RIETI-ANU Symposium

Japan and Australia: Leading Asia Pacific regionalism in uncertain times (Summary)

Information

  • Time and Date: 14:00-17:30, Thursday, March 15, 2018
  • Venue: Grand Ballroom West, Grand Hyatt Tokyo

The global economic system is under threat from protectionist forces; the situation we face is not business as usual. Japan and Australia share interests in protecting the global economic system, the stability of the global trade regime, and working with Asia-Pacific region partners.

Both countries were key to the creation of the Asia-Pacific Economic Cooperation (APEC). We face a new APEC moment for taking leadership in the Asia-Pacific region, and TPP 11 was signed on March 8, 2018. That was an important statement of our interests in the open rules-based trade regime, but it is just the first step. What strategies can be pursued to secure our interests in an open, rules-based global trading system for both the important members of the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) negotiations?

In this context, Japan specialists from Australian National University (ANU) along with a RIETI researcher, all of whom are experts in the Japan-Australia relationship, together with policy experts in both countries discussed the direction for strategies to develop the trade and investment rules in the Asia-Pacific region led by Japan and Australia.

Summary

Welcoming Remarks

KISHIMOTO Yoshio (Vice Chairman, RIETI)

Thank you for joining us at this symposium organized by RIETI and ANU. One week ago, on March 8, 2018, the TPP 11 Agreement was signed in Chile by 11 representatives of the countries involved. The agreement is intended for the Asia-Pacific region to establish high-level free and fair trade rules to create a new global economic order befitting the 21st century, and for Japan to display presence as a free trader. With the United States’ withdrawal from the agreement, Japan and Australia share the responsibility to harness the global economic system, and their cooperation with other members has helped to realize the signatures of the 11 countries.

In January 2018, U.S. President Donald Trump stated in Davos that the TPP signatories are important and that he would consider negotiations with them individually or collectively. Meanwhile, he decided to impose tariffs on steel and aluminum imports to the United States. Against the backdrop of visible protectionist moves, how should Japan and Australia cooperate in pursuit of high quality trade and investment rules in the Asia-Pacific region? Asking these questions is extremely critical. Today, we are honored to have our guest speakers who are frontrunners and experts in this field. I hope this symposium will deepen your understanding of how Japan and Australia should cooperate to develop high quality trade and investment rules in this region, and hope for active discussions between them.

Special Speech

Simon NEWNHAM (Ambassador for Asia-Pacific Economic Cooperation (APEC), Foreign Affairs and Trade, Australian Government)

History of close ties

Japan and Australia are regional economic success stories. Both countries signed the 1957 commerce agreement, and, within just one decade, Japan became Australia’s largest export market overtaking the United Kingdom. Japan is Australia’s second largest trading partner with around $70 billion AUD worth of two-way trade between the two countries. A recent PwC study found that Australian exporter utilization of our economic partnership agreement (EPA) is around 95%.

But it would be a mistake to characterize the history of economic success and close collaboration as simply one of a bilateral or one-on-one story. A big part of the story is our close cooperation and leadership in regional and global bodies. Foremost among our objectives is the welfare and stability of our Indo-Pacific region underpinned by open economies and the rule of law. Comparing Prime Minister Shinzo Abe’s Free and Open Indo-Pacific Strategy with Australia’s Foreign Policy White Paper reveals a remarkably close alignment of our two countries’ interests, including the welfare of the Indo-Pacific region, the pursuit of our interests by our open economies, core national security interests, global multilateral cooperation, and a stable South Pacific. Japan and Australia are also clearly major players in international economic forums, including the World Trade Organization (WTO), APEC, G20, and our network of free trade agreements (FTAs), and support for regional forums such as the East Asia Summit and the ASEAN Regional Forum.

Looking ahead

Many believe support for globalization is now more contested, whether it be on immigration, investment, or trade flows. But it is important to keep things in perspective. There are a number of compelling arguments for why it is not as dire as it appears. First, the global economic landscape is in good shape. The sense of protectionist contagion is sometimes overblown. Public support for key elements of globalization, including trade policy, is robust. Second, this is not the first time we are facing the dire consequences of a global shift to protectionism, and we are better prepared. Third, while others have stepped back, Japan and Australia have stepped forward. The U.S. withdrawal from the TPP was a major disappointment for Australia and its TPP partners. But like-minded countries have stepped forward together to drive regional integration. The TPP 11 is a fantastic example.

