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Japan

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Japan country brief

Bilateral overview

The Australia–Japan partnership is Australia’s closest and most mature in Asia and is fundamental to both countries' strategic and economic interests. The relationship is underpinned by a shared commitment to democracy, human rights and the rule of law, as well as common approaches to international security. We also share deep and longstanding trade and investment ties, and cooperate closely on the development of regional and global trade rules. In 2020, Japan was Australia's third-largest trading partner (two-way goods and services trade valued at AUD66.3 billion), second-largest export market (AUD46.4 billion), and second-largest source of foreign direct investment (AUD131.8 billion).

Japan and Australia share common strategic interests, including our alliances with the United States, and our commitment to an open, inclusive and resilient 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. Australia and Japan cooperate closely in multilateral fora, including the G20, Asia-Pacific Economic Cooperation (APEC), the East Asia Summit (EAS), the ASEAN Regional Forum, and in minilateral frameworks, including the Trilateral Strategic Dialogue (with the US) and the Quad (with the US and India). We also have a strong and growing bilateral defence relationship, including sophisticated joint exercises, staff exchanges and science and technology cooperation.

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 the Special Strategic Partnership agreed in 2014. Prime Minister Morrison and Japan’s Prime Minister Kishida met in November 2021 on the sidelines of the COP26 in Glasgow, where they agreed to work towards further elevating the relationship and discussed cooperation on issues including climate change and regional security. Prime Minister Morrison met outgoing Prime Minister Suga at the Quad leaders’ meeting in Washington in September 2021. He was also the first leader to meet Prime Minister Suga in Japan in November 2020. Our Foreign Ministers have regular formal and informal discussions, including with Defence Ministers at 2+2 Consultations, which were last held virtually in June 2021.  Our Trade Ministers also meet regularly, including at the Ministerial Economic Dialogue, last held in Japan in July 2021. Explore more key ministerial Joint Statements from high-level visits on the Key Documents page.

Political overview

Government and administration

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. His predecessor, Suga Yoshihide, served for one year, having replaced Japan's longest-serving Prime Minister, Abe Shinzo, in September 2020. Japan maintains an imperial family, currently headed by Emperor Naruhito. The accession of Emperor Naruhito on 1 May 2019 marked the beginning in Japan of the Reiwa ('beautiful harmony') Era.

Universal suffrage is limited to citizens of Japan aged 18 years or older, and voting is not compulsory.

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 political conditions frequently see the House dissolved earlier. 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 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 does not have a federal system. Its 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.

The Liberal Democratic Party (LDP) has been in power almost continuously since its establishment in 1955, and in coalition with Komeito since 1999, except for a period in opposition in 2009-12.

Current parliament

On 4 October 2021, Kishida Fumio was elected leader of the Liberal Democratic Party (LDP) and became the 100th Prime Minister of Japan. On 31 October 2021, the LDP/Komeito coalition was re-elected in the Lower House and retained government. Although the coalition lost some seats, it maintained an absolute majority.

The outcome of the 2021 general election:

Party Seats
LDP 261 (-15)
Komeito 32 (+3)
Constitutional Democratic Party (CDP) 96 (-13)
Japan Communist Party (JCP) 10 (-2)
Nippon Ishin 41 (+30)
Democratic Party for the People (DPFP) 11 (+3)
Reiwa Shinsengumi 3 (+2)
Social Democrats Party (SDP) 1 (±0)
Anti-NHK party 0 (-1)
Independent 10 (-2)
TOTAL: 465

Foreign relations

Japan's foreign policy aims to promote a peaceful and stable international community to support an economy highly dependent on international trade and investment, which relies on adherence to agreed rules and norms. 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. Japan is working closely with partners, including Australia, on COVID-19 response and recovery.

The Japan-US alliance is the cornerstone of Japan's foreign policy and national security, and this security cooperation 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 official development assistance (ODA) is focused in the Indo-Pacific, and in 2020 totalled USD16.3 billion, making it the fourth-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.

Japan and India enjoy a close relationship, which was elevated to a 'Special Strategic and Global Partnership' in December 2015. The two countries cooperate in many areas in the security and economic fields, including infrastructure and economic corridors, and human resource development.

Through the quadrilateral dialogue (the Quad), Japan, India, Australia and the United States cooperate on shared regional challenges including: climate change and humanitarian assistance; COVID response and vaccines; cyber security and critical and emerging technologies; infrastructure; and counterterrorism. Quad foreign ministers meet regularly, and leaders met in person for the first time in September 2021.

Like Australia, Japan views ASEAN and Southeast Asia as central to the Indo-Pacific region. Japan is a major trading partner and source of foreign investment for Southeast Asia. Japan actively contributes to multilateral initiatives for enhanced dialogue and cooperation in the region, including Asia-Pacific Economic Cooperation (APEC), the East Asia Summit (EAS), the G20, the ASEAN Regional Forum (ARF) and ASEAN+3 (ASEAN members plus Japan, China and ROK). Japan has a strong diplomatic presence in the Pacific, and engagement at leaders’ level through the Pacific Islands Leaders Meeting (PALM).

