48. Japan, India agree on tighter ties

Japan, India agree on tighter ties

(Agencies)

China Daily

Updated: 2010-10-26  

TOKYO - Japan and India pledged closer strategic ties between Asia's second and third biggest economies in talks on Oct 25,2010. Japan and India pledged closer strategic ties between Asia's second and third biggest economies in talks on Monday.

Indian Prime Minister Manmohan Singh and Japanese Prime Minister Naoto Kan endorsed a bilateral economic partnership deal and urged speedy agreement on a civil nuclear pact that would give Japanese firms access to India's fast-growing market.

They also decided to seek cooperation in developing, recycling and finding substitutes for rare earth minerals and rare metals, used in goods such as electronics and auto parts.

"India is the world's biggest democracy and it currently has the world's second biggest population. Its growth potential matches that of China," Kan told reporters after meeting Singh. "Japan-India ties have great possibilities."

Trade between Japan and India, Asia's second and third biggest economies, totalled 940 billion yen ($11.55 billion), four percent of Japan's trade with China.

In September, Tokyo and New Delhi clinched a basic accord on an economic partnership agreement (EPA) to promote two-way trade and investment, concluding more than three years of wrangling over such sticking points as tariffs on Japanese car parts and tough checks on Indian pharmaceutical goods.

"I strongly believe that we can, and we must, synergise our complementary stance to impart new momentum to Asia as well as global economic growth and prosperity," Singh, in Tokyo until Tuesday, told a group of business leaders from both countries.

He also said he hoped Japan's decision to treat Indian generic drugs the same as domestic products and finish approval procedures smoothly would create new business chances for Indiadrug companies including makers of generic medicines.

Japan has been stepping up efforts to strengthen overall ties with India, with the two countries agreeing on closer security cooperation in December 2009.

They also started talks in June on a civil nuclear energy deal that would give Japanese firms access to the rapidly growing market amid rising global competition.

Firms from countries such as the United States, France and Russia have scrambled for a foothold inIndia's civilian nuclear market, worth about $150 billion, after a 2008 US nuclear accord opened global access to it.

But Japan, the only country to suffer a nuclear attack, wants the deal to make clear that Tokyo would halt nuclear cooperation if New Delhi conducted another test, Japanese media have said, a stance India has so far rejected.

Kan said India understood Japan's nuclear sentiments and that the two countries will work to speed up negotiations on the deal.

They also agreed to hold annual ministerial economic talks.

47.India and Japan eye a glowing partnership By Purnendra Jain

Asia Times 27.10.10

India and Japan eye a glowing partnership 
By Purnendra Jain 
ADELAIDE - India for years actively sought closer ties with Japan - but Tokyo expressed little interest. This has changed slowly but surely amid a shifting regional landscape and momentum in bilateral ties this week gathered pace. 

During his three-day official visit to Tokyo starting October 24, Prime Minister Manmohan Singh and his Japanese counterpart, Naoto Kan, issued a joint statement covering a wide-range of issues. While these included worthy issues such as expansion of the East Asian Summit to include theUnited States and Russia, and reform of the United Nations, all eyes were fixed elsewhere. 

Progress of two important bilateral matters: an India-Japan Comprehensive Economic Partnership Agreement (CEPA) andcooperation on civilian nuclear technology captivated attentions. While a deal is sealed on the first, negotiations will continue on the second. 

For the record, the two prime ministers announced "the successful conclusion of negotiations on a balanced and mutually beneficial India-Japan Comprehensive Economic Partnership Agreement" and "expressed optimism that the India-Japan CEPA will deepen economic engagement in terms of trade in goods and services, investment and cooperation and contribute to mutual prosperity". 

Negotiations for a CEPA began in early 2006 and went through 14 rounds of negotiations between January 2007 and September 2010 after a feasibility report prepared by a joint India-Japan study group. 

While Japan has signed such agreements with a number of Asian countries, for India this is only its third after Singapore and South Korea. Although the content of the 850-page CEPA remains embargoed, it was hailed by Singh as a "historic achievement" which would lead to a "quantum increase" in bilateral trade and investment. The pact is likely to take three to four months to come in effect. It will eliminate tariffs on a number of items and is aimed at increasing the volume of bilateral trade, which currently stands at about US$10 billion. 

Until the details of the agreement are made available, it is difficult to say how India is going to address its huge trade deficit with Japan. Given Japan's stagnant economy, India will likely seek niche markets for exports. New Delhi will expect greater Japanese investment for infrastructure development, such as roads, ports, airports and transportation. 