Major challenges ahead

We cannot ignore the major challenges that lie ahead. First, we need to maintain momentum on the so-called building blocks of trade liberalization. Reaching an FTA outcome or a bilateral investment treaty or liberalization of migration regulations are not endpoints; they should always be seen as part of a much wider landscape. Second, we need deeper analysis of and a better response to public concerns about the effects of globalization. In Australia, this takes a number of forms such as FTA utilization studies, a FTA portal that is being created, advocacy, outreach programs, high-level political level messaging, public briefings, and a recognition of the need to support transitions within our economy. Third, there will be an increasing premium on the ability of governments to drive economic reform, including through trade agreements in the face of increasing headwinds. The signing of the TPP 11 is a signal that the tide on global trade issues is not one-way, and a superb blueprint for the future leadership that will be demanded of countries like Japan and Australia. Fourth, some of the cornerstones of the multilateral trading system are under threat, especially dispute settlement. Defending, promoting, and strengthening the international rules-based order is our highest foreign policy priority. Key members of these bodies, such as Japan and Australia, must be able to propose reviews and reforms where necessary in a way that strengthen and not undermine the hard fought principles and norms we have collectively achieved. Fifth and finally, we will need to be able to deal with an uptick in trade frictions.

TANAKA Shigehiro (Director-General, Trade Policy Bureau, METI)

The rise of China and its impact

There are some basic trends. One of them is clearly the huge size of China and its impact on this region. China is the largest exporting or importing party for many countries, and the import ratio from China exceeds 20% in many countries. China is the second largest source of outward foreign direct investment (FDI) following the United States on a flow basis. Within China, dramatic innovations are driving its economy and contributing to its strong sustainable growth. This growth has been supported by policy plans issued by the Chinese government, such as China 2025 and Internet Plus. One of the issues we face is overcapacity in some sectors, such as steel and other metal sectors, caused by market distorting measures implemented by the central or local governments.

Possible dysfunction of 21st century rules

The WTO is of the utmost importance for many countries including Japan, but sometimes it has not been sufficient. Its problems were manifested in the Ministerial Conference held in December 2017 in Buenos Aires. This century requires new rules in areas ranging from intellectual property, state-owned enterprises (SOEs), to industrial subsidies, to name a few. This trend is partially the result of policy changes taking place in the United States and elsewhere. The United States not only has withdrawn from the TPP, but also is pursuing several measures to address concerns that are incompatible with global rules.

Digital transformation of economies

The digital transformation of economies is both a domestic and global phenomenon, bringing about digital innovations which have helped some countries leap frog in areas such as payments and delivery services. Unicorns have emerged not only in the developed but also in the developing world. Digital protectionism has led some countries to erect walls and stop data flow across borders, either completely or partially, which could hinder digital economic growth.

Three strategic pillars

I would like to mention three strategic pillars for coping with these trends. The first is advancing FTA networks that we have created successfully, including the TPP and the EU-Japan EPA. TPP 11 is in a process of going through ratification in participating countries. Several new rules were written into the TPP, including rules on the digital economy. The agreements would be meaningless unless the rules were enforced. We shall make sure that the TPP membership is expanded so that more countries sign up to high-level rules. In order to achieve high-level rules in this region, it is also crucial to work with like-minded countries, with Australia being one of the most important.

The second pillar is to start thinking about 21st century rulemaking. There are concepts such as fairness, predictability, and comprehensiveness, in addition, there may be greater importance placed on reciprocity—reciprocal openness in our economies. There must be a level playing field by realizing rule of law. We would like to continue these discussions at forums such as the G7, G20, and APEC. In December 2017, Japan, Australia, and Singapore co-chaired a Ministerial Meeting on Electronic Commerce on the margins of the WTO Ministerial Conference. Japan would like to pursue multilateral channels as well achieve higher level rules.

The third pillar is promoting Japan’s Free and Open Indo-Pacific Strategy, which enshrines principles such as rule of law, economic prosperity, and peace and stability. With like-minded countries, we want to make sure alternative ways to achieve prosperity are provided in this region. That is a goal we can never miss and one we will continue to pursue.

Keynote Speech

Threats to Global Trade and Asia’s Response

Peter DRYSDALE (Emeritus Professor of Economics, ANU)

This is a time when wait-and-see strategies are no longer viable. It is a time that requires a strategic response, particularly from partners in the Asian region.

