Japan's pivotal global role: Insights from Davos 2024

Japan has been demonstrating leadership across various fields, from international trade and politics to regional cooperation. In the expansion negotiations of the Trans-Pacific Partnership (TPP) agreement, Japan took the lead after the United States withdrawal in January 2017, successfully navigating through the crisis and achieving the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the remaining 11 countries in 2018. Additionally, Japan has advocated the concept of Data Free Flow with Trust (DFFT) to establish rules for cross-border flow of data and is leading international efforts towards its realization, as well as exhibiting a proactive stance in sourcing from geopolitical allies.

In a world marked by increasing fragmentation and heightened uncertainty, what role can Japan play? Let's explore insights from leaders in government and private sectors, as shared during Japan’s Bet on Cooperation session at the World Economic Forum Annual Meeting 2024.

“Japan can serve as a bridge between different groups,” said Kono Taro, Japan’s Minister for Digital Transformation. Bringing up the Middle East peace issue, Minister Kono highlighted Japan's unique position of lacking a history of colonialism in the Middle Eastern countries and its religious neutrality, which sets it apart from major European countries. He pointed out that this distinct position enables Japan to be a sincere intermediary connecting stakeholders, emphasizing the country's ability to play a bridging role.

Meanwhile, Masayuki Hyodo, Representative Director, President and CEO of Sumitomo Corporation, said: “In the industrial world, the relationship between Japan and Asian countries has evolved from that of donor and beneficiary to a partnership.” He emphasized the long-standing efforts of Japanese companies in this regard, such as how Sumitomo Corporation has worked towards building a value chain across the entire Asian region, focusing on the principle of "growing together". This approach has allowed the company to establish robust and long-term relationships based on trust with Asian countries.

Hyodo emphasized the current need for companies to further strengthen partnerships to meet global demands. He underscored that redesigning the entire industry value chain for this purpose is essential. “Each value chain needs to evolve competitively and adapt to the new era, achieving key goals such as carbon-neutrality. To accomplish this, it is crucial to leverage the power of established partnerships and unleash creativity through collaboration."

Isabelle Deschamps, Chief Legal Officer at Rio Tinto, the largest supplier of iron ore to Japan, emphasized that there is also fragmentation in the market. "Today, where the commodity is, where the mine is, and where it is processed and manufactured are different. Consumers are also in a different place. Therefore, we are having to adopt this new reality of supply chain fragmentation. And we see that this is where the public-private partnership and cooperation are essential to navigate this new reality.

Against an increasingly fragmented and volatile global backdrop, Michael Froman, President of the Council on Foreign Relations, observed that while we seem to be heading towards an economic soft landing, geopolitical risks remain high. He emphasized the crucial role of Japan amid this: "How the situation plays out will depend a lot on what happens in Asia where half the world’s GDP growth, half the world’s innovation patterns, and half the world’s growth in trade all comes from the Indo-Pacific region. And how that plays out will depend a lot on Japanese leadership.”

He expressed expectations for Japan’s exceptional leadership, as demonstrated through the realization of the CPTPP and the promotion of DFFT: "In the late 1980s, Japan was a rule-breaker, then became a rule-taker, and now it is in the role of a rule-maker."

Furthermore, Minister Kono noted that the presence of the Global South is increasing as the world economy expands. “The role of Japan in the G7 is to represent non-Western countries,” Kono said. He reiterated Japan’s responsibility as a bridge, saying that since it is the only member state from non-Western G7 countries, it can fulfill this role.

The key to Japan’s continued leadership in the international community over the long-term will be to advance solutions to the specific challenges the country is facing; ones that may hinder its economic growth and global competitiveness, and impede it as a leader on sustainable development. Froman singled out the critical importance of addressing issues such as population decline, women in the workforce, and the acceptance of immigrants.