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Japan

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Japan country brief

Political overview

Japan is a democratic, constitutional monarchy with a parliamentary government headed by a Prime Minister. Japan's Prime Minister, Kishida Fumio, was appointed to the role in October 2021, succeeding Suga Yoshihide. Japan maintains an imperial family, currently headed by Emperor Naruhito. The accession of Emperor Naruhito on 1 May 2019 marked the beginning of the Reiwa ('beautiful harmony') Era in Japan.

Japan's parliament is known as the Diet. It comprises a House of Representatives (Lower House) and a House of Councillors (Upper House). The Lower House has 465 members who are elected for four-year terms, although the House is frequently dissolved earlier than this. The Upper House has 245 members who are elected for six-year terms, with the majority elected in prefecture-based constituencies and the remainder by proportional representation at the national level. One half of the Upper House is dissolved for election at regular three-year intervals.

Executive power is vested in the Cabinet, which comprises the Prime Minister and other members known as Ministers of State. The Prime Minister is selected from among members of the Diet through a vote by both Houses. There is no term limit for Prime Ministers, although individual parties often have term limits in place under party rules. Under the Constitution, the majority of cabinet members must be elected officials. However, the Prime Minister can appoint non-politicians to the Cabinet and as Special Ministers of State.

Japan’s governmental structure has three tiers: national, prefectural and local. There are 47 prefectures and 1,741 local municipalities. Each tier is governed by elected assemblies. Universal suffrage is limited to citizens of Japan aged 18 years or older. Voting is not compulsory.

Foreign relations

Japan's foreign policy aims to promote a peaceful and stable international community that adheres to agreed rules and norms. This supports its economy which is highly dependent on international trade and investment. Japan also actively contributes to international solutions to shared challenges such as environmental protection and climate change, terrorism, economic security and resilience, maritime security, counter-proliferation of weapons of mass destruction, poverty reduction, disaster resilience and infectious diseases.

The Japan-US alliance is the cornerstone of Japan's foreign policy and national security. Its security cooperation with the US has been important to maintaining stability in the region. The US military maintains a presence of approximately 50,000 personnel in Japan under the US-Japan Treaty of Mutual Cooperation and Security of 1960. The US Seventh Fleet is based in Yokosuka and the 3rd Marine Expeditionary Force (III MEF) is based in Okinawa. Plans for the relocation of the US marine air base at Futenma in Okinawa have been a longstanding bilateral preoccupation.

The Indo-Pacific region is a key focus for Japan’s foreign policy. In 2016, former Prime Minister Abe introduced Japan’s ‘Free and Open Indo-Pacific’ vision, under which Japan would support the rule of law, including by promoting freedom of navigation, free trade, economic prosperity, and peace and stability. Japan’s New Plan for a ‘Free and Open Indo-Pacific’ (FOIP) was announced in March 2023. Japan’s official development assistance (ODA) is focused in the Indo-Pacific, and in 2022 totalled USD17.5 billion, making it the third largest donor in the OECD. Japan’s approach to the Indo-Pacific aligns with Australia’s efforts to achieve an open, inclusive and resilient region based on agreed rules and norms.

Each year, Japan's Ministry of Foreign Affairs produces a Diplomatic Bluebook that summarises its foreign policy over the past year.

Japan is an active member of multilateral institutions. Japan was a non-permanent member of the UN Security Council in 2016-17 and serves as a non-permanent member in 2023-24. Japan is the third-largest contributor to the UN budget. Japan has served multiple terms as a member of the UN Human Rights Council. While Japan's constitution limits the role of its military forces, the Japan Self-Defense Forces contribute actively to UN peacekeeping operations and disaster relief, including in the Pacific. In September 2015, the Diet passed security reform legislation to give the Self-Defense Forces greater flexibility to contribute to international peace and stability, including by exercising Japan's UN Charter right to collective self-defence.

Economic overview

Japan’s highly industrialised market economy was the third-largest in the world in 2022 (GDP in USD at current prices). Japan has a well-educated domestic workforce, and its large, relatively affluent population makes it one of the world’s largest consumer markets.

Japan’s manufacturing strength has been the most remarkable and internationally renowned feature of its economic growth. Today, Japan is a world leader in the manufacture of automobiles, machine tools, optical and precision equipment, machinery and chemicals. In the face of rising competition from China, the Republic of Korea and other manufacturing economies, Japanese firms have diversified manufacturing production around the world through global value chains and foreign acquisitions. Japan’s services sector, including financial services, now plays a far more prominent role in the economy, accounting for about 70 per cent of Japan’s GDP. The Tokyo Stock Exchange is one of the world’s foremost centres of finance.