Japanese companies have often complained about bureaucratic bottlenecks and corruption inIndia as impediments to doing business. How these long-standing issues are going to be addressed will be of great interest. 

Prior to Singh's departure, it seemed that talks on a civilian nuclear cooperation agreement would take a back seat, but the issue was included in the joint declaration setting out a timeframe for the next round of negotiations. The two leaders affirmed that the Agreement for Cooperation in the Peaceful Uses of Nuclear Energy would lead to new opportunities and enhance bilateral ties. 
Just a few years ago, it was unthinkable that India and Japan would negotiate on a civil nuclear cooperation agreement. Given Japan's international pre-eminence as a voice against nuclear proliferation and its continued criticism of India's nuclear policy - voiced most loudly in response to nuclear tests in 1998 - what has made Japan consider a civilian nuclear cooperation agreement? 

The answers lie in a complex web of international and domestic imperatives. Japan is in the midst of profound transition at home and within the region and concerns about China's economic and military resurgence are a central factor pushing the two countries closer. 

While no direct mention was made of China in the joint statement, it made note of the possibility of exploring "bilateral cooperation in development, recycling and re-use of rare earths and rare metals". It is not difficult to link this to the recent spat between China and Japan in the East China Sea and China's reluctance to sell rare earths to Japan. 

The real motivation behind Japan's consideration of nuclear cooperation with India is the US–India civilian nuclear cooperation agreement concluded in late 2008. Japan is a member of the 45-nation Nuclear Suppliers Group that regulates the transfer of nuclear technology and lifted a three-decade global ban on nuclear trade with India just after the US–India agreement was signed. Yet Tokyorefrained from making any bilateral commitment to India. 

American and French companies, along with Russian and South Korean companies, are now seeking to win contracts for 20 nuclear power plants India plans to build by 2020 to deal with its chronic shortage in electric power. But since Japanese firms are deeply entangled in the US and French nuclear industry, Japan is an essential player. 

Leading US suppliers such as GE (in consortium with Hitachi), Westinghouse (owned by Toshiba), and French company Areva (a joint venture with Japan's Mitsubishi Heavy Industries) are eager for Japan to see the abolition of nuclear and high-tech export controls that forbid Japanese companies from engaging in such transactions with India. 

Pressure also comes from Japanese companies wanting to expand into India's multi-billion dollar nuclear energy markets. If they miss out, South Korean and Russian companies may secure most of the contracts – a situation unpalatable to a Japan in recession, which has already lost the burgeoning Indian market to South Korean companies in auto and white goods. 

Japan's Ministry of Economy, Trade and Industry, and its Atomic Energy Agency, have favored a nuclear deal with India despite caution from the Ministry of Foreign Affairs. The scales appear to have now shifted towards the former's position. 

The Kan government faces two mutually irreconcilable domestic constituencies: the influential business sector pushing for nuclear cooperation with India, while the strong anti-nuclear and pacifist lobby opposes this concession to a country that refuses to sign the Nuclear Non-proliferation Treaty. External conditions and domestic pressure from powerful business groups have moved the Kan government towards negotiating a deal with India. 
Japan needs new markets for an economy in recession and India is keen to get Japan's technological and financial assistance for its economic development. While that provides strong logic for Japan and India to come closer, perhaps the greatest impetus is concerns over China. China has fueled further anxiety in Japan through its actions in the East China Sea, while Beijing's growing influence in India's neighborhood, especially in Pakistan, is of great concern to New Delhi. 
Purnendra Jain is professor in Asian Studies at Australia's University of Adelaide.

46.An Iranian-Pakistani Balance of Power in Afghanistan?

