[Title] Press Conference by Prime Minister Shinzo Abe, Chair of the G7 Ise-Shima Summit

Opening Statement by Prime Minister Abe

First of all, as Prime Minister of Japan, I wish to extend my heartfelt welcome to all those of you visiting Ise-Shima on this occasion from all around the world.

I imagine you have had the opportunity to enjoy the charms of Japan's heartland areas-- beautiful inlets, a wealth of natural beauty, and sumptuous seafood and mountain area food specialties.

Whenever I encounter the dignified atmosphere in the solemn setting of Ise Jingu, I always have a very sobering feeling. Ise Jingu has spun a history that extends some 2,000 years, from time immemorial. There, people have offered up prayers for bountiful harvests, prayers for peace, and prayers for human happiness.

The peace and prosperity we enjoy in the present day were built upon these kinds of people's prayers. It is at such a place that this year's G7 summit had its start.

"We came together because of shared beliefs and shared responsibilities." Forty-one years ago, in the face of the "Oil Shock," a global economic crisis, our predecessors gathered together for the first time in the Château de Rambouillet in France and reached agreement on historic policy coordination.

The peace and prosperity that we enjoy today is the result of these predecessors taking on challenges together in the belief that the future can be changed.

And, we will reliably hand down to our children's and grandchildren's generations the peace and prosperity of the present day. To do this, we who live in the present day must join hands in taking on the challenges that lie before us, never avoiding these issues.

The G7, which shares fundamental values such as freedom, democracy, human rights, and the rule of law and has driven global peace and prosperity until the present day, bears that great responsibility. Japan and its G7 colleagues have together successfully sent out from Ise-Shima to the world a clear message that we will coordinate in tackling various challenges facing the international community.

Our main theme was the global economy.

Declines in stock markets have resulted in asset losses in excess of 1,500 trillion yen worldwide in less than a year. Just recently the markets have recovered somewhat and are in a sustained lull, but the unpredictability remains unchanged from before and the global market is in a state of unrest.

Why is that? The greatest risk is that "clouds" are now beginning to be seen in emerging economies.

Since the 21st century began, what has driven the global economy has been emerging economies, which have been full of vitality in terms of growth. Even when the world faced the economic crisis brought about by the financial crisis after the collapse of Lehman Brothers, it was the robust growth of emerging economies that led economic recovery. That is to say, these economies have been the "engine" of the world economy. Yet the reality is that those emerging economies have been slowing down rapidly for the past year or so.

The prices of commodities including crude oil, steel, and other raw materials and agricultural products have experienced declines of more than 50 percent in little more than a year. This is comparable to the range of the drop suffered during the financial crisis after the Lehman Brothers' collapse. It has struck a major blow to resource-rich countries and emerging economies dependent on agriculture and basic materials industries.

Investment, which nourishes growth, has also decreased. Last year, the rate of increase in investment in emerging economies dropped to a level even lower than the level during the financial crisis after Lehman Brothers' collapse. It was also the first time since the Lehman Brothers' collapse that capital inflow into emerging economies turned negative.

Moreover, delayed responses to structural challenges in emerging economies, including excess capacity, the expansion of non-performing loans and other issues in China, have been pointed out and there are concerns that the situation may deteriorate further.

Against this backdrop, the global economic growth rate last year recorded its lowest level since the financial crisis after Lehman Brothers' collapse. The prospects for this year are also being repeatedly revised downward.

For the past few years, advanced economies have been suffering from deflationary pressure caused by a chronic lack of demand. With the deceleration of emerging economies now overlapping this situation, global demand has slumped significantly.

The greatest concern is the contraction of the global economy.

The amount of trade worldwide has entered a downturn since the second half of 2014, declining by almost 20 percent. This is a decline that had not been seen since the time of the financial crisis after Lehman Brothers' collapse. China's import figures decreased by 14 percent last year and have shrunk a further 12 percent in 2016. There is a risk of a prolonged slowdown in demand.

Simply taking a pessimistic view of the current situation will not resolve these problems. The fact that as the leader of the country holding the Presidency I allocated the greatest amount of time at this Summit to discussing economic issues was not for us to take a pessimistic view.

However, we must objectively and accurately recognize the risks that are there at present. Without sharing a common recognition of the risks, we will be unable to join hands to resolve issues.

