[Title] Redefining Japan-UK Relations-Remarks by Prime Minister Abe at the Welcoming Dinner Hosted by the City of London

Good evening, ladies and gentlemen. I am Shinzo Abe.

It has been a great pleasure to have this truly superb dinner today in such wonderful company.

But with this speech to deliver, I have needed to overcome the temptation of alcohol. However, my wife has enjoyed some, in my stead.

I was indeed born in the year of the Horse (in the Japanese zodiac), as mentioned in that introduction just now. By this fact, a marvelous gift was bestowed on me. Other politicians born in the year of the Horse include former Prime Ministers Junichiro Koizumi and Yasuhiro Nakasone, and both of them count long tenures as prime minister among their strong points. Although I was born in the year of the Horse, my wife was born in the year of the Tiger, so I am careful always to defer to her.

The Choshu Five, or the Ability to Dream

Earlier today I made a visit to the campus of the University College London and had a moment of reflection standing in front of a monument.

It was a monument honouring five samurai, all young, who would later be called the "Choshu Five."

Choshu being an old name for Yamaguchi Prefecture, where I am from, the five young men took a bold decision exactly 150 years ago to defy the law prohibiting Japanese from traveling overseas, and, drawn by their own rigour to acquire knowledge, they chose to study right here in London, at the UCL.

The current of the times was exclusively one of driving out encroachment by foreign powers into Japan. In the orthodoxy of that era, it was the Choshu Five who were endowed with the courage to oppose this.

We can rightfully call them very discerning individuals who believed that to make the nation stronger, the better way forward would be to open the country to the world.

They brought back a great deal to their homeland. In good time the Choshu Five would become the founding fathers of Japan’s modernization. Among them was Japan’s very first prime minister, Hirobumi Ito.

These men launched Japan onto the stormy seas in which the world powers jostled. But at the same time they presumably felt trepidation about how best to charter a course through the narrow span between traditions to be upheld on one side, and reforms to be pursued on the other. It was such people who stood at the helm.

It was the power of their big dream that changed Japan.

Olympic Fortune

Now, we have a new dream: a dream to make the 2020 Olympics and Paralympics in Tokyo a huge success.

For Tokyo, the year 2020 is not simply a year to host a major event. I consider 2020 also to be a major juncture where people all over the world will witness the path our efforts took as we somehow worked to tackle the difficult challenges facing our economy and society, and how we ultimately resolved them, as we headed towards that target year. I imagine it must surely have been the same for you.

For that reason as well, we must make our economic policy succeed. I have come to believe this more and more firmly.

My "three arrows" have led us to the point where we are just about to get out of deflation. Leveraging the fortune the goddesses of Olympus have given us, let us tackle difficult challenges. Let us take strides forward up till 2020. A great many people have come to think in this forward-looking manner.

To those of you who have not been to Japan in more than a year, I should say that you must come and see for yourself how, over this brief period of but a single year, the people of Japan have changed, and how the country is changing.

This evening the governors of Mie and Hiroshima Prefectures and the mayors of the major cities Kobe and Fukuoka are here with me. All of these are promising investment destinations for you, as cities and regions brimming with appeal.

And, should you think that Japan’s transformation is indeed bona fide and that these locales offer business opportunities, may I say that you should not forget to invest in Japan.

Abenomics: All the better in an open setting

Leading industrial nations with mature democracies all face similar challenges. Raising labour productivity is no easy task. Reforming entitlement, or social welfare, entails enormous political costs.

Yet once again, I find myself thinking of the lesson the young men of 150 years ago taught us through their example. That is the lesson that if you aim to become stronger, you must first open up yourself.

That is the reason we are now working to attract investment and human resources to Japan, break away the fences dividing men and women, and work in earnest to celebrate the diversity of society to the greatest extent possible.

Yes, there are traditions, practices and customs that I want us to preserve, such as the beauty of rice terraces tinted gold as the surface of the water reflects the setting sun, and the Japanese people’s spirit of mutual assistance displayed in times of disasters or crises.

We cannot say, however, that we can uphold what you might call these good customs and manners of Japan by withdrawing from competition or by setting up tall protective banks in our minds.

Instead, what is important is exposing ourselves to competition and building up the indefatigable backbone to overcome bitter winds. That is what I see as essential in order to put Japan back on a growth track over the long term.

I would cite your country, Great Britain, as an excellent example of this.

