[Title] Address by Minister for Foreign Affairs Taro Aso, "Examining Latin America and the Caribbean from Japan's Perspective: Fostering Partnerships for a New Age"

A Visit to Latin America

As I begin my remarks, first please allow me to thank Nippon Keidanren for the cooperation that it extends to the Ministry of Foreign Affairs on a continuing basis. It is certainly a great pleasure to have this opportunity to address you this afternoon. I very much appreciate so many people having attended today despite your many obligations. In particular I would like to extend my thanks to Chairman of Nippon Keidanren, Mr. Fujio Mitarai and Mr. Mikio Sasaki, Chairman of the Committee on Latin America and the Caribbean.

First of all, I would like to explain to you just why I have taken up Latin America and the Caribbean as my theme today.

This summer I hope to pay a visit to Brazil and Mexico. Especially, in Brazil I hope to attend the Third Foreign Ministers' Meeting of FEALAC, which is the Forum for East Asia-Latin America Cooperation. With that in mind, I believed it would be appropriate to take advantage of this opportunity to address you this afternoon and examine to some extent the core issue of what Latin America and the Caribbean means to Japan.

The globe consists of numerous interesting places, but I really must tell you how fascinating a place Latin America and the Caribbean is. Let me share with you two reasons why I consider Latin America and the Caribbean to be exciting.

The first is that Latin America and the Caribbean is now in a historic period of transition. The second is that there is no other region in which Japan's public and private sectors have so vigorously built up such a rich accumulation of what we could call a kind of "latent assets."

In addition, the pitches that Japanese diplomacy will be throwing to Latin America and the Caribbean will all be plain and simple straight balls.

Specifically, those are, first of all, strengthening our economic relations; second, supporting efforts by the countries of Latin America and the Caribbean to spread social fairness and equality, which engages them as one of their most significant issues; and third, undertaking even more things with Latin America and the Caribbean on the international stage, in light of the fact that many of the countries of Latin America and the Caribbean have enthusiastically supported Japan ever since the San Francisco Peace Treaty was signed.

My conclusion today will be that by pursuing these three areas of diplomacy, there should emerge a partnership between Latin America and the Caribbean and Japan in which each side can rely on the other.

Post-war Japan and Brazil Right around the Corner

Let me take you back now to a time when I was still a new manager. The company run by my family had just made a foray into Brazil to diversify its operations. I was the manager responsible for these efforts, and that is how I found myself living for an extended time in a hotel in Sao Paulo.

At that time, from the end of the 1950's right through the 1960's, the mambo and the rumba, the tango and the cha-cha-cha were all the rage in Japan. This was hardly random chance. For Japan of that time, Latin America and the Caribbean--and particularly Brazil--was closer to our consciousness than it is now.

In that era, none of the Asian economies had yet even started their takeoff. In addition, Japan's payment of war reparations was only completed to Indonesia in 1970 and to the Philippines in 1976. As a result, it was still not quite an environment in which Japanese companies could easily operate in Asia confidently.

Yet within that context, in Brazil, in which there was a great number of people of Japanese ancestry, public opinion towards Japan was not bad at all. That was also the era in which Herman Kahn was prolifically promoting a bullish future for Brazil. Herman Kahn was the American futurist who predicted the rise of Japan and India.

This was the background against which Japan engaged in various National Projects towards Brazil. "National Project" is an expression of that era and is what the large-scale overseas investment proposals with Cabinet approval were called.

My company headed there in an attempt to catch up with the wave of Japanese iron and steel and textile companies that had already entered Brazil, although we ended up withdrawing in the late 1970's, as did most other Japanese companies.

I would argue that the past quarter century has been the period in which Japan and Brazil, or Japan and Latin America and the Caribbean, have drifted extremely far apart. On the Latin American side during the 1980's there was hyperinflation exceeding 1000%, the debt crisis, and the subsequent austere and ongoing macroeconomic reform, while on the Japanese side we were experiencing what has come to be called "the lost decade," during which time we simply did not have the wherewithal to think about Latin America and the Caribbean.

Yet now both sides have for the most part overcome those problems, and Japan has finally come to the point that we are refortifying our ties with Latin America and the Caribbean.

Incidentally, the robustness of Japanese diplomatic strength is seen first of all on the exact opposite side of the globe. I have come to conclude that the most sensitive indicator of Japan's diplomatic strength is the state of its diplomacy with Latin America and the Caribbean.

Latin America and the Caribbean As Comparable to China or Two Indias

In any event, it would be a problem if you started to think that the only countries around the globe now booming are China and India.

