Did Japan Get What It Wanted From the Osaka G20 Summit?

The hosting of the G-20 summit in Osaka provided a chance for Japanese Prime Minister Shinzo Abe to show leadership on the global stage just three weeks before a national upper house election. But to what extent did the summit live up to the goals set by the host country?

In the run-up to the summit on June 28 and 29, Abe had identified three priorities: strengthening “free and fair” trade; modernizing rules for the spread of data across international borders; and embracing innovation to tackle climate change and other environmental problems. Just as important, though, were a series of meetings with fellow leaders on the sidelines of the summit. Abe made progress in some areas but appeared to face challenges in others.

Free and Fair Trade

In a speech in late May, Abe explained that his three priorities for the G-20 summit included “working to maintain and ultimately strengthen the free and fair order for international trade.”

As has been noted previously, the Japanese government is concerned about the economic flow-on effects of the trade war between the United States and China (so it will welcome the apparent cooling of tensions after a highly anticipated bilateral meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Osaka). Tokyo – a key backer of the Trans-Pacific Partnership multilateral trade pact, from which the United States withdrew – is now engaged in bilateral trade negotiations with Washington in the hope of fending off Trump’s threat to impose tariffs on automotive imports, amid fears about the impact on the Japanese economy.

Against this backdrop, the G-20 leaders’ declaration gives a nod to concerns about significant risks to global growth. The document, published on June 29, says while growth appears to be stabilizing it remains low and “risks remain tilted to the downside” as “trade and geopolitical tensions have intensified.”

The G-20 declaration says that members “strive to realize a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open.” The statement reaffirms support for “the necessary reform of the World Trade Organization” to improve its functions, including with dispute settlement. “Furthermore,” the leaders said in the declaration, “we recognize the complementary roles of bilateral and regional free trade agreements that are WTO-consistent. We will work to ensure a level playing field to foster an enabling business environment.”

The trade and investment section appears to be broadly in line with Japan’s positions. However, for the second time in two years, the G-20 communique does not include an explicit vow to fight protectionism. In light of pressure from the Trump administration, the G-20 summit in Buenos Aires in 2018 removed the long-standing commitment to fight or resist protectionism. That passage is excluded again in 2019 – despite Abe’s previous vow to keep “the flag of free trade waving high” at a time of “widening protectionist movements worldwide.”

Free Flow of Data

The second desired focus, Abe said in the speech in May, was to kickstart attempts to allow the international “free flow of data under rules we can all count upon.” He aimed to launch an “Osaka Track” – a process to prepare rules that would allow the benefits of the digital economy to spread across Asia and beyond.

It was not the first time he had raised this issue. “I would like Osaka G-20 to be long remembered as the summit that started worldwide data governance,” Abe said in an address to the World Economic Forum’s annual meeting in Davos in January, as highlighted by The Diplomat. “Let Osaka G-20 set in train a new track for looking at data governance – call it the Osaka Track – under the roof of the WTO.”

Indeed, the G-20 communique includes a general statement that members “aim to promote international policy discussions to harness the full potential of data.”

But it was in a side-event where the issue was dealt with more comprehensively. On the first day of the summit, Abe hosted a digital economy event at which leaders of 23 countries – including the United States, China, and Japan – plus the European Union issued a declaration supporting further discussions on the topic. Other signatories included Argentina, Australia, Brazil, Canada, France, Germany, Italy, Mexico, South Korea, Russia, Saudi Arabia, Turkey, the United Kingdom, Spain, Chile, the Netherlands, Senegal, Singapore, Thailand, and Vietnam.

“Today, we, standing together with other WTO Members that participate in the Joint Statement on Electronic Commerce issued in Davos on 25 January 2019, in which 78 WTO Members are on board, hereby declare the launch of the ‘Osaka Track’, a process which demonstrates our commitment to promote international policy discussions, inter alia, international rule-making on trade-related aspects of electronic commerce at the WTO,” the Osaka Declaration on the Digital Economy says.

Signatories are pushing “to achieve a high-standard agreement with the participation of as many WTO Members as possible.” The aim is to reach substantial progress by the time the 12th WTO Ministerial Conference is held in June 2020. A statement issued by Japan’s Ministry of Foreign Affairs said the declaration should provide a political impetus to these negotiations.