Some people think the difficulties we face today arose with the election of Donald Trump. That is an oversimplification of the matter. They are a consequence of significant shocks to economic and trade systems through the global financial crisis, as well as the underlying economic forces that have been at work for some time. These are a consequence of long-term structural changes in the global economy that have shaken the system, including the emergence of China and its accommodation in the global system. In North America, there are also long-term structural problems that are the cause of maldistribution of gains from international trade. This is a deep structural problem and requires deep institutional and policy shifts and a different approach to social as well as international trade policy. The notion that the United States has not reaped huge benefits and gains from international trade is nonsense; U.S. income growth has been boosted by the gains from trade. But the distribution of the gains from trade is poorly served by domestic institutions (health, education, adjustment policies) and policies than have not seen household incomes rise for decades. This won’t change quickly, certainly not in one presidential term; it will take a generation to fix.

Asia and our region have more at stake in the global system than any other part of the world because our economies depend on the open rules-based system not only for their economic prosperity but also their political security. The appeal to the rules-based system is a critically important dimension of protecting economic security and, more broadly, political security. We need to stand firm now in the face of the threat to the global trade regime. The dynamic Asian growth depends importantly upon keeping with the reform agenda and encouraging entrenchment and deepening—including by China, the southeast Asian economies, and India—of the open rules-based international trading system.

We have had threats to the system in the past, when Japan was on the rise. But the threats in the global system are more intense than they have ever been before in the postwar period.

We need to focus on three fronts. First, we need to protect our interest in the multilateral system, where the WTO is its key anchor and reference point. There are global platforms, including the G20 process and globally-oriented processes such as APEC in which to do that. In last year’s Hamburg G20 summit, German Chancellor Angela Merkel held the line against protectionism. So ultimately, the APEC members stood against the onslaught from U.S. Trade Representative Robert Lighthizer and his colleagues in Da Nang last November. The performance at the recent G20 Finance ministers’ meeting was not so creditable. Japan’s hosting of the G20 next year will be another important opportunity to reinforce this interest. The second is through regional processes. The negotiation of TPP 11 was an important opportunity to hold the line for the rules-based system regionally. The TPP 11 is an essential initiative in declaring our strategic interests in the global system. Japan’s initiative in reaching out and negotiating an EU agreement is another step in the right direction.

We need to develop a coherent and comprehensive framework for strategic action that mobilizes a strong coalition of economies and their interests in the open global system. Issues related to digital trade and treatment of foreign investors can be negotiated with the preservation of a system that protects our interests in this region. In the solutions to those problems, both China and other emerging economies have to be fully engaged.

The RCEP offers a ready-made negotiating platform that incorporates all of the important players other than the United States. It has the weight to make the difference globally, and, like the TPP 11, should remain open to the United States down the track. It will require re-conception of strategic interest in the RCEP not only as an instrument of global reform but also as an agent that can influence the shape of the global system to complete the RCEP negotiations successfully. What is critical in articulation of that interest is to be very clear about the priority that we attach to our objectives on the multilateral system.

East Asia has a role to play in this that is bigger than the role of other areas because of the scale of Asia’s current impact on global outcomes. It is time for collective leadership in pursuing and articulating that interest. Collective leadership will not be effective unless there are particular agents to carry it forward. This is another APEC moment because, in establishing APEC, Japan and Australia have an important responsibility to work with their partners in the region and enunciate the strategy that meets U.S. interests and deals with them at the same time as protecting the rules-based global trading system on which we all so vitally depend.

URATA Shujiro (Faculty Fellow, RIETI / Dean and Professor of Economics, Graduate School of Asia-Pacific Studies, Waseda University)

I would like to present on the importance of regional and global frameworks for Japan’s economic revival and sustainable growth. The Japanese economy has been recovering, but growing protectionist policies throughout the world, particularly in the form of non-tariff measures as well as anti-dumping and counter duties, are on the rise. In addition to the unfavorable external environment, Japan’s population is declining and aging rapidly, making it difficult to achieve economic growth. Furthermore, Japan’s government debt to GDP ratio is higher than that of other Organisation for Economic Co-operation and Development (OECD) countries, and there is a shortage of FDI into Japan.