Should we err in our responses here, we face a major risk of the global economy exceeding the normal economic cycle and falling into crisis. We the G7 leaders shared such recognition, as well as a strong sense of crisis.

In addition, with weaknesses seen in emerging economies, now is the time for the G7 to fulfill its responsibilities in that regard. The G7 will coordinate and will advance monetary policy, fiscal policy, and structural policy, and will launch our "three arrows." Abenomics will be deployed globally.

We will expand to the world free and fair economic spheres through the Trans-Pacific Partnership (TPP) Agreement and the Japan-EU EPA. Creating environments in which all people, notably women, are able to be actively engaged, as well as advancing global health, including responses to public health emergencies, will be the foundation for sustainable global growth. In order to support the growth of emerging economies and boost global demand, under our common Principles, it is also necessary to promote quality infrastructure investment. These commitments by the G7 have been compiled as the "G7 Ise-Shima Economic Initiative."

Japan, as the Presidency of the G7, will also act in accordance with the G7 agreements decided at this Summit and will take the lead in contributing to the growth of the world economy. In order to face up to the risk of the global economy becoming caught in a crisis, I am determined to mobilize all measures of policies and to once more rev up the engine of Abenomics to the greatest possible extent. I intend to examine what Japan should do, including whether or not we should raise the consumption tax rate, and clearly lay that out before the House of Councillors election this summer.

We will protect the peace and stability of the world. This too is a major role for us G7, who share fundamental values.

Violent extremism is a challenge towards all humankind. We will eradicate places to which terrorists can flee while wiping out the inflow of terrorist financing. The G7's new Action Plan is a major step towards the international community acting in coordination to fight terrorism. With regard to the issue of massive numbers of refugees flocking to Europe as well, we agreed to strengthen global assistance in order to sever the root causes of the issue.

All disputes must be resolved peacefully and diplomatically based on international law, not through the use of force or coercion. The G7 firmly share this principle.

Freedom of the seas must be ensured anywhere around the world. We must pursue juridical procedures and other peaceful means, never tolerating unilateral actions. And, we were in complete agreement in calling for full implementation regarding such matters.

We are also united in our conviction that the conflict in Ukraine can only be solved by peaceful and diplomatic means and in full respect for international law. The G7 urges all sides to take concrete steps that will lead to the peaceful resolution of the situation, in accordance with the Minsk agreements.

We call on Russia to play a constructive role regarding the full range of issues confronting the international community. It is important to maintain dialogue with President Putin in order to attain peace and stability in the situation in Syria and in other regions.

We the G7 condemn in the strongest terms North Korea's nuclear test in January and its multiple ballistic missile launches. We demand that North Korea immediately and fully comply with all relevant UN Security Council resolutions and strongly urge North Korea to immediately address the international community's concerns, including the abductions issue.

We seek a world free of nuclear weapons. We reaffirmed the G7's strong determination towards non-proliferation and disarmament.

Bringing about a world free of nuclear weapons will not be easy. We nevertheless share the strong will to move forward hand in hand.

After this I plan to visit the atomic bombing site of Hiroshima together with U.S. President Obama.

We will go to the site of the bombing and pay tribute to all the victims. We will also send out to the world the message of the realities of atomic bombings.

I am convinced that this will provide significant momentum for the creation of a world free of nuclear weapons. Such a tragic experience should never be repeated anywhere in the world. This is a tremendous responsibility for us in the generation alive at this moment.

We will create a better world for our children, our grandchildren, and the children of generations still to come. At this G7 Ise-Shima Summit, the leaders of the G7 confirmed our determination in that regard and I believe it was a highly substantive Summit that will serve as a major impetus for translating into clear actions.

Last but not least, I would like to extend my sincere thanks to the local people of Ise-Shima and of Mie Prefecture for their considerable cooperation as we held this Summit.

With that, I conclude my opening statement.

Questions and Answers

REPORTER (MIYAZAKI, TV TOKYO): I am Miyazaki with TV Tokyo.

This G7 summit was held in Asia for the first time in eight years. Was the severity of the security environment surrounding Asia, including the situation in the South China Sea and North Korea, conveyed properly to the European nations?