From the distant past Britain has incorporated capital, goods, and human resources from overseas unreservedly, based on efficiency and talent, always seeking out new things, and then even newer things. As I see it, that is how the country has maintained its international standing and its economic power.

No more do we find hats and canes or old school ties anywhere in the City. Nor do we hear the names of those merchant banks and brokers that evoke nostalgia even now.

Expectations for a Japan-EU EPA

It is through opening up that we become strong. If we dare say that that is the lesson of world history that the UK teaches us, then Japan is at this very moment advancing policies based on that very same rulebook.

Last month on the 7th, Australian Prime Minister Tony Abbott and I reached an agreement in principle on a bilateral Economic Partnership. For as long as seven years, such an agreement had been deemed unachievable.

As for the Trans-Pacific Partnership, U.S. President Barack Obama and I together reaffirmed our pledge that we, Japan and the U.S., must give traction to the whole TPP process so that we should reach a twelve-nation-wide agreement sooner, rather than later. Our meeting last month was a great success in that sense.

Next in line is the Japan-EU Economic Partnership Agreement. I will make it a reality, whatever it takes. My commitment is firm.

Further down the road we can envision a framework for free trade that is inclusive, open, and governed by transparent rules, which will benefit nations all around the world. A framework that only such countries as are respectful of freedom, democracy, and the rule of law and are rule-abiding can bring forth.

I hope you join me in setting a target of concluding negotiations on a Japan-EU EPA within 2015.

Abenomics now moving forward

Japan has now restored its ability to change itself.

Amongst the largest financial institutions, Nomura Trust and Banking is now headed by a female CEO. Mizuho Financial Group is just about to have a new chairperson of the board, who is also a woman.

This brings to mind the words I heard from Arianna Huffington: “If 'Lehman Brothers' was ‘Lehman Brothers and Sisters,’ they might still be around.”

Last year, here at Guildhall, I spoke of my determination to revive the Japanese economy. Borrowing from the Thacherite lexicon, I stated that this is a case of "TINA" - "there is no alternative." I also told you that I would serve as a drill bit, sturdy enough to break through the red tape and long-held habits. A year has now passed and I am pleased to be able to visit Guildhall once more, not ashamed in the least at my words. This is because Abenomics is now moving forward.

National Strategic Deregulation Areas, still in the planning stages when I spoke here last, are now being implemented.

By the time the five Olympic rings visit Tokyo, electric power companies' regional monopolies, unchanged throughout the post-war history, shall have been shattered completely.

We have already started to overhaul medical practices.

We are going to adjust our labour regulations to the new era, as well as the ways of work practices the new era requires.

We are going to improve our corporate taxation still further.

Dramatically changed already is our corporate governance structure.

Furthermore, as for the Government Pension and Investment Fund, which is the world's largest pension fund with more than 730 billion pounds under management, we are making improvements in a forward-looking manner, just as I said we would do at the Davos World Economic Forum gathering this past January.

As an example, the investment committee setting the fund's investment strategy has employed new members.

See, the drill bit is spinning at the fastest possible speed.

What has encouraged us more than anything else is the increase we saw in the number of companies that took the bold decision this spring to raise wages for the first time in many a year.

Employment-related statistics are all trending upwards. The ratio of job offers to job seekers is at a six-year high, and companies hiring a greater number of university graduates are appearing one after the other.

To overcome deflation, it is absolutely necessary for wages and employment to move in a visible way in a positive direction.

What is even more gratifying is that the business sentiment among SMEs is now positive after a six-year interlude among manufacturers, while among non-manufacturers, this was the first positive result seen in 22 years.

This indicates that a discernable feeling of growth has gradually come to permeate society.

In addition, an expert on business cycles asserts that from super-long Kondratiev waves to short-term Kitchin cycles, any Japanese economic cycle you examine is currently on the upswing. In that sense, this is said to be an extremely uncommon point in time.

While of course we still need to exercise caution regarding the risk of Japan's increased consumption tax rate dampening consumption, it appears that consumption has not been diminished to the extent we had feared, thanks also to the 32 billion pounds of additional measures we prepared and are implementing ahead of schedule. More and more people now take an optimistic view as a result.

We seek to reinstate fiscal soundness simultaneously with our tireless quest for growth. Abenomics does not bracket efforts into “growth measures” versus “austerity measures.” What we are aiming for is the creation of a positive spiral in which each measure harmonizes with and enhances other efforts.

It is absolutely imperative for us to realize a stable and inexpensive energy supply in order to achieve economic growth. From this perspective I took a decision on a responsible energy policy.

