The Issue of Secure Trade Routes

Japan is a highly developed industrial nation that also depends heavily on trade. It lacks many raw materials needed for its industry and power generation - such as oil, coal, iron ore, copper, aluminum and wood. Japan must import most of these goods. And to pay for these imports, Japan must export a variety of manufactured goods to other countries. Japanese exports have changed over time, from agricultural products to manufactured goods, textiles, steel and cars. Japan is no longer competitive in agriculture because it has little farmland.

Today, simple manufacturing is too expensive because of the high wages paid to Japanese workers and non-availability of surplus workers. Japan has become less competitive in energy-intensive industries such as petrochemicals and aluminum since the country has few domestic energy resources. Japan purchases oil from the Middle East, but Middle Eastern countries cannot use much of the products Japan needs to sell or trade for the oil it uses, so Japan must sell its products elsewhere (Japan’s Economy and Trading Patterns: A Fact Sheet: Asia for Educators).

Because of its heavy dependence on trade and being an island-nation, Japan has always been concerned about the security of its trade routes. During the Cold War the Soviet presence in the Indian Ocean and the Pacific Ocean - two major arteries for Japan’s trade - was nominal, and maritime trade remained uninterrupted. In addition, with its massive naval capability and having positioned itself as the principal adversary of the Soviet Union and a protector of Japan, the United States, among others, made sure those waters remained safe for all trading nations.

In recent years, with the rise of China, who also uses the same sea routes, Japan has begun to realize that a new security situation has emerged in the region, and that its dependence on the United States, located thousands of miles away, to keep the trade routes free and safe may turn out to be inadequate in the long run. In particular, Japan requires that sea lanes stretching from the Persian Gulf, the Strait of Hormuz, the Red Sea and the Gulf of Aden to the surrounding waters of Japan, passing through the Indian Ocean, the Straits of Malacca and the South China Sea be kept safe and unfettered. If not in South China Sea, in the Indian Ocean and the Straits of Malacca cooperation with Indian naval forces is a viable option for Japan. To make that real, Japan could contribute significantly in helping India to develop a capable naval strength.

Its preoccupation with the security of maritime trade has led Japan to consider the changing geopolitical landscape and its implications for both trade and security. In a December 2013 national security strategy document, Japan’s Ministry of Foreign Affairs pointed to the shift in the balance of power in the region: “Since the beginning of the 21st century, the balance of power in the international community has been changing on an unprecedented scale, and this has substantially influenced the dynamics of international politics. The primary drivers of this change in the balance of power are the emerging countries, including China and India.

“In particular, China is further increasing its presence in the international community,” the document stated. “On the other hand, though its relative influence in the international community is changing, the U.S. remains the country that has the world’s largest power as a whole, composed of its soft power originating from its values and culture, on top of its military and economic power. Furthermore, the U.S. has manifested its policy to shift its emphasis of national security and economic policy towards the Asia-Pacific region (the ‘rebalance’ policy).”

Japan’s Defense Requirements and the U.S. Role

Japan’s security arrangements with the United States go back almost 70 years and have served the island nation very well. In 1951, a U.S.-Japan agreement was signed along with the Treaty of San Francisco that officially ended World War II. Revised in 1960, the “Treaty of Mutual Cooperation and Security between the United States and Japan” granted the United States the right to base military forces in Japan in exchange for the promise that America will defend the nation if it’s ever attacked. Under some circumstances, the treaty would include the U.S. defending Japan from cyber-attacks. During the U.S. occupation after World War II, the Americans imposed a pacifist constitution that prohibited Japan from maintaining land, sea or air forces. (Everything You Need to Know About the U.S.-Japan Defense Treaty Irking Trump: Bloomberg News: Isabel Reynolds: June 25, 2019).

Although the terms entitle either side to withdraw from the treaty, there is no reason to assume that such a major policy shift, by either side, could take place in the short- or mid-term. What has instead emerged is that despite opposition from among Japan’s strong pacifist constituency, Prime Minister Shinzo Abe is pursuing the creation of an even stronger defense partnership with the United States. He set aside a 2014 reinterpretation of the Japanese constitution to allow Tokyo to come to the defense of an ally in certain circumstances. He has also increased the defense budget every year since he took office in 2012 and focused spending on expensive U.S. technology such as F-35 jet fighters and land-based Aegis missile defense equipment.

What is evident is that Prime Minister Abe is keen to move Japan from a passive receiver of security assistance from abroad into a pro-active security provider for its own people. As a January opinion-piece in Japan Times observed: “Countering the reactive state thesis, Abe put forward Japan’s role as a ‘proactive contributor to peace,’ underpinned by the notion of positive pacifism, while dealing with the challenges to the international order. In other words, Japan ought to play a role in upholding international security by moving from passive / negative pacifism to active/positive pacifism.”

