[Title] Address by H.E. Mr. Hirofumi Nakasone, Minister for Foreign Affairs of Japan at the 45th Annual Japan-U.S. Business Conference hosted by Japan-U.S. Business Councils

Ladies and Gentlemen;

It is my great pleasure to be able to address you at this 45th Annual Japan-U.S. Business Conference.

As you all know, the Emergency Economic Stabilization Act of 2008 was passed in the U.S. Congress last weekend. I think people are paying close attention to how the U.S. will implement the bill, but in any case, it was a significant progress, and I welcome it wholeheartedly. I imagine business leaders worldwide, including those present here today, have been closely following and dealing with the financial crisis in the international market. I personally felt its seriousness upon visiting New York to attend the United Nations General Assembly immediately after assuming the office of Minister for Foreign Affairs of Japan. The scale of the international impact of this problem has renewed my understanding of the importance of international cooperation and coordination on this challenge.

"My principle is strengthening the Japan-U.S. alliance; this should always come first."

These are the words that new Prime Minister Aso stated in his Policy Speech to the Diet last week. I totally agree with him.

Japan has been conducting diplomacy with a solid Japan-U.S. alliance as its cornerstone. Japan has been able to enjoy peace and prosperity for over half a century undeniably because solid U.S. presence in this region has been maintained. The Japan-U.S. alliance, which has strengthened through the eight years of the Bush administration, has become a significant asset for both our countries. Opinion polls show that mutual trust between the citizens of Japan and the U.S. is extremely high. It goes without saying that this relationship is based on the economic, cultural and personal exchanges between our two countries, and the valuable support from both countries' business leaders. From that standpoint I would like to express my gratitude to everyone present.

Next month, a new President will be elected in the U.S. I feel encouraged by the understanding shown by both Presidential candidates of the importance of the Japan-U.S. relationship. Japan intends to further strengthen the solid ties of the Japan-U.S. alliance and to tackle together the issues facing the international society. Japan does not intend to pull out from the fight against terrorism. We have submitted a bill to the Diet to continue the refuelling support activities in the Indian Ocean by the Maritime Self-Defense Force. We will also work together to steadily implement the realignment of U.S. forces including the replacement of the Futenma Air Station, as well as the relocation of U.S. Marines from Okinawa to Guam. The Japan-U.S. alliance is a vital bond in ensuring global peace and stability, and we will continue to do our utmost to strengthen it.

Let us now turn to the Japan-U.S. economic relationship. There were times when economic friction was a significant problem. Today, our economic relations have changed dramatically from "friction" to "cooperation". In particular, Japanese corporations in such industries as the automobile have increased investments in the U.S. and relocated production capability from Japan to the U.S. Such factors have contributed significantly to stabilizing the Japan-U.S. economic relationship and have become the essential basis for the Japan-U.S. alliance. This must be strengthened further.

I have come to stand in the heavily responsible position of Minister for Foreign Affairs of Japan. In the time when my father was in the position of Prime Minister of Japan, trade issues such as beef and orange was raging, but my father told President Reagan that "Japan and the U.S. share a common destiny" and exerted his efforts towards establishing an extremely close Japan-U.S. alliance, commonly called the "Ron-Yasu relationship". Together with business leaders present today, I am determined to establish a closely knit Japan-U.S. alliance, which may be equally strong, if not stronger, as that during my father's age.

In order to further strengthen the Japan-U.S. relationship, we must focus on expanding frontiers of Japan-U.S. cooperation. Through attending the United Nations General Assembly, I renewed my belief that Japan and the U.S., as the world's two largest economies, need to cooperate in order to tackle the mounting problems facing the international community, such as the environment, food security, poverty, AIDS, and malaria. I conveyed my message to the world that Japan will use its strength to seriously tackle global issues. I also reaffirmed with Secretary of State Rice to work in close coordination concerning the various issues facing the international community.

In particular, climate change is one of the most significant issues of the 21st century. Japan and the U.S., including both the public and private sectors, need to take the lead in tackling this issue. Just a few days ago, the Government of Japan made a specific proposal - including creating categories depending on respective stages of economic development - concerning the basic concept of the international framework beyond 2012. Working closely with the U.S., the Government of Japan intends to exert its strength toward significantly moving forward from the Kyoto Protocol, and toward building an effective international framework beyond 2012 in which all major economies, including newly developing countries such as China and India, participate in a responsible way.