In recent years Latin American and Caribbean countries finally engaged in reforms in fiscal revenue and expenditures and inflation was overcome. In addition to this, there has been a boom in the primary commodities, resulting in dramatic improvements in the international trade balance. These have both been historical firsts.

If we look at the size of GDP, we find something interesting at the present, namely that the GDPs of Korea, Russia, India, and ASEAN as a whole are all more or less in line with each other, with each being roughly 800 to 900 billion dollars in size.

Now, Mexico and Brazil are also in line with these. So in other words you can think of Latin America and the Caribbean as having the equivalent of two Indias, or the equivalent of two entire ASEANs. Alternately, the entirety of Latin America and the Caribbean is exactly comparable to the size of the Chinese economy.

Latin America and the Caribbean is first of all rich in natural resources, and in the future we can expect domestic consumption to increase. Furthermore it enjoys a geographical advantage for access to both Europe and the Americas. For Japan, the region is a supply source for primary resources, a market for our products, and also a manufacturing base, and with all of these being critical features, I think that you must surely have some interest in Latin America and the Caribbean.

I intend to have the Ministry of Foreign Affairs support your activities, and with regard to official development assistance I will have the Ministry work in ways that reinforce the relationship between Japan and Latin America and the Caribbean.

I'll be speaking about this at greater length in just a minute, but for the most part Latin America and the Caribbean has achieved democratization. When a leader emerges with the backing of the people, the leader has no choice but to turn his or her attention to existing disparities and distribution policies, although this is a fact everywhere.

The countries of Latin America and the Caribbean have just started to be in that situation, and its governments are generally attuned to the economic activities of the private sector. When Japanese companies want to enter the markets there, negotiations with the government become quite important, and this gives the Ministry of Foreign Affairs a considerable workout.

As you know, Japan has concluded EPAs, or economic partnership agreements, with Mexico and Chile. It goes without saying that this has become possible largely due to the support of you and your colleagues.

Roughly three years have passed since we signed our EPA with Mexico in September 2004 and the impact of that agreement has been tremendous.

Figures for fiscal 2006 show that, compared to those for fiscal 2004, exports from Japan to Mexico increased from 592.2 billion yen to 1.134 trillion yen--an increase of 91.5%. When we add in imports to Japan, we still find that total trade value increased by 76.3%. There was also a wave of Japanese direct investment in Mexico, which increased to 2.6 times the previous level. Japanese consumer electronics manufacturers have concentrated in Mexico, exporting to the US some 10 million liquid crystal display TVs and plasma TVs in total annually.

Meanwhile, Chile, which has become a model through its success in both economic liberalization and political democratization, is a supply source of critical resources such as copper and molybdenum.

Our EPA with Chile was signed this past March during the visit of Foreign Minister Alejandro Foxley Rioseco.

Today we have none other than Japan-Chile Business Co-operation Committee Chair Mikio Sasaki with us, and I would like to extend to him my sincere thanks and respect for having provided such great support during this undertaking, which resulted in an EPA with a country that is important both in securing access to resources and in being a point through which economic expansion into Latin America and the Caribbean can take place.

An Era of Common Benefits

But there is one point in Latin American and the Caribbean development that has been especially encouraging to me.

In the 1980's, military governments became democracies one after the other. As a result, many administrations are aiming to achieve simultaneously the dual goals of firmly establishing a political system that reflects the will of the people and bringing about stable economic development grounded in the market economy, and these two goals are now generating a virtuous circle between them. It is exactly this that I find so encouraging, as if we are watching the drama of the century.

It is now the case in almost every country that the will of the people decides the country's future. We are also hearing that bureaucratic corruption has declined substantially compared with past levels.

That said, I realize that various longstanding issues remain, including the inequality in distribution in Latin America and the Caribbean resulting from latifundism, the system of landownership of enormous tracts of land by the very few. But no matter how much one might want to lend a hand towards bringing solutions to those problems, when the other country has a military government in power or is in a state of civil war, the things that Japan can do are very limited indeed.

It has only been the last 20 years that Japan has finally become able to extend a hand to countries that need assistance, such as Bolivia and Central American countries.

Speaking of Bolivia here, the president is a man named Juan Evo Morales Ayma, who is the first president of Bolivia to be completely of indigenous heritage. He began his rise after serving as the general secretary of a farmers' union and he is still only in his 40's. There are also rumors about him being a radical.