International trade contributes significantly to the Japanese economy, with exports equivalent to approximately 21.6 per cent of GDP in 2022. Key exports include motor vehicles and parts, integrated circuits, electrical machinery and photo lab equipment. In 2022, Japan’s major goods export destinations were China (19.4 per cent), the United States (18.6 per cent) and Republic of Korea (7.3 per cent).

Japan’s main imports include crude petroleum, petroleum gas, integrated circuits, coal briquettes and refined petroleum. In 2022, leading suppliers of goods imports were China (21.0 per cent), the United States (9.9 per cent) and Australia (9.8 per cent). Japanese trade and foreign investment trends in recent years reflect a much greater engagement with China, which overtook the United States as Japan’s largest merchandise trading partner in 2007.

Japan is signatory to a number of trade agreements, including the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and Japan-European Union Economic Partnership Agreement (JEEPA), both concluded in 2018. On 15 November 2020, Ministers from 15 countries, including Australia and Japan, signed the Regional Comprehensive Economic Partnership (RCEP). In force since 1 January 2022, RCEP is the world’s largest free trade agreement by members’ GDP. The second RCEP Ministers’ Meeting was held in August 2023.

Following decades of low economic growth and the impact of the Covid-19 pandemic, Japan’s “new capitalism” policies (launched by Prime Minister Kishida in 2021) aim to reinvigorate the economy over the medium term. Japan is grappling with challenges including an ageing/declining population and low birth rate, stalling workforce productivity, the transition to net zero emissions by 2050, and modernisation more broadly.

Bilateral relations

Australia and Japan are united by our shared values, including an unwavering commitment to democracy, human rights, free trade and a rules-based international order. Our partnership is fundamental to both countries' strategic and economic interests.

Japan-Australia relations date back to the late 1800s, when Japan began importing Australian coal and wool. At around the same time, Japanese immigrants came to Australia to work in agriculture and maritime industries, including pearl diving. The trade relationship between Australia and Japan continued to strengthen until the onset of World War II, when Australia joined allied troops to fight against Japan.

Australia and Japan re-established bilateral relations in 1952. Our post-war relationship grew with the establishment of a major trading relationship under the 1957 Commerce Agreement, and deepened cultural ties under the 1976 Basic Treaty of Friendship and Cooperation (the Nara Treaty).

In 1957, Sir Robert Menzies became the first Australian Prime Minister to visit Japan, and then-Prime Minister Kishi Nobusuke became the first post-war Japanese Prime Minister to visit Australia. Since then, our leaders, ministers and senior officials have had regular interactions and visits, including a commitment to annual reciprocal leaders’ visits under our Special Strategic Partnership (2014). Our Foreign Ministers have regular formal and informal discussions, including with Defence Ministers at 2+2 Consultations. Our Trade Ministers also meet annually as part of the Ministerial Economic Dialogue.

Our bilateral relationship has developed into a fully diverse and rounded partnership, which is closer than ever, and underpinned by significant trade and investment links, strong defence and security ties and a deep affinity between our peoples. The elevation of the Australia-Japan relationship to Special Strategic Partnership by the leaders of both countries in 2014 reflects the unique breadth and depth of our close strategic, economic and people-to-people ties.

Australia and Japan share common strategic interests, including our alliances with the United States, and our commitment to an open, stable and prosperous Indo-Pacific region. Our economies are highly complementary, deeply rooted in the Indo-Pacific, and dependent on free and open trade and resilient supply chains.

Defence and security cooperation

Australia and Japan have a strong and broad-ranging security relationship. Japan describes Australia as its most important security partner after our common ally, the United States.

The 2007 Joint Declaration on Security Cooperation provided a foundation for wide-ranging cooperation on security issues between Australia and Japan, including in law enforcement, border security, economic security, health security, climate change, energy transition, counter-terrorism, disarmament and counter-proliferation of weapons of mass destruction, maritime and aviation security, peace operations and humanitarian relief operations.

The renewed Joint Declaration on Security Cooperation (JDSC) issued by Prime Minister Albanese and Prime Minister Kishida in October 2022 deepened and expanded cooperation to respond to the most pressing security challenges in our region. The growth in security and defence cooperation included identifying ways to enhance interoperability, including through expanding existing military exercises and training. Australia and Japan’s defence forces have cooperated in regional crises, including the 2021 Tonga Volcano eruption, 2021 Kiribati drought assistance, 2014 disappearance of flight MH370, and 2013 Typhoon Haiyan.

Australia and Japan signed a Reciprocal Access Agreement (RAA) in January 2022 to further deepen our strategic and security relationship. The RAA entered into force on 13 August 2023. This agreement will facilitate even deeper collaboration on joint defence exercises and humanitarian and disaster support.

Japan provided valuable support to Australia during the 2019-20 Australian bushfire response, including two Hercules aircraft to transport military and civilian personnel, protective masks, and over AUD5 million in cash donations. Similarly, Australia provided extensive assistance to Japan following the 2011 Great East Japan earthquake and tsunami, including specialised personnel and equipment, defence aircraft, and a donation of AUD10 million.