Also, in the discussions on the global economy, you gave an explanation comparing the eve of the Lehman Shock and the current state of affairs. Just now in this press conference you used the word "contraction." To what degree did you and the other G7 countries hold your views on the current state of affairs in common, including up to what would be a "crisis" level? Also, I would like to ask what would be the necessary scale of fiscal strategies [by the G7] as well as what kind of concrete policies Japan will undertake to address the risk of the situation potentially developing into something at the level of the Lehman Shock.

PRIME MINISTER ABE: The G7 Ise-Shima Summit is the first [G7] summit to be held in Japan and indeed in Asia since the G8 Hokkaido Toyako Summit eight years ago. As for the situation in Asia, I believe that a great many people have the idea that since Europe is far removed geographically, European countries do not feel that the various critical security issues at present are growing. I believe that this G7 summit in Japan located in Asia, however, gave an opportunity for the European leaders in attendance to thoroughly familiarize themselves with the worsening security environment in Asia due to the situations including in the South China Sea as well as North Korea.

With regard to the situation in the South China Sea, I advanced our discussions at the G7 summit by taking up the "Three Principles on the Rule of Law at Sea" that I had announced at the Shangri-La Dialogue the year before last, namely that states shall make and clarify their claims based on international law, that states shall not use force or coercion in trying to drive their claims, and that states shall seek to settle disputes by peaceful means. The G7 shared recognition on the matter, with each of the leaders agreeing on these principles.

As for North Korea, I explained the severe situation resulting from its nuclear test in January this year and the subsequent series of ballistic missile launches. Given that, the G7 confirmed that North Korea's possession of nuclear weapons was totally unacceptable and agreed to cooperate closely, including in ensuring the strict implementation of the relevant United Nations Security Council resolutions.

Furthermore, I raised the abductions issue. In response, the G7 leaders expressed their concerns about the issue, and it was included in the communiqué in a clear manner.

As for the global economy, we were unable to prevent the financial crisis after the collapse of Lehman Brothers. While it is not the case that we take a pessimistic view of the global economy, unless we have a firm recognition of "risk" first and foremost, it will be impossible to adopt the correct response.

With regard to this point, we the G7 conducted thoroughgoing discussions on the global economy and agreed on the recognition that the world is facing large risks.

Moreover, we succeeded in compiling in the form of the G7 Ise-Shima Economic Initiative the strong message that in order to confront those risks, we commit to deploy all possible policy tools to strengthen global demand, and that the G7 will work together to achieve sustainable growth.

In the future, the G7 countries must work in a cooperative manner to implement our fiscal strategies flexibly and advance structural reforms decisively.

In particular, in order to strengthen global demand, it will be necessary to undertake quality infrastructure investment and make further investment in partnership with the private sector in areas conducive to economic growth, such as environment, energy, digital economy, human resource development, education, and science, among others.

Given the G7 agreement reached at this summit, I intend for Japan too to take all possible policy tools, including fiscal response, while promoting the "three arrows" of Abenomics even more strongly.

REPORTER (REYNOLDS, BLOOMBERG NEWS): I am Reynolds, with Bloomberg News.

You have spoken several times about the importance of trade in promoting economic growth. How confident are you that the TPP will be ratified in its current form? And when do you expect the Japanese Diet to ratify it?

The text of the G7 communiqué includes mention of excess capacity in steel, which is generally seen as having been caused by China in particular. I would like to hear your comment on this and ask what the G7's discussions were regarding this matter.

PRIME MINISTER ABE: We once again agreed at the summit meeting among TPP parties that each country would advance its own domestic procedures and firmly move domestic discussions forward aiming at the early entry into force of the TPP Agreement.

The TPP Agreement will become the foundation for the Japanese economy to grow robustly over the medium- to long-term period, and it has a strategic significance on the grounds that countries which share fundamental values will deepen their economic bonds and expand their economic circles.

In order to realize these kinds of effects from the TPP at the earliest possible time, I intend to continue to urge approval by the Diet in a swift manner. In addition, I will demonstrate the leadership domestically as well to increase the momentum towards that goal.

The issue of excess capacity in steel and other products in China was also mentioned just now. This excess capacity is imparting major impacts onto the global economy, including among other things the worsening of corporate earnings and employment instability through the fall in prices internationally. While the Chinese government has announced that it will reduce its excess production capacity, Japan has concerns that the reduced amount will be insufficient in the context of the circumstances of the international markets, and that the reductions are not effective, so long as there is the fundamental problem of market-distorting government support.