We invited him to visit Tokyo in March, and when I met him, I found that he is a man of great passion. He speaks of wanting to somehow bring growth to his homeland, whose level of income is the lowest in South America. To such a leader, now I can say that I hope he pursues that dream, and Japan will root for his success.

I consider this something to celebrate. As we deepen our relations, a variety of ways to incorporate Latin American and Caribbean growth into Japan's pursuit of its own national vitality will open up to us.

I think that you have all been hearing a lot of very positive news recently discussing Brazil's future as a biofuel powerhouse. The time has come for Japan and Latin America and the Caribbean to discuss in earnest various common benefits that can be created.

However, the fact is that the foundation for this already exists. It is the product of the untiring efforts of countless anonymous Japanese and people of Japanese descent, and I would be remiss if I did not touch on this point.

Arithmetic in Honduras and a Hundred Sacks of Rice

As I was writing this speech, there was one thing in particular that really caught my interest. Japan has over the years been building elementary schools and junior high schools, and in some cases remodeling and expanding existing schools, in developing countries such as Nicaragua, Peru, Bolivia, and Guatemala, yet I think that there are many of you who are just now hearing that fact for the first time.

Would you take a moment to guess how many schools Japan has helped to build there through its ODA since 1995?

The number of elementary and junior high schools is 1,960 while the number of classrooms is now at 7,861. Add to that the trade schools and facilities for handicapped people that we have remodeled or expanded and the number increases still further, to 2,356 schools and 8,964 classrooms. Individually, each school project involved only a small amount of cooperation, but the accumulated numbers, at 2,356 and 8,964, are, frankly, truly stunning.

Now, while the buildings themselves are of course very important, the more important issue in education is how you teach. And for that, the ones who step up to the plate are the people at JICA, the Japan International Cooperation Agency.

Let's look for a moment at Honduras, a country whose level of income is among the lowest. From 1989 to 2002, 58 elementary school teachers from all around Japan went there as Japan Overseas Cooperation Volunteers--"JOCVs"--and coached a total of some 20,000 teachers in how to teach arithmetic. That's not 2,000, mind you, but 20,000.

It seems that as a common phenomenon to Latin American and Caribbean countries with difficulties in development, arithmetic is a major stumbling block in school, and there are quite a few kids who drop out of school. The JOCVs, alongside their local counterparts, came up with a teaching method that would make arithmetic seem fun to the Honduran children.

Finally they created a math textbook there in Honduras, and that ultimately became the only government-designated textbook for arithmetic in the country.

Since April 2006, JICA has been working to take this textbook originally made for Honduras and spread it to the nearby Spanish-speaking countries of Guatemala, El Salvador, Nicaragua, and the Dominican Republic.

Please take a second to close your eyes and imagine the scene of this easy to understand textbook made by Japanese teachers being passed from the hands of one child to another.

With such a foundation now laid in that country, allow me now to share with you the story of how the Japanese tale of Kome Hyappyo--"A Hundred Sacks of Rice"--made it to Honduras.

The story is one of a historical event that took place in the Nagaoka domain of the former district of Echigo, or Niigata in northern Japan. After Nagaoka suffered defeat in the Boshin war, shortly before the Meiji restoration there arrived in this province one day the gift of a hundred sacks of rice. There ensued a great debate over whether the people, already very hungry as a result of the war, should eat the rice or not. Finally a bold decision was made that rather than fill their stomachs now for temporary satisfaction, it would be better to sell the rice to earn money to start a school and invest in the education of their children--even if they should go hungry as a result. This story came back into the public eye a few years back when then Prime Minister Junichiro Koizumi used it in a speech before the Diet to appeal to the Japanese people to take a long-term view and support the temporary hardships of economic reforms.

This was performed as a play in Honduras by a troupe of actors all from Honduras, and it is said that the entire theater was swept up in emotion, with both the audience and the actors in tears at the story.

There are many more interesting parts to this story--that the English version of the script translated from the original by Donald Keene was put into Spanish by the woman who was then the Minister for Culture, the active encouragement by the Japanese ambassador to Honduras, Princess Norinomiya having also had the opportunity to see the play--but it would not be right just to continue on with these all evening.

Training Grounds that Demonstrated Japan's Good Faith

Honduras' trade value with Japan is merely 16 billion yen. But in my opinion, Honduras is a country to which we should be grateful.

In 1998, a major natural disaster hit Honduras--the enormous hurricane, Hurricane Mitch. This country with a population of less than 7.4 million people suffered 7,007 deaths and over 610,000 disaster victims in total.

