Distinguished participants, ladies and gentlemen,

It gives me a great pleasure to speak to this distinguished gathering at the 2008 Japan-Korea Roundtable. Today I am going to talk about how I see relations between Japan and the Republic of Korea, especially in a region-wide as well as global context. My bottom line is, we should of course seek better bilateral relations, but that's not enough. We must elevate our relations to the point where we can work together in order to give a solution to regional and global issues. That is why today I decided to speak in English, not in Japanese or in Korean.

1. Role of Political Leaders
Let me start my remarks by discussing current political landscape in Japan, which changed dramatically around the time of the devastating defeat of LDP in the Upper House election and the unexpected resignation of our Prime Minister last year. The Diet is now divided between the LDP-Komeito controlled Lower House and the opposition controlled Upper House, which means any law cannot be passed without opposition party's consent.

Under these circumstances, it became very difficult for Prime Minister Fukuda to push big reform bills that always require fierce political battle against resistant groups in LDP and bureaucrats. As a result, the pace of reform has stalled, if it is not back-lashed. Prime Minister Fukuda had to use constitutional provision of 2/3 re-approval by Lower House three times, in order to pass unpopular bills, such as gasoline tax bills and a bill for dispatching Self Defense Force to Indian Ocean. Nominations of the Bank of Japan Governor have been rejected in the Upper House twice, and one deputy governor and one policy board member are still vacant. Due to these awkward political handling, and the newly introduced medical insurance scheme for the elderly over 75 from April, the approval rating of the Fukuda Administration fell to around twenty percent, which is the second lowest level in the recent decade.

These negative political climates are also influenced by the dark side of globalization, in particular, economic slowdown triggered by turmoil in international financial markets, and soaring energy and commodity prices. Many politicians now have to pay more attention to domestic income disparity and industrial protection against foreign capital.

Moreover, an acceleration of reform for global competition seems to have become rather unpopular with a sense of "reform fatigue", thus a politically incorrect policy option in Japan, against the background of rapid aging problem which casts serious uncertainty upon a sustainability in the pension and other social security system, where any social unrest might be offended by the public.

Having said this, however, neither the ruling party nor the opposition party has manifestly rejected the necessity of reform for the long-term prosperity. Indeed, it might in theory be possible to compete for reform among the parties. One example, a few days ago, the ruling and opposition parties have agreed upon the fundamental reform bill of government personnel system, even though there has been fierce opposition from bureaucracy. This implies that both ruling and opposition party leaders are beginning to share the notion that the old regime of bureaucracy tends to set wrong national policy priority since it cares for their own ministerial status quo. So I still see a hope in a potential dynamism in Japanese politics.

As the world's fastest aging society, Japan must overhaul the social security system including public pension and tax structure including consumption tax . This means , whoever will sit in the Prime Minister's Office, the necessary reform agenda will be the same, and so would be the solutions.

The domestic reform has to be consistent with the new reality in Asia, since a new game has already begun. International Airport of Incheon and Narita now compete in order to become regional hub. Universities in Japan and in Korea have come to compete in order to attract global talents. Climate change problem set a new standard of the game for global as well as regional sustainable economic growth under energy constraints.

In this way, Japan and Korea are faced with a common challenge. A challenge that requires us to transform ourselves to fit in a new framework. Political leaders both in Japan and Korea must lead the changes in their own ways and when it is possible and appropriate, two leadership can act together.


2. Japan-Korea Relations
Let me turn to our bilateral relations. Korea is one of my favorite travel destinations. Many Japanese enjoy Korean cuisine, watch Korean TV dramas, and study Korean language. The sum of the number of Japanese people visiting Korea and the number of Korean people visiting Japan is almost five million per year. In this context, strengthening of youth exchange will surely build long-term mutual trust. I am glad that a number of concrete programs have been agreed upon between the two leaders last month, when President Lee Myung-bak visited Japan.

Against the background that economic integration between Japan and Korea has accelerated during the decade, we started negotiations on the Economic Partnership Agreement in 2003, while actual negotiations became standstill in 2004. I believe that concluding EPA is essential, since it will accelerate domestic structural reform in both countries, which is indispensable for our survival in the rapidly changing world. I would imagine today's participants all agree upon the positive effect of the EPA, and the necessity of the reform in domestic markets in two countries. Japan and Korea, as two developed countries in East Asia, have to establish the best practice for regional economy. Not just on bilateral EPA, but also on global issues, such as environment, energy and development aid, to name but a few.