Monday, October 25, 2010  STRATFOR.COM  Diary Archives An Iranian-Pakistani Balance of Power in Afghanistan? Afghan President Hamid Karzai admitted on Monday that his office has received millions of dollars in financial aid from Iran for several years. A day earlier, The New York Times reported that unnamed Western and Afghan officials said Tehran was giving bags of cash to Karzai’s chief of staff, Umar Daudzai, to enhance its influence in Afghanistan. A U.S. State Department spokesperson responded to Karzai’s admission by saying that United States did not question Tehran’s right to provide aid to Kabul or Afghanistan’s right to receive it, but Washington “remains skeptical of Iran’s motives.” Kabul’s admission and Washington’s response speak volumes about how both sides are looking at a post-NATO Afghanistan — one in which the southwest Asian country’s neighbors, particularly Iran and Pakistan, will play a dominant role. Pakistan influences Afghanistan via the Afghan Pashtun plurality, whose most powerful political force is the Taliban movement. Iran’s influence comes largely via the ethnic minorities seeking to curb Pashtun domination of the country who are thus the Taliban’s bitter opponents. “This increasing complexity does not negate the point that the Iranians and Pakistanis will play the lead roles in any settlement in Afghanistan.” For Karzai, caught between the domestic and international players, it is a given that Iran and Pakistan will fill the geopolitical void left by the United States and its NATO allies. That reality is one that the various Afghan factions will have to live with in the long term. After all, the two countries are Afghanistan’s principal neighbors with their own spheres of influence, and they worked together (albeit unsuccessfully) in the post-communist era, in the early 1990s, to form a coalition government in Kabul. But if the United States is saying that it has no qualms about such an outcome, this regional arrangement must somehow complement the U.S. strategy for the country and the surrounding region. From the U.S. perspective, a settlement in Afghanistan underwritten by Iran and Pakistan could create the conditions conducive to a Western military withdrawal from the country. More importantly, such an understanding could also prevent Afghanistan from becoming a haven for transnational jihadists. Furthermore, Tehran and Islamabad could reach an arrangement that would create a balance of power in Kabul, where neither side would have the upper hand. Achieving such a regional arrangement, however, is easier said than done, as several factors complicate the situation. First, the United States’ relationships with Iran and Pakistan are far from simple: Washington and Tehran are locked in a bitter struggle over Iraq and the nuclear issue, and Washington is in a complex love-hate relationship with Islamabad. On the bilateral level, Tehran views Islamabad with great suspicion, given the latter’s close relations with Saudi Arabia. Conversely, Iran and India’s close ties are a major cause of concern for the Pakistanis. This mistrust is a major hurdle that prevents them from arriving at an understanding on how to achieve a political settlement in Afghanistan, especially one that would work for Washington. Within Afghanistan, the Iranian and Pakistani positions have become more complex than they were before the U.S. move to oust the Taliban after the Sept. 11 attacks. Although Iran’s main influence in Afghanistan is through the assortment of anti-Taliban forces, Tehran has cultivated closer ties with elements of the Pashtun jihadist militia since 2002. Pakistan, which historically has been the Taliban’s main patron, now has its own Taliban rebels to deal with and is diversifying its influence in Kabul through the Karzai government. This increasing complexity does not negate the point that the Iranians and Pakistanis will play the lead roles in any settlement in Afghanistan. It does, however, make life harder for the United States, which wants to pull out of Afghanistan as soon as possible and needs to get Tehran and Islamabad to cooperate in order to keep to its timetable. Give us your thoughts  on this report For Publication Not For Publication Read comments on  other reports Reader Comments

45.Japan: India Agrees To Provide Rare Earth Minerals

Japan: India Agrees To Provide Rare Earth Minerals October 26, 2010 India agreed to provide long-term supply of rare earth minerals to Japan’s high-tech economy after recent tensions with its key provider, China, AFP reported Oct. 26. Indian Prime Minister Manmohan Singh made the announcement during talks on Oct. 25, according to Japanese Industry Minister Akihiro Ohata.

44.Germany: REE Scarcity Leads To Strategic Partnerships

Germany: REE Scarcity Leads To Strategic Partnerships October 26, 2010 Germany has been severely hit by the global shortage of rare earth elements (REE), and the government should guard against speculation in raw materials, German Economy Minister Rainer Bruederle said Oct. 26, Reuters and Bloomberg reported. According to two unnamed officials, safeguarding REE supplies is “crucial” for Germany, so Bruederle, whose ministry is hosting an Oct. 26 international conference, is attempting to forge strategic partnerships with seven countries — Mongolia, Namibia, Nigeria, Kazakhstan, South Africa, Chile and Peru — to secure commodities, including REE and copper. China needs to realize protectionism is not a “one-way street,” Bruederle said.

43.Germany: Safeguard Rare Earths Supplies - Economy Minister

Germany: Safeguard Rare Earths Supplies - Economy Minister October 26, 2010 Germany has been severely impacted by a global shortage of rare earths and safeguarding supplies is critical, German Economy Minister Rainer Bruederle said on Oct. 26, Bloomberg and Reuters reported. His ministry is hosting a conference in Berlin on securing commodities. Bruederle is planning “strategic partnerships” to secure commodities, including rare earths and copper, according to two unnamed sources. The partner nations are reportedly Mongolia, Namibia, Nigeria, Kazakhstan, South Africa, Chile and Peru. Bruederle said China’s policy is not a “one-way street,” and that the “ghost of protectionism” haunts global trade. Speaking at the conference, he said Germany will work with mining states to safeguard rare-earth supplies; he did not name the countries.