East Asia has achieved rapid economic growth due in part to foreign trade and FDI. Through production networks, such as supply and global value chains, companies could learn how to become more efficient. When the value of the yen increased sharply in the 1980s, instead of making products including its parts and components in a single country, production blocks constructed by Japanese companies became spread out throughout East Asia. Tariff rates decreased substantially from the mid-1990s to the early 21st century. This contributed to a rapid expansion of trade and investment, leading to the formation of production networks. The WTO made a limited contribution to trade and investment liberalization, and many countries opted to form FTAs with like-minded countries. More progress is needed in promoting FTAs, particularly mega FTAs. In addition, Japan is interested in exporting agricultural products. Some may think they are not competitive, but that is not true. Japan has competitive agricultural products such as sweet strawberries. In order for Japan to promote agricultural exports, we need liberalization of agricultural products in trading partner countries. For that, the TPP 11 or other FTAs can play a critical role. Although Japan has a number of FTAs, the proportion of trade with FTA partners is still much lower than that of other countries such as Australia: 23% vs. 70%. Japan needs to enact FTAs with large trading countries, and the TPP 11 can contribute to increasing these numbers.

There is an interesting FTA competition. When Japan showed interest in joining the TPP, that led to start of the RCEP negotiation and the Japan-EU EPA negotiation. Some people say the TPP 11 without the United States may not be as important as the TPP 12. I disagree. The TPP 11 is a more comprehensive FTA than others, and can be a model for other FTAs. Additionally, the TPP 11 can be an instrument to fight against rising protectionism, and serve as a platform to receive the United States should it change its mind.

I would like to see a fairer, more open, free, and transparent level-playing field and business environment, which is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and possibly the RCEP. Japan and Australia can cooperate and contribute to the conclusion of RCEP negotiations and also cooperate on technical and educational assistance to members of ASEAN. The revival of the Japanese economy will benefit not only Japan but also the rest of the world including Australia.

Q&A for Special and Keynote Speeches

Question: I have a question for Prof. Drysdale. One of your slides states, “avoiding the European integration problem.” Could you elaborate?

DRYSDALE:
The United Kingdom’s retreat from Europe will cost the United Kingdom and the global economy substantially. Our calculations shows that whatever options that the United Kingdom has open to it post-Brexit, retreating from an integrated market with Europe is damaging to it and the global economy, even in the best case scenario where a whole range of economic agreements is settled quickly with the rest of the world. It cuts UK incomes, growth potential, global incomes, and growth. We do not want to get into that circumstance in East Asia; the costs in Asia would be huge. Also, there is no reason we should. We are on course to achieving huge benefits in East Asia around a different policy approach, but we need to avoid being accidentally being knocked off that course by the wrong response to Washington’s trade threats.

Question: Digital economy promotion requires the protection of personal information. Can we counter EU and U.S. safe harbor processes?

TANAKA:
We are working in APEC and with the EU to establish a system to protect personal data across borders, and these global efforts are expected to continue.

Panel Discussion

Moderator

URATA Shujiro (Faculty Fellow, RIETI / Dean and Professor of Economics, Graduate School of Asia-Pacific Studies, Waseda University)

Panelists (in alphabetical order)

Shiro ARMSTRONG (Director, Australia-Japan Research Centre, ANU)

FUKUNAGA Tetsuro (Director-General for International Cyber Economy Policy, Trade Policy Bureau, METI)

Michael MUGLISTON (Visiting Fellow, ANU)

SUGAWARA Junichi (Senior Research Officer, Research Department-Public Policy, Mizuho Research Institute Ltd.)

Presentation 1

SUGAWARA Junichi (Senior Research Officer, Research Department-Public Policy, Mizuho Research Institute Ltd.)

Due to the U.S. withdrawal from the TPP, there will be multiple tracks of rulemaking in the Asia-Pacific region. Competition and collaboration towards the FTAAP will arise between tracks with similar or different rules. On the other hand, in the Asia-Pacific region, there is a shadow hanging over common rulemaking. The TPP 11 was signed on the day that Trump decided to impose tariffs on steel and aluminum products. It was a symbolic phenomenon. The United States also seeks to invoke unilateral actions to China under Section 301 of the Trade Act of 1974. In order to suppress protectionism and spread high quality rules in the region, we need to strengthen and deepen cooperation between Japan and Australia. We have common goals. Last year, the Foreign Policy White Paper was issued by Australia for the first time in 14 years, which is a sign of good cooperation. There are slight differences in strategy towards the United States and China between our two countries, but we have multilayer networks in the region to ensure its prosperity. With the two countries’ cooperation, we can progress regional economic integration with high quality rules.