This problem was also discussed at the summit. Each country shares these recognitions and concerns. And, with a view to resolving those issues, we reached agreement that it is necessary to enhance market function and eliminate market distorting measures and to consult with other major producer countries including China, utilizing venues such as OECD and other fora. I consider this to be one of the major outcomes of the summit.

REPORTER (MATSUMOTO, JIJI PRESS): I am Matsumoto, with Jiji Press.

I would like to ask about the increase in the consumption tax rate. Just now, Mr. Prime Minister, you said that before the House of Councillors election you would clearly state your decision regarding whether or not to increase the rate. Is your intention to seek the judgment of the public regarding that decision in the summer House of Councillors election? In the case that a decision were to be made to postpone the raising of the consumption tax rate, the opposition parties and others have pointed out and made the criticism that this would indicate the failure of Abenomics. Should the decision be made to postpone the increase, do you intend to dissolve the House of Representatives and ask for the judgment and the true intent of the public by holding a House of Representatives election and the House of Councillors election on the same day?

PRIME MINISTER ABE: First, regarding the opposition parties' argument that Abenomics must have failed, nothing could be further from the truth. Employment has reached an extremely sound level. I believe the ratio of job offers to job seekers is moving at a quite high level compared to years past. Employment has increased by 1.1 million people thanks to us pressing forward with this policy of Abenomics. Previous to this, in the era of the opposition party-led administrations, this number had dropped by 100 thousand. Moreover, this is true in not only a portion of our major cities but also our local regions. When the ratio of job offers to job seekers is exactly "1.0" it means that for every person seeking work there is one type of employment opportunity -- one job. When it exceeds "1.0," that is a situation in which job seekers can essentially succeed in landing a job somewhere. Before we took office, only eight prefectures out of 47 had a ratio higher than "1.0," but now 46 are over "1.0." Wage increases have also been at their highest level since the 21st century began, a situation that has been underway for three consecutive years. Hourly wages for part-time staff are also at their highest level in history. I wish to state clearly at the outset that Abenomics has most certainly not "failed."

With regard to the global economy, the G7 shares a sense of crisis that we are currently facing large risks. On that basis, in order to avoid falling into another crisis, we have reached international agreement to undertake our responses in a cooperative manner, and I consider that fact to be quite weighty indeed.

Japan, as the G7 presidency, will take the lead in contributing to the growth of the global economy. I am determined that we must mobilize all possible policy tools to rev up the engine of Abenomics strongly once more.

Having said we commit to deploy all possible policy tools, naturally we will also examine the handling of the consumption tax, but as of this moment, we have not arrived at a conclusion. The G7's agreements were just concluded today, so I would like to take some more time in examining concrete policy responses.

For that reason, while I am unable to answer hypothetical questions, in any event, I intend to clarify my stance before the House of Councillors election.

REPORTER (VU, VIETNAM TELEVISION): I am Vu with Vietnam Television. The G7 has taken a stance of strongly opposing actions that threaten maritime security or attempts to change the status quo. If no improvements were to be seen in the current situation, or were the state of affairs to deteriorate, what responses would be taken in order to put a stop to unilateral actions?

PRIME MINISTER ABE: With regard to maritime security, the leaders of the G7 countries concurred on maintaining a rules-based maritime order in accordance with the principles of international law, the importance of freedom of navigation and overflight, and concern about the situation in the East and South China Seas. By incorporating that into the Leaders' Declaration as well, the G7 made its resolute stance quite clear.

As for the situation in the South China Sea, as I stated in my answer a few moments ago, I led the G7's discussions by taking up the "Three Principles on the Rule of Law at Sea" I announced at the Shangri-La Dialogue two years ago. The other leaders agreed with these principles, resulting in the G7's shared recognition of them.

In addition, the award/ruling of the arbitral proceedings by the Philippines under the United Nations Convention on the Law of the Sea (UNCLOS) is likely to be released soon. From the perspective of the importance of the rule of law, it is critical for each country to clearly indicate its stance.

Also, discussions of these matters were held at not only the G7 summit meeting but also at the Outreach Meeting, in which the Prime Minister of Viet Nam also participated.

Thank you very much.