Japan’s relations with its neighbours are a key preoccupation for its foreign policy. After the signing of a peace and friendship treaty with China in 1976, bilateral relations developed rapidly. Japan supported China's membership of the World Trade Organization (WTO), and China is Japan’s top two-way trade partner. Cooperation between Japan and the Republic of Korea (ROK), including over the threat posed by the Democratic People's Republic of Korea (DPRK), is important in ensuring regional stability. A trilateral summit process established in 2008 provides Japan, China and the ROK with a forum for leaders-level dialogue – the eighth meeting was held in December 2019. Japan's relationships with China and the ROK are complicated by territorial and historical issues. Japan is also seeking to resolve a longstanding territorial dispute with Russia.

Japan is an active member of multilateral institutions. Japan was a non-permanent member of the UN Security Council in 2016-2017 and 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.

Prime Minister Kishida’s cabinet has signalled its intention to maintain foreign and security policies that focus on working with like-minded partners to uphold a free and open Indo-Pacific in a period of strategic uncertainty. Each year, Japan's Ministry of Foreign Affairs produces a Diplomatic Bluebook that summarises its foreign policy over the past year.

Economic overview

Japan’s highly industrialised market economy is the third-largest in the world (GDP at market exchange rates). 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 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 15.6 per cent of GDP in 2020. Key merchandise exports include motor vehicles, machinery and manufactured goods. In 2020, Japan’s major goods export destinations were China (22.0 per cent), the United States (18.5 per cent) and the Republic of Korea (7.0 per cent).

Japan has few natural resources, and its agricultural sector remains relatively protected, although a long-overdue domestic reform process started in anticipation of recent trade deals, such as 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 Agreement (RCEP). When in force from 1 January 2022, RCEP will be the world’s largest free trade agreement.

Japan’s main merchandise imports include mineral fuels, machinery, pharmaceuticals and chemicals. In 2020, leading suppliers of goods imports were China (25.8 per cent), the United States (11.3 per cent) and Australia (5.6 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's economy has taken a hit from the COVID-19 crisis, recent global trade tensions and world economic slowdown. This has put Japan into a recession for the first time since 2015, with GDP falling by 4.6 per cent to USD5 billion in 2020. However, unemployment has remained low throughout the crisis, remaining at 2.8 per cent for most of 2020-2021. In 2020, Japan announced three stimulus packages to support the economy through COVID-19, with an approximate value of 230 trillion yen (USD3 trillion), or 64 per cent of GDP. Measures include a universal cash payment to residents, subsidies and loans for businesses, and tax deferrals. Incentives have also been introduced to encourage reshoring and ‘near-shoring' of Japanese production from China to promote supply chain diversity. In November 2021, the Kishida Government announced an additional 55.7 trillion yen (USD488 billion), stimulus package, which includes cash payments to households, subsidies to firms impacted by the pandemic, and wage increases for childcare workers and nurses.

Most observers predict broad continuity in economic policy under Prime Minister Kishida. Prime Minister Kishida's key economic policy, dubbed ‘new capitalism', is aimed at addressing wealth disparities and redistributing wealth to households, with a focus on rebuilding Japan's middle class. This policy combines the pro-growth economic policies of former Prime Minister Abe, dubbed 'Abenomics', with stronger government-led efforts to redistribute wealth from companies to households. Japan is also grappling with demographic challenges, including rapid ageing and a declining birth rate, and the reduced workforce and tax revenues that result from this. Former Prime Minister Abe also introduced labour market reforms, including 'Womenomics', to increase workforce participation to counter these trends. Although progress has been made in a number of sectors, continued reform efforts will be important to revitalise Japan's business environment, including due to the effects of COVID-19.

Prime Minister Kishida will continue former Prime Minister Suga's digitalisation and government reform agenda. The Kishida administration will also focus on areas such as supply chain resilience and the protection of critical infrastructure and technology, with the first-ever appointment of a cabinet minister dedicated to economic security.

Bilateral relations

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 Japan and Australia 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 began with the establishment of a major trading relationship with the 1957 Commerce Agreement, and deepened cultural ties under the 1976 Basic Treaty of Friendship and Cooperation (the Nara Treaty). Our bilateral relationship has developed into a fully diverse and rounded partnership, including important political and security objectives, highlighted by the 2007 Joint Declaration on Security Cooperation and the 2015 Japan-Australia Economic Partnership Agreement (JAEPA). Since 2014, we have been broadening and strengthening our cooperation across the board under our Special Strategic Partnership. Today, Japan is Australia’s closest partner in Asia.

Special Strategic Partnership

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. Australia and Japan cooperate closely bilaterally and trilaterally with the United States, including through the Trilateral Strategic Dialogue. We also work together in critical regional partnerships with countries such as India, including through the Quad.

Our prime ministers engage in annual reciprocal leaders' summits, and we hold an annual ‘2+2' meeting of foreign and defence ministers. Australia and Japan regularly participate in joint defence exercises and frequently consult on regional security issues, such as the nuclear tests and ballistic missile launches undertaken by the Democratic People's Republic of Korea (DPRK).