42. India and Japan Move Closer Together

India and Japan Move Closer Together October 26, 2010 | 1214 GMT EVERETT KENNEDY BROWN/AFP/Getty Images Indian Prime Minister Manmohan Singh (L) and Japanese Prime Minister Naoto Kan in Tokyo on Oct. 25 Summary The leaders of India and Japan wrapped up a meeting in Tokyo on Oct. 26. The meeting highlights the growing alignment of strategic interests between the countries. With concerns about China rising in both Tokyo and New Delhi, this process can be expected to accelerate. Analysis Indian Prime Minister Manmohan Singh and Japanese Prime Minister Naoto Kan ended a visit Oct. 26 in Tokyo. The meeting was part of a broader East Asia tour that will take Singh to Malaysia on Oct. 26 and Vietnam for the 17th Association of Southeast Asian Nations leaders’ summit Oct. 28-30. India and Japan are pursuing a closer relationship, though the two have not moved especially rapidly in this regard. Still, their strategic interests continue to align, most notably on economic cooperation and the need to counter China’s growing clout. Throughout most of history Japan and India have existed in separate worlds, with the only substantial connection arising from Indian religious practices migrating east across Asia. During the Cold War, Japan and India did not have a basis to develop a friendly relationship. The Soviets were a dire enemy of the Japanese due to longstanding Russo-Japanese animosity as well as to Japan’s role as the bulwark of the U.S. alliance in the Eastern Hemisphere, yet India worked better with the Soviets than it did with the United States. Meanwhile, China, a potential threat capable of driving India and Japan closer together, was mired in internal chaos. Toward a Japanese-Indian Alignment After the Soviet collapse, realignment ensued. Japan drew a hard line against the Indians after they tested nuclear weapons in the late 1990s. But economic cooperation continued and the nuclear row gradually subsided. Japan and India have grown closer since then, symbolized by Japan’s providing construction, technology and investment for the New Delhi metro project in the early 2000s and the2005 visit to India by then-Prime Minister Junichiro Koizumi. The two have increased diplomatic exchanges and military exercises since then. Relations have especially improved in recent years as the two countries’ core strategic interests increasingly have aligned. Economically, the match is logical: India is a fast-growing, developing country with a booming population and a need for technology to upgrade its infrastructure and energy and manufacturing sectors, while Japan is fully developed — with the ability to provide high-tech and value-added services and goods — but its growth has stalled over the past two decades, its population and workforce are shrinking and it needs to diversify its investments away from China. Strategically, both countries have felt pressured by China’s rising economic and military power, especially over the past few years. Beijing recently has become more aggressive in pressing its claims in disputed territories, with Japan in the East China Sea and with India in Kashmir and Arunachal Pradesh. AsChina and Japan seek to expand their naval presences and operational capabilities in the Indian Ocean to secure vital supply lines — namely for oil from the Middle East — India has come to see Japan as a naval partner against what it sees as Chinese encirclement arising from China’s port of call agreements in Myanmar, Bangladesh, Sri Lanka, and most threateningly to India, in Pakistan. Japan, meanwhile, sees exercises and exchanges with India’s navy as a natural gateway to the Indian Ocean. While China is a potential military threat to both Japan and India, neither Tokyo nor New Delhi fundamentally threaten each other, and both can help the other balance China. In Southwest Asia and Southeast Asia, two additional theaters of concern, India and Japan do not compete much and could cooperate. In Afghanistan, Japan’s contribution to international security efforts is minimal, focusing solely on civil assistance, development and humanitarian aid, and investment, since the Democratic Party of Japan in 2010 discontinued an aerial refueling mission to support the U.S. and NATO operations. Japan’s contributions fall in line with India’s interest in stabilizing Afghanistan. New Delhi is attempting to establish a foothold in Afghanistan to serve Indian interests against Chinese-supported Pakistan after U.S. and NATO forces depart. Japan and India have little reason to see each other as threats in Southeast Asia, an economically promising region that is becoming the site of growing competition among global powers. China’s influence is spreading and entering new areas, the United States is seeking to revitalize alliances and form new partnerships, and Russia is reactivating ties for the first time since the collapse of the Soviet Union. In this context, especially with its eyes on China, India is signaling it wants to renew its Look East policy — nearly two decades old, but so far unremarkable — in this region historically permeated by Indian influence, as Singh will emphasize during his visits to Malaysia and Vietnam. Japan meanwhile is seeking to maintain its advantage in the region and remain competitive. The two do not