Presentation 2

Shiro ARMSTRONG (Director, Australia-Japan Research Centre, ANU)

I think the rise of protectionism mostly represented by Trump’s America First agenda is just a start, and we will see more as we head towards the mid-term elections. Asia should not be reactive but proactive. I think the TPP 11 is a better agreement than the TPP 12 and easier to expand to other countries such as Indonesia, South Korea and the Philippines. Just as the TPP was a cover for Japan and the United States to make progress in their bilateral economic relationship, the RCEP can be a cover for China-India and Japan-China to make progress in their bilateral relationships. It is also a great opportunity to lock in liberalization and reform in China, India, Indonesia, and others.

A modeling exercise of a scenario where global tariffs rose by 15% shows that the global economy shrinks by 3%. If the RCEP holds the line, Australia and Japan will grow. If it removes tariffs, the gains are even larger for Japan and Australia. And if it removes non-tariff barriers, the gains are even larger. This shows the systemic importance of the grouping of these countries and moving forward with a positive agenda.

Presentation 3

FUKUNAGA Tetsuro (Director-General for International Cyber Economy Policy, Trade Policy Bureau, METI)

The Asia-Pacific region confronts three governance gaps. The biggest challenge is to craft global governance for digital transformation. There is no suitable regulation for fast-moving innovations such as fintech. We have no good data privacy regulation commonly applicable all over the world. Second, we are facing a big governance gap for the rapidly growing global economy as we lack 21st century type rules. Third, there is a governance gap for the recent geopolitical situations. We do not have an appropriate conflict resolution mechanism for conflicts such as North Korea thus we are seeing skyrocketing economic sanctions.

Let me explain Japan’s effort to address the situation. To fill the gap of digital transformation, the Japanese government is mobilizing all of its resources to create Society 5.0. As we would like to share relevant data and business practices beyond sectors and borders in the initiatives, the World Economic Forum Center for the Fourth Industrial Revolution Japan will be established. To create 21st century rules, there is the Japan-U.S. economic dialogue. We want to have the United States committed to rulemaking in the Asia-Pacific. We are also working further with Europe beyond our FTA deal and enhancing Europe’s involvement in the Asia-Pacific. As a result of engagements with Americans and Europeans, now we can expand trilateral cooperation on trade among Japan, the EU, and the United States to ensure a global level playing field.

Another one of Japan’s challenge is keeping cyber space accessible, open and secure. For that purpose, we need to set up norms and rules on data flow, platform, and cyber security by a multi-stakeholder approach. In a proactive manner, we can utilize blockchain technology to solve data flow issues as an enabler of autonomous contracts, as well as ethical and security issues as a sort of circuit breaker.

Presentation 4

Michael MUGLISTON (Visiting Fellow, ANU)

APEC is focused on principles-based cooperation. It does not have legally binding rules or market access commitments found in trade agreements. Leadership is key to delivering meaningful regional, plurilateral, or multilateral agreements. You need a critical mass of countries, including at least one major country, committed to reform. Following U.S. withdrawal from the TPP, Japan provided leadership which resulted in the TPP 11. For the RCEP, we need to be mindful of how the United States and others in the world will interpret it. RCEP negotiators are under pressure to conclude the RCEP in a timely manner, but, at the same time, there needs to be a sufficient level of ambition for the RCEP to be credible. What needs to be demonstrated is that meaningful commitments can be negotiated at the regional level. We need to use the RCEP’s potential to encourage India and Indonesia, as emerging major economies, and ASEAN as a group to step up and be responsible players in accepting rules that will facilitate continued sustainable economic growth. Similarly, we need to engage China. We will lose collective credibility if the RCEP’s level of ambition is not sufficient. A low quality RCEP will confirm the views of those who consider that negotiating such agreements are a waste of time. Credibility is needed on rules and market access commitments. Negotiations need to progress in both areas.

Panel discussion

URATA:
Mr. Sugawara, do you think there are problems that stand in the way of Japan-Australia cooperation?

Mr. Armstrong, can you elaborate on what the two countries can do to deepen people’s understanding about the benefits of globalization and mitigate the costs or demerits of globalization?

Mr. Fukunaga, can you talk about what can be done with non-like-minded countries that are growing their influence in new economic areas like the digital economy?

Mr. Mugliston, you were a chief negotiator for the RCEP. Why has it not been concluded and what can countries such as Japan and Australia do?

SUGAWARA:
Japan and Australia sometimes adopt different strategies for the United States and China. I hope the two countries will cooperate, overcoming slight differences.