3. Japan and Korea in Asia

(Current situation in Asia)
When we look at Asia widely, we recognize many positive developments. In particular, Asian economic integration has been taking place on a de facto basis. In 2006, intraregional trade of ASEAN, Japan, China, Korea, Hong Kong, Taiwan, Australia, New Zealand and India made up 58% of Asia's total trade. Compare this to the 42% intraregional figure for NAFTA and the 65% for the EU. This is occurring in parallel with the evolving network of bilateral FTAs and some regional architectures built in recent years. Former Foreign Minister of Thailand, Dr. Surin Pitsuwan, once said that Asian countries, after the Asian Currency Crisis in 1997, started to face each other, fully recognizing the meaning of the phrase "Asia is one."

Accompanying this economic development in Asia is a rise of the middle class and establishment of civil society. We have also seen advances in democracy, with leaders being chosen increasingly through the democratic process.

Yet we all know that Asia is possessed with a dark side of the coin. First, the negative impacts of rapid economic growth have reached levels that we can no longer ignore. Economic disparity between the emerging rich and the increasing poor is growing not only within countries, but between countries in the region. Moreover, serious environmental degradation is placing people's health and welfare at risk, and countries concerned need to develop regional mechanisms to tackle these issues.

On the security front, the remnants of the Cold War still exist in Northeast Asia. The rise of China gives us opportunity, but its army is tremendously modernized, in a not transparent manner. Cross-strait relations between China and Taiwan draw serious attention. Denuclearization of North Korea is an imminent issue for us.

Furthermore, we should pay attention to smoldering domestic tensions and growing terrorist threats in some countries, which carry potential risks of developing into larger security concerns. Climate change and infectious diseases such as avian influenza, AIDS (Acquired Immune Syndrome) and SARS (Severe Acute Respiratory Syndrome) are also serious concerns. Asia is also home to serious natural disasters like earthquakes and typhoons.

To tackle these problems, Japan and Korea must utilize the whole set of regional-wide cooperation mechanisms such as Japan-Korea-China trilateral cooperation, EAS (East Asia Summit), ASEAN+3 and Six-Party Talks on North Korean issues. I think issue by issue basis is Asian wisdom in finding common interests rather than unnecessary confrontations.

In our case, Japan and Korea have a strong market economy with scarce resources and its economy is highly dependent on free trade and safety of sea lanes. Based on these basic similarities, Japan and Korea could work together in order to solve regional issues in a future-oriented manner.


(Japan's own efforts)
Japan, on our side, will make its utmost efforts to offer better governance in Asia. Japan is going to hold the G8 Summit in Hokkaido/Toyako in July, and utilize its chairmanship to let European and North American leaders understand the real situation in Asia. Japan launched a program to train peacebuilders in Asia last year, and it is expected to contribute to maintenance of peace and order in the region. Japan is also addressing the issue of disparity in the region. Japan's assistance to the Mekong Region is a good example of this. Although Japan's Official Development Assistance has been decreasing in the last decade, I will urge the government to find ways to increase the amount of ODA to a level commensurate to its international responsibility.


(Cooperation with other countries)
I would of course like to ask other countries to join the Japan-Korea cooperation. Most countries in ASEAN, India, Australia and New Zealand share fundamental values and strategic interests with us, so they can be good partners. I would also like to invite China to our cooperation. It is good to know that Japan, Korea and China are planning to hold the next round of the trilateral summit meeting in Japan sometime in fall. This is going to be the first meeting independently held apart from ASEAN meetings. I hope the three leaders discuss concrete measures to promote trilateral cooperation. Here, I would like to remind us all that a sound and firm Japan-Korea bilateral relationship is the basis and the prerequisite for better functioning of the trilateral ties.

Asia should provide a model for stability and prosperity to other regions, and what's more, Asia should contribute to bringing about a stable international environment. For example, Japan held the TICAD IV this week to address the issues of poverty and conflicts of Africa. I would like to invite more involvement of Korea to our endeavor. International society also faces problems such as terrorism, proliferation of weapons of mass destruction and infectious diseases. Japan and Korea can work even closer to solve these problems.


4. Conclusion
Japan and Korea, as responsible players in the international community, should cooperate with countries concerned and address the regional and international issues mentioned above. Such cooperation would enable us to construct more mature Japan-Korea partnership and to achieve interests of both countries and respond to the request of the region and the international community. I believe it is important that both nations and governments will keep a close cooperation and all of us concerned in both countries will share such recognition.

Thank you for your attention.