The political, security, and economic environments surrounding Japan have been changing very rapidly since Prime Minister Kan took office. During his talk, to be followed by a discussion with the audience, Shikata-san will seek to answer several key questions: What are the salient features of current Japanese diplomatic, security and economic policies in the Asia Pacific region? What are the possible directions that Japan can take given the current and prospective regional landscape? What the the implications of TPP (Trans Pacific Partnership) for Japan? What are the implications of TPP (Trans Pacific Partnership) for Japan?

1. Japan's Diplomacy in the Asia Pacific Region under the Kan Administration Noriyuki SHIKATA February 23, 2011 Deputy Cabinet Secretary for Public Relations Director of Global Communications Prime Minister's Office of Japan

3. Emerging challenges such as terrorist activities and the global environment 2

4. Security environment in East Asia Asia at the center of major tectonic changes, and risks to the security environment remain, such as nuclear development by DPRK. DPRK ・・・Sinking the ROK military vessel, Cheonan Mar.2010 Shelling Yeonpyong Island in Nov. 2010 Uranium Enrichment activities continue Nuclear, Missile, Abduction issues need to be resolved 3

6. Military Balance in East Asia Source: “The Military Balance 2010” publications of the U.S. Department of Defense and others (actual numbers as of the end of FY2009 are shown for Japan). U.S. ground forces in Japan and the ROK are combined figures of Army and Marine Corps personnel. Combat aircraft includes Navy and Marine aircraft. Figures in parentheses show the total number of major units, such as divisions and brigades. Only divisions are included for North Korea. Military police areincluded for Taiwan. U.S. 7th Fleet is the number of forward deployment to Japan and Guam. Notes: 5

7. Five Pillars for Japan's Foreign and National Security Policy Japan-USalliance as the cornerstone New development of foreign relations with Asia Promotion of economic diplomacy Efforts to address global issues Japan responding appropriately to the security environmentsurrounding it. These five pillars are formulated with the "new reality" in mind. 6

9. Japan-US alliance more important in light of uncertainty and possible instability in the region.

10. Alliance continues to play a role as “public goods” fostering peace and prosperity in the region.

11. We will further deepen the alliance.

12. Three pillars of security, economics and exchange of culture and people promoted.⇒ ANew Vision for our alliance 7

13. U.S. Forces in Japan 8

14. Realignment of U.S. Forces in Japan and the SDF Relocation of Aircraft 9

15. Realignment of U.S. Forces in Japan （Kanto Area） 10

16. Realignment of U.S. Forces in Japan （Okinawa） 11

18. China needs to play a constructive role.

19. Both countries have important responsibilitiesto bear in the international community, and will need to enhance cooperation in wide fields such as economy, regional stability, and global environment.

20. Deepen “Mutually Beneficial Relationship based on Common Strategic Interests”.12

22. We will strengthen cooperation in the area of security while maintaining due respect for the viewpoints of the ROK.

23. Aiming to resume negotiations of Japan-ROK EPA.

24. We will build a future-oriented Japan-ROK relationship.13

26. Nov. 2010: GOJ adopted a Basic Policy on Comprehensive Economic Partnerships.

27. EPA with India and Peru concluded, will negotiate with Australia, ROK, Mongolia and EU.

28. TPP(Trans-Pacific Partnership) Agreement: began consultations with the relevant nations. GOJ will hold consultations with the US and others and will reach a decision by around June.14

29. Japan’s FTA/EPA Switzerland Mongolia EU Korea Japan GCC India Mexico Vietnam Philippines Thailand Brunei ASEAN (as a whole) Indonesia Malaysia Singapore Peru Australia Chile 12 EPAs concluded （As of Feb.2011） 6 EPA Negotiations ongoing or to be started/resumed

30. Region-Wide Economic Partnerships in the Asia-Pacific region East Asia Free Trade Area(EAFTA) 【ASEAN + 3】 Comprehensive Economic Partnership in East Asia(CEPEA) 【ASEAN + 6】 Free Trade Area of the Asia-Pacific (FTAAP) USA Canada Mexico Peru Chili Hong Kong Taiwan Russia Papua New Guinia Trans-Pacific Partnership(TPP) Agreement FTA among Japan, China and Korea USA Malaysia New Zealand Brunei Chili Singapore Peru Vietnam Australia 16

33. Integration and enlargement of farmland is important means to strengthen agriculture.

34. Transition to “senery” industry (multiplier)17

37. Medical care visas to promote “medical tourism” to Japan.

38. Deployment of “package” type of infrastructure such as railroads, water business, nuclear power plants(e.g. Vietnam).

39. “Open Skies” agreements with the U.S., ROK and Singapore.➜ Make Japan a “Hub for Asian economies”!! 19

41. Malaysia makes use of Japanese climate-control equipment in factories.

42. This sharing of Japanese technologiescontributes to the environment and reduce energy and natural resources consumption.

43. Japan will show the global community models to overcome these challenges.20

45. The objective: to give all the citizens of each country the opportunity to participate in and contribute to economic growth, and to share its benefits.

46. In the APEC Growth Strategy we are focusing on such policies as:Job creation, support for small and medium-sized enterprises, enhancements of social security systems, and support for women, the elderly, and vulnerable groups in society 21

50. Will enhance its readiness and mobility and work to build a “Dynamic Defense Force” supported by high levels of technological and information capabilities.

51. Will reinforce response capabilities in southwestern Japan and outlying islands.

52. Accelerate the upgrading of large-scale patrol vessels for maritime security.23