2023 New Year’s Remarks by Chairman KOKUBU Fumiya

January 4, 2023

Welcome to a new year. I hope it will be a good one for us all.

Looking back over the last year, there is no doubt that Russia’s invasion of Ukraine in February was the event that delivered the greatest shock to the world. The ongoing war has created many victims, and is a truly heartrending situation. I sincerely hope that it will end as soon as possible and that the people of Ukraine can enjoy genuine peace.

The Ukraine crisis has had huge global impact in both political and economic terms. It has transformed the world’s energy situation, and many commodities essential to daily life have been unevenly distributed to certain regions, leaving severe food shortages in emerging countries. This crisis has also reaffirmed that if distribution of such commodities is delayed, the impact immediately spreads worldwide. When economic sanctions were introduced and resolutions adopted condemning Russia, certain countries did not disapprove of the unilateral invasion of an independent nation in contravention of international law, overtly revealing splits in the international community and the complexity of the global power balance.

Turning to the trade environment in Japan, the government passed the Economic Security Promotion Act last May, paving the way for it to take leadership in securing stable supplies of critical materials. This is a shift from the conventional approach to supply chains, which emphasized economic rationality, toward certainty in securing necessary materials, and should be highly acclaimed in the sense that it is a step in the direction of building more resilient supply chains.

In a situation where there has long been no improvement in the decline of WTO functions, economic partnership agreements (EPAs) have progressed. In January RCEP came into force, and in September Malaysia ratified the CPTPP and was recognized as its ninth signatory. From the perspective of protecting systems for free trade and investment, such EPAs should be welcomed as serving functions supplementary to the WTO. Particularly, the launch of new multilateral cooperative structures such as the Indo-Pacific Economic Framework for Prosperity (IPEF), have opened up paths for building supply chains based on a “friend-shoring” approach. However, it would not be desirable for such frameworks to become entrenched in the form of economic blocs. They should be open frameworks with mutual respect for the diversity of participating countries, and need to continue being inclusive and high-level mechanisms.

It is now about three years since the novel coronavirus was first confirmed. Although the impacts of the pandemic are abating, localized waves of infection still spread and retreat repeatedly, and a complete return to normality is likely to take quite some time. Meanwhile, regulations in all countries are generally easing, and I feel that as the attitude of living with COVID-19 permeates, the impacts on economic activity have gradually become manageable. It is vital to pursue an optimal balance between public health and economic activity, and I hope that the government and experts will thoroughly examine the best mix from a scientific perspective and choose a path towards restoring freedom of conduct and economic activity to pre-COVID levels as much as possible.

Countries all around the world have begun concrete efforts to achieve carbon neutrality, and Japan also needs to fulfill its international commitments. We must accelerate expanded introduction of renewable energy and raise energy efficiency, but in the short term, sharp rises in energy prices are increasing the burden on households and companies, and it would be undesirable for such negative impacts to cause a backlash that delays the move away from fossil fuels. To achieve stable social and economic activity without damaging the national interest, I would like the government to continue setting out a road map for a highly achievable energy transition and future energy policy.

As we head into the new year, various challenges and severe problems still confront us, and the business environment is predicted to remain uncertain for the time being. The top priority is for the government and the private sector to unite in overcoming the current difficulties. In doing so, I believe we need to adopt a longer-term perspective and make flexible and daring efforts to turn these drastic changes into opportunities. The JFTC upholds the aim of “LEAPING AHEAD INTO A SUSTAINABLE WORLD” and we will engage in business activities to this end. I hope we can continue to count on your understanding and support for the JFTC’s activities.

Let me conclude this new year message with my very best wishes that 2023 will be an even brighter, more fulfilling year for us all.