In this context, I would like to emphasize that progress in environmental technology development driven by the private sector is vital in such fields as clean energy and energy efficiency. Japan and the U.S. together account for around 70% of the total research expenditure in this field. Promoting cooperation between Japanese and U.S. corporations in developing such innovative technologies is important for the rest of the world. The Government will provide the maximum support to that end. Also, in November a referendum will take place in the State of California concerning the issuance of State bonds for construction of a high-speed rail system. It would be meaningful from the perspective of measures to curb climate change if such projects advance with Japan and the U.S. in close cooperation.

Moving forward, I would like to touch upon another significant issue; the invigoration of the economies of Japan and the U.S. In response to financial problems in the market, the Bank of Japan and the Federal Reserve Bank of New York concluded a foreign exchange swap agreement, and the Bank of Japan introduced U.S. Dollar funds-supplying operations for the domestic money market. I felt very encouraged by the sight of Japan's private financial institutions working as well to prevent global turmoil, demonstrating how close the cooperation is between both the public and private sectors of Japan and the U.S.

As Prime Minister Aso stated in his address to the United Nations General Assembly, invigorating its own economy would be the most immediately effective contribution that Japan can deliver to the global economy. And the reinvigoration of the U.S. economy is absolutely vital for the recovery of the global economy at large. To that end, what can Japan and the U.S. do together?

Between Japan and the U.S., we have been contributing toward invigorating both our economies through conducting a mutual dialogue on regulatory reform and competition policy in which each government exchange requests. Prime Minister Aso stated in his Policy Speech to the Diet that, in the near term we will take measures to revive business activity, in the mid-term we will rebuild public finances, and during the mid- to long-term we will pursue "economic growth through reforms". This bi-directional dialogue between Japan and the U.S. has the very effect of pushing forward "economic growth through reforms" in both our countries. I will further revitalize this Japan-U.S. dialogue, and continue the ceaseless efforts to promote "economic growth through reforms". To that end, I ask the business leaders present here today to raise your voice and make your requests.

Finally, we must not forget the "regional" perspective. The Asia-Pacific region is the growth center of the global economy. The sustainable development of this region is vital for the stability of the global economy. However, destabilizing factors such as the North Korean situation exists in this region. Engaging China to let her become a responsible and constructive partner is another important issue. As Minister for Foreign Affairs of Japan, I will work hard to cope with such issues of the East Asia region. Moreover, it is important for the U.S. to further strengthen its commitments in this region, and for Japan and the U.S. to combine their strengths to actively contribute toward building a new economic order for the peace and prosperity of this region.

We appreciate very much that the Japan-U.S. Business Conference has been issuing recommendations and deepening considerations on a Japan-U.S. Economic Partnership Agreement (EPA). Concerning the Japan-U.S. EPA concept, I myself believe that it is most important to conduct within Japan discussion on and consideration of this issue on a wider basis and in a frank manner.

Liberalization of the global economy is in the interests of not only Japan and the U.S. but also the world at large. It goes without saying that Japan and the U.S. need to work closely toward an early conclusion of the Doha Round. At the same time, in this region, several studies on region-wide FTAs such as ASEAN+3, ASEAN+6, and so-called FTAAP which the U.S. proposed and engaged in, are proceeding. Moreover, there was a notable announcement of the launch of negotiations for the United States to join the comprehensive Trans-Pacific Strategic Economic Partnership Agreement or P4, whose partners are Singapore, New Zealand, Chile and Brunei. It is possible that more Asia-Pacific nations will join these negotiations. Japan needs to consider these developments realistically, and must consider its own response to them accordingly.

APEC exists as a critical forum when we think about a major framework for Asia-Pacific economic cooperation. At the APEC, there are on-going discussions on the promotion of the regional economic integration. These discussions include the choices that FTAAP has and consideration of prospect of FTAAP. In addition, Japan will be the chair of APEC in 2010 and the U.S. in 2011. Since Japan and the U.S. will be the chair sequentially, it is necessary that Japan and the U.S. will exercise leadership in cooperation and propose the direction of a new economic order and vision in the Asia-Pacific region. Japan is coming to the point where we should start examining these points seriously.

Thus, frontiers of Japan-U.S. cooperation are expanding to such aspects as tackling global problems, promoting bilateral economic relationship, and economic cooperation in the Asia-pacific region.

The inaugurations of new administrations both in Japan and the U.S. can serve as an opportunity to build a stronger economic relationship. I would like you all to deliver private sectors' big voices on how we can improve Japan-U.S. economic relationship and what makes business activities easier. I will listen seriously to these voices, and support your activities. To conclude, from the bottom of my heart, I hope such voices will be sent out from this Japan-U.S. Business Conference and I will pray for the success of this Conference.

Thank you for inviting me and thank you for your kind hospitality.