I decided to restart our nuclear plants, none of which is currently in operation, one by one, undertaking procedures with great care. We will start with the locations that conform to our strict safety standards, which are at a level fully on par with anywhere else in the world.

The UK and Japan have a long history of involvement with each other when it comes to nuclear power development. Nuclear power company Horizon Nuclear Power is, as you know, a subsidiary of Hitachi, Ltd. Moreover, Toshiba announced this past January that it would acquire a 60 per cent stake in another nuclear power company NuGen. I would like to share with Britain the lessons of Fukushima and work to develop technologies that are even more advanced.

Japan as job creator

Now, it's perhaps time for you to need another dose of caffeine. Changing course a bit, let me discuss the deep bonds of friendship between the U.K. and Japan.

Firstly, on business to business ties.

As a point of fact, some 70 per cent of Internet traffic in the UK is routed through an East London Data Centre. The information now streaming in to the tablets you are using also certainly passed through that very same data centre.

Incidentally, the company operating this data centre since 1990 in support of your secure and stable Internet use is KDDI, a Japanese company.

At this year’s Davos meeting, Prime Minister David Cameron said that the UK would become a nation of “reshoring.” By that he meant that he would make the UK a country that re-attracts industries that had previously moved offshore.

Well, then, Japanese companies are a prime example of successful reshoring. The number of vehicles built at Nissan’s Sunderland Plant has already surpassed the total number of cars Italy as a whole can offer. If we combine that with the outputs of Honda and Toyota, then more than half of the roughly 1.51 million automobiles produced annually in the UK are made by Japanese-affiliated companies.

There is also the example of Hitachi taking the plunge to construct a plant for building InterCity rolling stock.

Tomorrow I will ride a Javelin train built by Hitachi to visit the Olympic Park. I imagine that Masaru Inoue, one of the Choshu Five called the father of modern Japanese railways who had studied UK railway technology intensely and brought it back to Japan, must be deeply moved in the afterlife.

The vigorous operations of Japanese companies that have transferred plants onshore in the UK have generated employment for more than 160,000 people in the UK.

The investment flow into the UK of 8.6 billion pounds last year --2013 -- was a record-high. Japanese companies are job creators of well-established reputation in the UK.

"Proactive Contribution to Peace" and Japan-UK relations

I would like to close my remarks this evening by stating that in the area of security as well, our two countries are poised to have ties of a nature altogether different from what we have had until now.

This past December, a tremendous typhoon struck the Philippines. It was at this time that the HMS Illustrious of the Royal Navy and the JDS Ise of Japan’s Maritime Self-Defense Force worked together to rescue and assist the disaster victims.

Believing that world peace and international public goods such as freedom of aviation and navigation are best safeguarded through the efforts of nations that value the rule of law and uphold democracy and freedom, my government, wishing to uphold our responsibilities in that regard, has decided to carry the banner of “Proactive Contribution to Peace.”

The cooperation demonstrated between the Ise and the Illustrious is the best endorsement of the fact that Japan’s new banner of Proactive Contribution to Peace can be pursued even more fittingly when nations having the same aspirations and values work together.

I am of a belief that going forward, Japan and the UK should work more closely in collaboration with each other, together shouldering responsibilities from the peace of the seas to the security of the skies, space, and cyberspace.

I believe that we should deepen our association on a routine basis so that we are able to execute the cooperation that was achieved between the Ise and the Illustrious whenever necessary.

Today, seeking to make this a reality, Prime Minister Cameron and I agreed that we would have our Joint Foreign and Defence Ministerial Consultations, often referred to as “2 + 2” meetings, on a regular basis, and that we would carry out a closer level of consultations between the heads of our respective National Security Secretariats.

We have already entered into cooperation in the field of defence equipment. We will also make steady efforts towards the conclusion of an Acquisition and Cross-Servicing Agreement between the U.K. and Japan.

A toast!

Tonight I said that Abenomics is now moving forward. Stating my desire to open the country and grow into the future, I overviewed my aspirations towards concluding a Japan-EU economic partnership agreement.

I called your attention to the present state of Japan-UK relations being what can be called “a priori” partners in the areas of both business activities and security.

I would like to close my remarks this evening by extending my appreciation to Lord Mayor and the City of London Corporation for their kind cooperation, and now, may I ask you to join me in raising our glasses for a toast.

The Lord Mayor and the City of London Corporation, Cheers!