Australia and Japan hold regular '2+2' consultations between foreign and defence ministers. The was held on 9 December 2022.

Regional cooperation

Australia and Japan work together for an open, stable, and prosperous Indo-Pacific region. Together, we are supporting our neighbours in the Pacific and Southeast Asia. Our 2011 Memorandum of Understanding on International Development Cooperation facilitates information exchange and cooperation in sectors such as education, health, food security and infrastructure. Recent 2+2 consultations highlighted our respective approaches to Southeast Asia, and our work together towards mutually decided priorities with ASEAN and Southeast Asian partners, including economic development, security cooperation and the energy transition.

In 2016, we agreed to a Strategy for Cooperation in the Pacific. The Strategy outlines four areas for cooperation: effective governance; economic growth and sustainable development; security and defence cooperation; and diplomatic initiatives. The 2022 Australia-Japan Leaders’ Meeting Joint Statement articulated our pursuit of the expansion of effective cooperation with other partners, including through the Partners in the Blue Pacific (with New Zealand, the UK, and the US), on key areas of importance for the Pacific such as critical infrastructure, disaster recovery and resilience, and maritime security. Leaders also affirmed their commitment to take significant action on climate change.

Australia and Japan are also members (alongside the US) of the Trilateral Partnership for Infrastructure Investment in the Indo-Pacific (TIP). The TIP promotes sustainable infrastructure development and is focused on mobilising private investment in regional infrastructure. In October 2020, the three countries announced the first project under the partnership – an undersea fibre optic cable to Palau. Since then, Australia has worked trilaterally with Japan and the United States to support other infrastructure initiatives, such as the East Micronesia Cable and Telstra’s acquisition of Digicel Pacific. Members of the TIP renewed a Memorandum of Understanding on cooperation in the Indo-Pacific region in October 2022, which included an emphasis on working on infrastructure in concert with the Quad.

Australia and Japan work together in multilateral and regional fora, including the United Nations, G20, Asia-Pacific Economic Cooperation (APEC), the East Asia Summit (EAS), the ASEAN Regional Forum (ARF) and the Asia Zero Emission Community (AZEC). They also collaborate in minilateral frameworks, including the Trilateral Strategic Dialogue (with the US) and the Quad (with the US and India). During Japan’s 2023 G7 Presidency, Prime Minister Albanese attended the Hiroshima Summit in May alongside G7 leaders, and Trade and Tourism Minister Farrell attended the G7 Trade Ministers’ Meeting in Osaka in October. Australia supports Japan’s aspiration to become a permanent member of the United Nations Security Council.

Australia and Japan also cooperate closely on nuclear non-proliferation and disarmament. We have jointly led efforts in support of the Nuclear Non-Proliferation Treaty, including as co-founders of the cross-regional Non-Proliferation and Disarmament Initiative (NPDI) established in 2010. Australia and Japan are co-Chairs of the Friends of the Comprehensive Nuclear Test-Ban Treaty (CTBT) group.

Japan ceased its program of lethal whaling in the Southern Ocean and in 2019 it withdrew from the International Whaling Commission.

Economic engagement

The Australia-Japan economic relationship is highly complementary and enduring. Australia is a safe, secure and reliable supplier of energy, mineral resources and food, and is a world-class centre for financial and other services. Japan became Australia’s largest trading partner in the early 1970s – a position it maintained for 36 years. Japanese investment will continue to play a significant role in the development of the Australian economy, including through the net zero transition.

Australia and Japan held the fifth Ministerial Economic Dialogue in October 2023. The Dialogue is an annual mechanism for high-level engagement on strategic economic and trade cooperation to complement high-level defence and security cooperation and leaders’ meetings. The Dialogue supports the strong and growing trade and investment relationship between Australia and Japan in new areas such as clean energy, including hydrogen and ammonia, and in critical minerals.

Following the June 2019 signing of a Memorandum of Cooperation on Energy and Minerals, Australia and Japan signed a Joint Statement on Cooperation on Hydrogen and Fuel Cells in January 2020 and, and a Partnership on Decarbonisation Through Technology in June 2021. During the Leaders’ Meeting in October 2022, Minister King and Ministry of Economy, Trade and Industry Vice Minister Hirai signed a new Critical Minerals Partnership, to establish a framework for building secure critical minerals supply chains between Australia and Japan and to promote opportunities for information sharing and collaboration.

Australia supports Japan’s economic security efforts. Its 2022 Economic Security Promotion Act and subsequent focus on economic security during its 2023 G7 Presidency have enhanced bilateral and multilateral cooperation on supply chain resilience, the international rules-based trading system and economic coercion.