In response, Japan dispatched its Self-Defense Forces. Six C130 Air Self-Defense Force transport jets crossed the Pacific carrying supplies. Eighty members of the Ground Self-Defense Force were engaged in the mission, including seven doctors. Today, this may seem to be nothing out of the ordinary. But this marked the first time in history that Japan sent its Self-Defense Forces abroad for the purpose of providing emergency medical care.

The people of Honduras were very grateful to Japan for having undertaken these efforts. When our ambassador completed his service there, some ten years after the Self-Defense Forces had been dispatched, he received an official decoration from Honduras and addressed the National Congress. In that speech, as soon as he mentioned Hurricane Mitch, a cry rang out, "Hooray for Japan!" and soon the assembly hall was overflowing with the voices and applause of the Congressmen and women.

It seems to me, then, that Honduras was thus a training ground in which we could show our good faith. It was a training ground in that it was a place in which anonymous Japanese people went to demonstrate their good intentions and which trained them in return. Yes, we must certainly be grateful to Honduras.

Not Allowing Japan's Latent Assets to Go to Waste

Yet there are many impressive cases like this. Let us ask why the Japanese company Tadano would transport a crane it had constructed to Easter Island, Chile and from 1991 to 1993 work to resituate fallen Moai statues in their original standing positions.

Kingston, the capital of Jamaica, an island in the Caribbean, is hardly known for its safety. So why is it that you can find a former JOCV Japanese participant, Yasunori Ishimoto, who has been teaching the high bar, the rings, and gymnastics to children there for the last decade?

And what of the fact that it has consistently been Japanese researchers who have studied the many ruins found all across Latin America and the Caribbean in greater depth than anyone else?

The key idea here is, I believe, the acts of good faith undertaken by Japanese men and women. In addition, I think it is due to a tremendous sense of curiosity.

What's more, there is the fact that Latin Americans of Japanese ancestry--more than 1.55 million all across the region, including 1.4 million in Brazil and 80,000 in Peru--have by and large come to be well-respected.

Just next year, we will be celebrating the 100th anniversary of the beginning of Japanese immigration to Brazil. This will be celebrated in both countries at the official and the private levels, with preparations already underway, through the help of the President of Mitsui & Company, Mr. Shoei Utsuda, who has graciously accepted the position as the Chair of the Japan-Brazil Exchange Year Planning Committee, and with the cooperation of so many others in the business world.

The Brazilian side is also very enthusiastic about these upcoming events, and I believe that this is proof of the trust and respect that people of Japanese heritage have built up over the last hundred years.

We can look at it by saying that Japan has no unpleasant "baggage" in the countries of Latin America and the Caribbean. Instead, Japan has built up a relationship abundant in trust and gratitude.

To put it another way, I would say that Latin America and the Caribbean is another name for a region in which Japan has steadily and assiduously built up only the "latent assets derived from acts of good faith."

In my view, this understanding should be the starting point for Japanese diplomacy with Latin America and the Caribbean. In other words, if these "latent assets" are downplayed or treated too lightly, their value will necessarily erode little by little. These hidden reserves are too precious for Japanese diplomacy to waste.

Pursuing Common Benefits while Addressing Climate Change

Once again here I would like to touch on the current situation. An extremely challenging issue for the Latin American and Caribbean region, in which democracy is now in the process of taking hold, is how to close the enormous gaps that exist among countries and also among people within individual countries and how to bring about social fairness and equality. If this cannot be solved well, then ultimately, the prospects for stability and sustainable development in the Western Hemisphere will be dim.

It goes without saying that this constitutes a risk factor for Japan, which depends on Latin America and the Caribbean for a host of resources, from iron ore to rare metals, and from orange juice and frozen chicken to soybeans.

That is exactly why Japan should better utilize what I called its "latent assets" and work towards the stability of the Latin American and Carribean region as a whole, cooperating in Japan's fields of specialty such as education, manufacturing cooperation, the environment, and disaster prevention.

What's more, there is no one on earth who feels such deep appreciation for Japan's actions as the people of Latin America and the Caribbean. This is likely why the people of Latin America and the Caribbean invariably aid Japan whenever Japan is trying to advance a policy in international society. In other words, this situation enables us to be partners on the international stage.

If we look at "Cool Earth 50," the policy proposal made by Prime Minister Shinzo Abe in May, we find that the countries of Latin America and the Caribbean immediately indicated acceptance and approval, and indeed, the first country to sign an independent document with Japan regarding the environment and climate change was the Caribbean country of Guyana.