Climate Change and the Environment

In the lead-up to the summit, expectations had also been raised about a focus on climate change. In September of last year, Abe sounded the alarm over the frequency of extreme weather events and argued that the world must act quickly and take more robust actions against climate change. And in his speech in May this year, Abe described a third priority for the G-20 summit in a more business-focused manner, saying discussions would focus on “the importance of innovation in order for us to tackle global environmental challenges.”

The communique embraces Japan’s view on green issues by calling for a paradigm shift “where the virtuous cycle of environment and growth is accelerated through innovations, and with business communities playing an important role, in synergy with the public sector.” However, climate change again proved a flashpoint in which some countries, including the United Kingdom and France, pressed for more ambitious language whereas the United States pushed in the opposite direction. Britain’s Sunday Times reported that Trump had lobbied for the climate-related language to be watered down, with the newspaper quoting a senior British government official as saying that the process of drawing up the communique had been “challenging.”

To bridge the divide, negotiators again found a way to separate out the U.S. position from those of the rest. The document essentially reaffirms the formulation at last year’s G-20 summit: “Signatories to the Paris Agreement who confirmed at Buenos Aires its irreversibility and are determined to implement it, reaffirm their commitment to its full implementation, reflecting common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.” It continues that by 2020, countries “aim to communicate, update or maintain” their emission reduction targets while “taking into account that further global efforts are needed.” They further “emphasize the importance of providing financial resources to assist developing countries with respect to both mitigation and adaptation in accordance with the Paris Agreement.”

In the following paragraph, however, the United States “reiterates its decision to withdraw from the Paris Agreement because it disadvantages American workers and taxpayers” while arguing it is taking a “balanced approach to energy and environment.” Washington, it says, “remains committed to the development and deployment of advanced technologies to continue to reduce emissions and provide for a cleaner environment.”

Greenpeace responded to the declaration by calling on the “G-19 leaders” to turn their words into “rapid action.”

Meetings on the Sidelines

Aside from the G-20 summit, the event provided an opportunity for Abe to meet with key world leaders to press his key diplomatic priorities on a more direct basis. Highlights are as follows:

Abe told Xi, the Chinese president, that he wanted to further improve ties between the two countries. To further that goal, Abe invited Xi to visit Japan as a state guest next spring. They agreed to work together on “developing a free and fair trading system,” a Japanese official told reporters, according to Reuters. The meeting was also an opportunity to discuss developments in negotiations with North Korea after Xi’s recent visit to Pyongyang. Abe also touched on human rights and advocated for “a free and open Hong Kong to prosper under ‘one country, two systems’ policy,” the Associated Press reported.

Abe told Indian Prime Minister Narendra Modi that he would like them to work “hand in hand and elevate the Japan-India relationship, which is blessed with the greatest potential for development of any bilateral relationship in the world, to greater heights.” In order to realize a free and open Indo-Pacific, Abe said he would like to proceed with a two-plus-two meeting between Japan and India as soon as possible, according to the Japanese government’s readout. This effort would aim to “advance concrete cooperation on connectivity through quality infrastructure as well as defense and security.” The G-20 summit itself also endorsed a set of “Principles for Quality Infrastructure Investment.”

In an unexpected development on the eve of the summit, Trump publicly complained about what he saw as an “unfair” element of the long-standing security alliance between Japan and the United States, telling Fox Business Network that “if we’re attacked, Japan doesn’t have to help us at all; they can watch it on a Sony television.” Speaking after a bilateral summit with Abe on June 28, Trump advocated amending the treaty rather than scrapping it. However, Japanese officials said Trump had not formally requested a review of the treaty.

Abe met with French President Emmanuel Macron in Tokyo before the G-20 summit and they strengthened their partnership by publishing a five-year roadmap for bilateral cooperation in a range of fields, including maritime security.

Notably, however, officials did not schedule a meeting between Abe and South Korean President Moon Jae-in. There is ongoing tension in bilateral relations between Tokyo and Seoul, including over South Korean court rulings ordering Japanese companies to pay compensation for past forced labor practices. Abe’s meeting with Russian President Vladimir Putin, meanwhile, demonstrated again the gulf between the countries when it comes to resolving the territorial dispute and completing peace treaty negotiations. On these and several other fronts, Abe continues to face diplomatic challenges.