Trade

Japan has long been a major trading partner for Australia. In FY2022-23, Japan was our second-largest trading partner after China, with two-way goods trade valued at AUD143.4 billion. Japan was also our second-largest export market, valued at AUD115.0 billion and accounting for 16.8 per cent of our total exports. In FY2022-23, Australia’s major merchandise exports to Japan included coal (AUD53.4 billion), natural gas (AUD34.7 billion), iron ore and concentrates (AUD8.1 billion), beef (AUD1.9 billion), and aluminium (AUD1.3 billion).

On the other side of the trade ledger, in 2022 Japan was Australia’s fifth-largest import source, valued at AUD27.4 billion, including passenger motor vehicles (AUD9.4 billion), refined petroleum (AUD4.2 billion), goods vehicles (AUD2.7 billion), civil engineering equipment and parts (AUD1.1 billion) and rubber tyres, treads and tubes (AUD807.5 million).

In FY2022-23, total bilateral trade in services was valued at AUD5.7 billion, with exports valued at AUD1.9 billion and imports valued at AUD3.8 billion. Australia’s key services exports to Japan include travel, transport, business and insurance/pension services.

The Japan-Australia Economic Partnership Agreement (JAEPA) entered into force on 15 January 2015, giving Australian exporters significantly improved market access in goods and services and substantially improving investment protections. Australia and Japan are members of the CPTPP, RCEP and the Indo-Pacific Economic Framework (IPEF), and also cooperate in the World Trade Organisation (WTO).

Investment

The total level of investment between Australia and Japan is significant. Japan was the fourth-largest total foreign investor in Australia in 2022, valued at AUD257.4 billion. Japan was also the third-largest direct foreign investor in Australia (AUD133.8 billion) in 2022, accounting for 12 per cent of total direct foreign investment.

Japanese investment has been essential in the development of many of the export industries that have driven Australia’s growth, including in large-scale projects to meet Japanese demand for resources such as coal and iron ore. Japanese investment has also enabled the rapid expansion of Australia’s LNG production, notably by way of the Japanese-led Ichthys project located about 220 kilometres off the northern coast of Western Australia.

Japanese investment also extends to sectors such as renewables, financial services, infrastructure, information and communications technology, property, food and agribusiness. JAEPA has further boosted Japan’s diverse and growing investment in Australia, generating employment growth, including in regional Australia.

Opportunities exist for Australia to cooperate with Japan as each of our economies transition to a lower carbon future. These include supply and collaboration in relation to carbon-neutral LNG and technologies including hydrogen, low emissions steel and iron ore, clean fuel ammonia, clean hydrogen, and batteries as well as carbon capture and storage and carbon recycling. Opportunities also exist in supplying the Japanese manufacturing sector with critical minerals including lithium, graphite, vanadium, nickel and cobalt.

Doing business in Japan

Austrade assists Australian companies to build and implement their export strategies. Austrade’s Japan market profile offers practical advice, market intelligence, financial assistance and ongoing support to Australian companies seeking to grow their business in Japan. Austrade also works to promote the Australian education sector within Japan and to attract productive foreign direct investment into Australia. Austrade has offices in Tokyo and Osaka.

People-to-people links

Early Japanese settlers started the pearling industry in Australia in the late-1800s. Larger-scale migration began after World War II, and Japanese continue to settle in Australia today. According to the 2021 census, more than 78,000 residents identified with Japanese ancestry. From January to October 2023, there were 11,335 students from Japan in Australia, ranking Japan as 15th overall by volume of enrolments for student visa holders. Japanese students enrolled in English courses, VET colleges, and higher education. For Australian school students, Japanese is the most studied foreign language.

There are more than 100 sister city and state-prefecture relationships between Australia and Japan. These relationships provide opportunities for educational, cultural, sporting, and economic exchanges.

Since 2014, Japan has participated in the New Colombo Plan, an initiative of the Australian Government that aims to lift knowledge of the Indo-Pacific in Australia and strengthen people-to-people and institutional relationships through study and internships undertaken by Australian undergraduate students in the region. The New Colombo Plan has awarded 169 scholarships and 5,506 mobility grants for Australian undergraduates to undertake study and work-based experiences in Japan to date.

The Australian Government supports the expansion of people-to-people and institutional links through the Australia-Japan Foundation (AJF). Since 1976, the AJF has provided grant funding for projects aligned with Australia’s foreign policy priorities, including in science and technology, sport, arts and education programs. People-to-people links are also supported by several Japan-Australia societies that provide grassroots community support to the relationship.

2023 was a record-breaking year for travel by Australians to Japan, with travellers of all generations making the journey. Tokyo is now one of Australia’s most significant consular posts in the overseas network.

Most Japanese travel to Australia on short-term visits as tourists or on business. For FY2022-23, Japan was Australia’s 8th largest inbound market in terms of short-term arrivals and Australia’s 7th-largest tourism market by expenditure.

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