The countries of Latin America and the Caribbean, with their rich natural blessings throughout the region, such as in the Caribbean, the Amazon, and the Andes, and Japan, rich in scenic beauty, have many things that we can and should undertake together with regard to climate change.

I said earlier that Japan and Latin America and the Caribbean are now in an age in which we can speak of "common benefits." Areas such as climate change and the environment are ones in which we should, quite literally, pursue benefits that we will enjoy in common, and I believe that these are areas in which we should deepen our partnership internationally.

The Legacy of "Usiminas Academy"

Finally today, people of my generation cannot hear the name "Usiminas" without being gripped by a special feeling of nostalgia.

Usiminas was the monumental national project of post-war Japan, a huge steelworks built on Brazilian land, with such major figures in business as Taizo Ishizaka and Kogoro Uemura of Keidanren or the Japan Federation of Economic Organizations and all steel manufacturers from Yawata Iron and Steel and Fuji Iron and Steel on down being involved.

Well, of course, times have changed, and we now find ourselves in a world in which M&A transactions are sweeping the market. For Nippon Steel, overtaken by Indian company Mittal in aggregate market capitalization, in a worst-case scenario, it would not be surprising if it became an acquisition target, complete with its technology for high-tension steel sheets for automobiles, for which it is universally recognized to rank first in the world.

Pursuing the dual objectives of an increase in aggregate market capitalization and securing supply routes to European and US automobile manufacturers, Nippon Steel president Akio Mimura reached a decision. That was to join forces with Usiminas in Brazil.

Well, everything I have told you so far has been in the newspaper and on TV. But I am confident that Nippon Steel's strategy was only possible because of the "latent assets" that Nippon Steel and Japanese people related to the project had steadily built up in its relationship with Usiminas.

The fact that Usiminas, which started operations at its blast furnace number one in 1962, was at the time called "Escola da Usiminas"--"Usiminas Academy"--hints at this.

Among statements collected by a researcher at Kansai University were those made by a Japanese engineer familiar with Usiminas at the time. His comments were: "In Brazil, something I am often told is that there has been a lot of technology transfer heading into the country from the United States and many other countries. Yet nothing ever stayed in the country over the long term, whereas the Japanese settle in and engage with Brazil over the long term, and that is why Brazil's technical competency has increased."

Well, I am certain some of the US technology stayed in the country, but I feel as if I can envision those Japanese engineers, sweat streaming down, who worked right along with their Brazilian counterparts.

Critical to the steel industry is the accumulation of know-how in plant management, and the Japanese engineers who were sent from Yawata and Fuji to that remote land of Brazil spared no efforts in transferring technology and skills there, firmly believing in its value. That must be why, from the Brazilian perspective, what they had was not so much a factory as something akin to a school.

And I believe that this has brought about a shared legend spoken of and passed down many times over the years.

Well, after a while, when it seemed that Nippon Steel had to worry about the possibility of a hostile takeover attempt, Akio Mimura must have seen fleeting visions of the efforts of the many people who had gone before him and the stories of good faith as told by the Brazilian engineers who had appreciated those efforts. This is where Akio Mimura would have seen the "latent assets" that had derived from past actions conducted in good faith. I think that that is what has really happened to Nippon Steel and Usiminas; wouldn't you agree?

Latin America and the Caribbean as an Important Partner

Mr. Mimura seems to be planning to transfer Nippon Steel's cutting edge technology to Usiminas and make Usiminas one of the world's foremost steel companies and among the most competitive.

There is a story that when Mr. Mimura traveled to Brazil recently, he told Brazilian President Luiz Inacio Lula da Silva about these plans directly. It is said that President Lula replied, "For you to have such confidence in Brazil and invest further here, it really plucks at the heart strings."

In telling these types of stories to you this afternoon, one role for Japan's Latin American and Caribbean diplomacy becomes clear: you should make use of the Ministry of Foreign Affairs. You will find the people at the Ministry both knowledgeable in Spanish and Portuguese and eager to demonstrate their skills.

I will be wrapping up my remarks in just a minute. But today, I mentioned three points that Japan intends to pursue in the years to come: the strengthening of economic relations, support for efforts to resolve the regional issues of poverty and gaps in society, and joint engagement in addressing issues in international society.

They are all quite obvious ones to pursue, and yet I believe that today you have come to see that each of these has underlying support found in our long relationship.

Even as I look back on my own memories from long ago, I find myself reexamining Latin America and the Caribbean with new eyes, and once again I am reminded of what a truly interesting place it was. I believe that you may feel the same. For Japan, Latin America and the Caribbean is an important partner in a multitude of ways.