conflict in the region, and both can be expected to welcome another contender for influence as a means of diluting Chinese influence. Thus, the Indo-Japanese strategic relationship is growing based on each side’s needs. The alignment has received a boost as the United States mostly endorses their cooperation. Washington is currently cultivating stronger ties with India, such as by paving the way for India to enter the global civil nuclear energy market and by encouraging its chief East Asian ally, Japan, to embrace India as a civil nuclear partner despite its failure to sign the Nuclear Non-Proliferation Treaty. The United States also has encouraged major alliance partners in Asia to take a more active role in dealing with regional security contingencies, and this means promoting allies’ relations with India and nudging Japan to overcome its reluctance in global security matters. Yet simultaneously the United States is being reminded that India is fiercely independent and distrustful of the U.S. relationship with Pakistan and that Japan is yearning for greater independence in determining its foreign policy. Even so, it sees the need to counterbalance China as important and does not foresee an immediate threat from the Japanese, who remain reliant on U.S. security guarantees for the near future. India and Japan, Introverted Powers India and Japan are both somewhat introverted states that do not always open up to outside powers naturally, have thick bureaucracies that do not move quickly on new initiatives, and are having trouble meeting their goals to boost trade. Total trade, especially Indian imports of goods from Japan, began to grow faster in 2004, increasing from less than $4 billion in 2002 to $11.6 billion in 2009 and $7.7 billion in the first half of 2010. But it has failed to meet the goal of $20 billion by 2010, a goal now moved to 2012. Investment flows have fluctuated considerably, with Japan typically contributing about 1-3 percent of India’s total foreign direct investment since 2003-4. However, major investments can change this impression — the Japanese share in 2002-3 was as high as 13 percent due to the Delhi metro, while it reached 10.7 percent due to several major automobile and electronics industry investments in 2008-9. The defense relationship has, until recently, developed slowly. The impetus lies mostly with Japan — since Japan’s interest in the Indian Ocean is based on its oil supply line security — and Tokyo has both constitutional and historical inhibitions in reclaiming a high-profile international role for its military. Similarly, on the nuclear energy front, the two have moved haltingly toward concluding a deal, with little progress until mid-2010. Japan is a non-nuclear armed state, and as it frequently reminds others, the only state to have suffered a nuclear attack. It therefore takes a staunch line against nuclear proliferation. It opposed India’s nuclear tests in the late 1990s and criticized the U.S. decision to grant India an exemption from the international nonproliferation regime in 2005. Japanese-Indian negotiations on concluding a civil nuclear energy cooperation agreement since June have been complicated by this difference in perspective. Yet despite these and numerous other obstacles, that the two states’ strategic interests are so closely aligned has enabled them to move forward even in trouble spots. Singh and Kan announced Oct. 25 that they had concluded years-long negotiations on a Comprehensive Economic Partnership Agreement, which now awaits approval in the Japanese Diet (parliament). This is no mean feat, as both states are highly protectionist and not generally very handy at free trade agreements. Their economic roles are fairly well differentiated (competition is minimal), however, and they both have an interest in expanding markets so they do not lose out as others, especially China and other East Asian states, expand markets enthusiastically. Recognizing Japan’s sensitivities, Singh declared he would not pressure Japan on forming a nuclear deal. Japan’s leader said, however, that he would speed up negotiations on an agreement, as Tokyo comes to accept India’s status and weighs the risk of not taking economic advantage of India’s big plans for its nuclear energy sector. (Japanese firms are both linked to U.S. firms taking a role in India’s nuclear development and would provide critical equipment for the Indian nuclear sector.) In addition, the two leaders agreed to streamline visa requirements and discussed their growing defense ties as well as exploring further areas of cooperation, including alternative energy and rare earths exploration and development — though India only has about 3 percent of the world’s known rare earth reserves. They also spoke in favor of each other’s bids to join an expanded U.N. Security Council as new permanent members. While the Indo-Japanese strategic partnership is developing incrementally, the two states’ deepest strategic interests suggest it will continue to advance. And with concerns about China growing more pressing, especially given China’s harder push on territorial disputes, New Delhi and Tokyo can be expected to accelerate this process. Give us your thoughts  on this report For Publication Not For Publication Read comments on  other reports Reader Comments