Whether the recent initiatives to emerge as a pro-active provider of its own national security stem from statements and policies of U.S. President Donald Trump is moot. (He had said Japan’s financial contribution to the United States for its stationing of troops in Japan was inadequate and was also critical of what he perceives as the one-sided nature of the security treaty - a reference to the fact that the alliance obliges the United States to come to the defense of Japan in the event of an attack but does not require Japan to help defend the United States against aggression.) It is likely that Trump’s critical observation of the Japan-U.S. treaty was been noticed in Tokyo, but there is no indication that Trump’s stated “America First” policy means a reduction of security arrangements abroad. On the contrary, on the 60th anniversary of the U.S-Japan Treaty in January, President Trump tried to erase any doubt on that score: “Japan’s contributions to our mutual security will continue to grow, and the alliance will continue to thrive.”

Japan proceeded to take some groundbreaking actions in 2019 to lay the foundation of a broader-based security arrangement. Among other things, Tokyo carried out Exercise Malabar with U.S. and Indian participants out of Atsugi Air Base in Kanagawa Prefecture. The Maritime Self-Defense Force also participated in Exercise Joint Warrior in the United Kingdom, and Japan’s Ground Self-Defense Force joined the amphibious assault exercise Kamandag in the Philippines. In October, the U.K. became the first military partner to conduct bilateral (i.e., without U.S. involvement) ground-based training on Japanese soil. Earlier, Japan was a dedicated full-fledged participant (not just an observer) in NATO’s Cyber Coalition exercise. (Looking back on Japan’s security in 2019: Michael MacArthur Bosack: The Japan Times: Dec. 19, 2019).

According to Japan Times’ Michael Bosack, all this security cooperation is critical for three reasons. First, it is necessary for advancing Japan’s Free and Open Indo-Pacific strategy, which is predicated on a unified reinforcement of a rules-based international order. Second, these expanded security relationships buttress the Japan-U.S. alliance. As codified in the 2015 Guidelines for U.S.-Japan Defense Cooperation and reinforced in every “two-plus-two” joint statement since, there is an allied mandate to foster multilateral cooperation that supports security in the region and abroad. Third, they represent Japan’s maturation as a Group of Seven leader. As the only Asian member of the G7, Japan shoulders a disproportionate load from some of the other parties. In 2019, that has given way to a willingness to engage in unprecedented military activities beyond the confines of strictly “defense of Japan” scenarios.

A Great Opportunity

Developing all-round ties with India will benefit both Japan and India immensely. From the Indian viewpoint, the benefits are obvious. India’s underwhelming manufacturing industry suffers from shortcomings that continue to undermine the country’s economy and security. The growth of China as a manufacturing and military powerhouse and its ability to engage the smaller South Asian and Southeast Asian nations as its major trading partners will leave India by the wayside.

India must urgently strengthen its engineering capabilities to master heavy, medium and small-size engineering manufacturing. The small pool of skilled workers in a vast nation such as India has kept the country’s productivity - a crucial element in becoming competitive in the world market - lagging far behind that of major industrial nations. Productivity growth is the result of workers making more - and better - goods per hour.

Productivity gains are, in turn, a marker of progress and higher living standards. Conversely, a loss of momentum in this area can cause steady damage to an economy over time. The low-productivity economy that India possesses now will condemn hundreds of millions of Indians to continue to live in poverty for an unforeseeable future. At the global level, rising productivity and a steadily growing skilled labor force are the twin drivers of economic progress.

Japan has all the wherewithal to assist India in developing the skilled workforce needed to implement Prime Minister Modi’s “Make in India” campaign and help India to emerge as a manufacturing nation. Indian manufacturing not only trails that of East Asian powerhouses such as South Korea and Taiwan, but also that of even much smaller economies like Vietnam and Bangladesh.

As a percentage of GDP, manufacturing in India contributes only about 17 percent, a percentage that is essentially unchanged from the advent of economics reforms back in 1991. To put this in perspective, manufacturing accounts for 29 percent of economic output in China and South Korea, and 27 percent in Thailand, according to World Bank data. Moving millions of workers from farms into factories has played a pivotal role in reducing poverty and raising living standards across East Asia. (Can Indian Manufacturing Be the Next Chinese Manufacturing?: The Atlantic: Alyssa Ayres: Jan 4 2018).

For Japan, setting up major manufacturing facilities along with Indian partners will allow it to further modernize its own technologies and remain a world leader in engineering. It would also reduce to a certain extent the need to both haul bulky commodities for manufacturing into Japan and get the finished products out. Manufacturing in India will make the Indian authorities responsible for securing raw materials and the dispensing the final products.

Most importantly, developing Indian skilled workers in Japan-led joint ventures in India would enable Japan to overcome its demographic problems without undermining its technological progress, inhibiting the generation of wealth or destabilizing its social order.

Secondly, for Japan, a technologically strong India is essential for brokering a meaningful security relationship with India. Until India becomes capable of manufacturing its own ships for maritime and defense use and aircraft for civilian and military use and acquires the engineering skill to manufacture armaments and armament-delivery systems, India’s dependence for these products will continue to compromise the security of the region.

(Concluded)