Memo #118 (The fourth Memo from the Theme, Asia at the 2011 Cannes G20)
By Yves Tiberghien – yves.tiberghien [at] ubc.ca
The G20 Summit in Cannes just finished after a breathtaking Kalamatianós around global institutional reform and commitments. In this process, what was Japan’s role?
Against expectations, Prime Minister Yoshihiko Noda has shown more interest in the G20 than Japan’s two previous prime ministers and has embraced novel initiatives. Noda has decided to coordinate global economic policy more actively from the prime minister’s office and to make use of both the Government Revitalization Commission and the National Strategy, Economic, and Fiscal Policy Commission for this purpose.
The most visible and unexpected Japanese action in Cannes was the strong international commitment made by the Noda government to raise the consumption tax from five per cent to ten per cent before 2015 and to pass the related bill in the Diet before March 2011, even though there is no consensus for this within the Cabinet or the Democratic Party of Japan. Thus, Noda has chosen to tie his hands publicly at the G20, as a means to weaken domestic opposition.
On the question of “saving the Euro-zone” and investing into the European Financial Stability Facility (EFSF), Japan has demanded that Europe create a “sustainable and credible framework,” but will likely invest $10-50 billion when the fund is operational. Japan might play a catalyst role with respect to China and others.
Interestingly, Japan has also moved on the issue of the international financial transaction tax (“Tobin Tax”) by shifting from a position of opposition aligned with the US, Canada, and the UK to a neutral position. Japan acknowledged that such a tax is a good idea, but that much work remains to be done before it can be workable.
Although there was a short Japan-China bilateral meeting on the margins of the summit, the two countries did not focus on G20 issues. So far, East Asian countries continue to play it alone at the G20.
But one surprising innovation is the G20 decision to let China, Japan, Korea, and Indonesia decide among the four of them which of them should host the G20 in 2016. This could be the beginning of an East Asian regional caucus within the G20, one that does not include Australia or India. Later in November attention will shift to the wider Asia Pacific bodies of APEC and the East Asia Summit.
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- The Cannes Action Plan for Growth and Jobs, Ministry of Foreign Affairs of Japan, November, 2011.
- Theme: Asia at the 2011 Cannes G20