ARMSTRONG:
We can learn from the U.S. experience, including the lack of a social safety net with inadequate healthcare as well as underinvestment in education systems outside of cities and urban areas, coupled with a lack of spreading the gains of trade liberalization and innovation and growth. The benefits of trade have to be communicated to the public by elected leaders. Our politicians explain trade is important for exporters, but we know it is good for importers as well.

FUKUNAGA:
The 21st century rules should be more inclusive and fair so as to invite participating countries from all over the world. We already have positive developments on trade issues such as overcapacity. We have seen concerted efforts by steel producers under the G20 scheme. These approaches can be extended to the other issues including overcapacity of semiconductors.

MUGLISTON:
One of the challenges with the RCEP has been to operationalize the Guiding Principles for the negotiations and translate them into a legally binding instrument. The short answer is I think we underestimated the nature of the challenge. ASEAN is negotiating as an entity, and there is considerable variability in the scope, scale, depth, and degree of comprehensiveness in the existing ASEAN+1 FTAs that the negotiations are seeking to build on. A further complicating factor has been the absence of FTAs among major ASEAN FTA Partners (e.g., China-India, China-Japan, Japan-Korea).

URATA:
What can Australia and Japan do to make the RCEP negotiations move forward?

MUGLISTON:
Australia has worked with Japan and Korea to submit joint proposals in several areas of the rules negotiations. We need to continue to work together and with others to raise ambition levels in ASEAN and other RCEP participating countries to achieve a sufficient level of ambition for a credible outcome covering rules and market access commitments.

ARMSTRONG:
Our prime ministers and other leaders in the region have not expended as much political capital on the RCEP compared to the TPP. Market openings and market access commitments that Japan made to the TPP should be made to the RCEP. That will put pressure on countries such as China to sign up to rules.

URATA:
Are political tensions blocking progress in the RCEP negotiation, specifically Japan-China and Japan-Korea tensions?

ARMSTRONG:
They do not help, but I do not think they are blocking. They are significantly constrained by economic relationships. I think a lack of ambition is blocking.

SUGAWARA:
They have not impacted the RCEP negotiations. The meaning and significance of the RCEP are recognized by China and Korea. FTA negotiations can be utilized as a political channel.

MUGLISTON:
My experience has been that political issues have been left outside of the trade negotiations in which I have been involved, although the prevailing political context inevitably impacts the negotiations and needs to be managed. Each delegation has its own negotiating mandate, and negotiators cannot expect to remain negotiators for the next meeting if they exceed their mandate. Revised mandates are necessary to move negotiations forward, including delegations coming forward with improved market access offers. It is understood that such improved offers would be conditional on others making satisfactory commitments.

URATA:
What are the benefits or costs of having an agreement with Pacific Alliance countries?

SUGAWARA:
The P4 did not get attention, but it developed into TPP and the current TPP 11. It was the starting point. The same might apply to the Pacific Alliance. I believe Colombia will happily join the TPP 11. It is a question of what sort of rules the Pacific Alliance will establish.

FUKUNAGA:
We should also work together with countries with which we already have a regional trade agreement, bilaterally or multilaterally, to set up higher standards.

ARMSTRONG:
The dynamism is in East Asia and increasingly South Asia, and that is where I would put priority and resources.

URATA:
The TPP’s e-commerce provision is likely outdated. Do you share that view?

FUKUNAGA:
Many countries have started to introduce cyber security laws which try to prohibit data outflow. Once data trade is prohibited, there might be a "trade war." Japan and Australia need to fight against such data protectionism. We do not have good norms to secure digital trade yet, and need to work bilaterally, multilaterally, and with the private sector.

URATA:
Can Japan and Australia do something for cyber protection?

MUGLISTON:
It is a challenging task to make progress at the WTO. Now with 164 members—many with divergent interests—getting consensus is very challenging. We are going in the plurilateral mode at the moment. My suggestion is to keep the framework as simple as possible and concentrate on facilitating the free flow of goods, data and financial flows with appropriate provisions on cyber security and consumer protection.

SUGAWARA:
It is important to invite industry players. The provisions may be outdated, but they provide a platform for the next negotiation.

URATA:
Developed countries seem to have similar views toward the digital economy. What issues could become controversial?

FUKUNAGA:
Developing countries are betting on digital innovation to leapfrog. We are already seeing reverse innovations, for example, in Thailand and Indonesia. They are seriously thinking about what regulatory regime would be appropriate through a sandbox regime.

URATA:
I believe forums like this symposium can contribute to increasing the public’s understanding of the benefits and costs of globalization and regional arrangements.