The 2007 Joint Declaration on Security Cooperation provides a foundation for wide-ranging cooperation on security issues between Australia and Japan, including in law enforcement, border security, counter-terrorism, disarmament and counter-proliferation of weapons of mass destruction, maritime and aviation security, peace operations and humanitarian relief operations. We have worked closely together in key defence operations, including in Iraq, East Timor, and Pakistan.

In 2014, the leaders of both countries elevated the Australia-Japan relationship to a Special Strategic Partnership, reflecting the unique combination of our close strategic, economic and people-to-people ties. In November 2018, then Prime Minister Abe visited Australia, including a historic visit to Darwin. Prime Minister Morrison visited Japan in November 2020 − his only overseas visit that year − and became the first leader to meet Japan’s then Prime Minister Suga in Japan. Japan provided valuable support for Australia’s bushfire response, including two Hercules aircraft to transport military and civilian personnel, protective masks, and over AUD5 million in cash donations. Similarly, Australia had 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. At the ninth 2+2 meeting on 9 June 2021, Ministers reaffirmed the growing strength of our Special Strategic Partnership. The 2+2 joint statement reaffirmed our determination to work together, and with the US and other partners, to promote a free, open, inclusive and prosperous Indo-Pacific where disputes are resolved peacefully, without the threat or use of force or coercion, and where the sovereignty and rights of all states under international law are upheld. Ministers discussed key regional security and defence issues including coercive and destabilising behaviour in the region, economic coercion, human rights issues in Xinjiang, Myanmar, and North Korea.

Outcomes agreed by Ministers at the 2+2 included deepening cooperation on cyber and critical technology, coordinating vaccine-related assistance in Southeast Asia and the Pacific, and improving information sharing. The 2021 2+2 meeting built on the many previous outcomes of the 2+2 process, including an Acquisition and Cross Servicing Agreement (ACSA) on defence logistics cooperation, which entered into force on 31 January 2013, and an Information Security Agreement on the sharing of classified information, which entered into force in March 2013. A revised ACSA was signed in January 2017 and came into force in September 2017.

Our defence forces are increasing joint training and strengthening interoperability. Japan and Australia have agreed in-principle on a reciprocal access agreement (RAA), which will further deepen our strategic and security relationship by facilitating joint defence exercises and humanitarian and disaster support.

Australia and Japan 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 also co-Chairs of the Friends of the Comprehensive Nuclear Test-Ban Treaty (CTBT) group.

Australia and Japan work together to maintain the stability, resilience and prosperity of the Indo-Pacific region. Together, we are supporting our neighbours in the Pacific and Southeast Asia respond to and recover from COVID-19, including through the supply of vaccines. Our 2011 Memorandum of Understanding on International Development Cooperation facilitates information exchange and cooperation in sectors such as education, health, food security and infrastructure. 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.

Australia and Japan are also founding members (alongside the US) of the Trilateral Partnership for Infrastructure Investment in the Indo-Pacific. The Trilateral Infrastructure Partnership 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.

Australia and Japan are close partners in regional and multilateral forums such as Asia Pacific Economic Cooperation (APEC), the East Asia Summit (EAS) and the G20. Australia supports Japan's aspiration to become a permanent member of the United Nations Security Council.

Japan has ceased its program of lethal whaling in the Southern Ocean and has withdrawn from the International Whaling Commission.

Economic engagement

The Australia-Japan economic relationship is underpinned by complementary strengths and needs. Australia is a safe, secure and reliable supplier of food, energy and mineral resources and 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 26 years. Japanese investment continues to play a significant role in the development of the Australian economy.

Australia and Japan held the third Ministerial Economic Dialogue in July 2021. The Dialogue offers a regular mechanism for high-level engagement on strategic economic and trade cooperation to complement high-level defence and security cooperation and annual leaders’ meetings. The Dialogue supports the strong and growing trade and investment relationship between Australia and Japan in new areas such as energy, including hydrogen, and 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 a Partnership on Decarbonisation Through Technology in June 2021.

During the July 2021 meeting, Minister for Trade, Tourism and Investment Dan Tehan, and then Japanese Minister of Economy, Trade and Industry Kajiyama Hiroshi reaffirmed their commitment to the rules-based multilateral trading system and close collaboration including through the CPTPP, RCEP and WTO. The Ministers confirmed the importance of building supply chain resilience, collaborating on technology research and development to reduce greenhouse gas emissions, and enhancing information exchange to address challenges in digital and critical technologies, and infrastructure. The Trade Ministers were joined by the Australian Minister for Energy and Emissions Reduction, Angus Taylor, to progress initiatives to drive the transition to net zero emissions and achieve the goals of the Paris Agreement.

Trade

Japan was Australia’s third-largest trading partner in 2020, with two-way goods and services trade valued at AUD66.3 billion. Japan was Australia’s second-largest export market, valued at AUD46.4 billion in 2020, accounting for 10.6 per cent of total exports. In 2020, Australia’s major merchandise exports to Japan included natural gas (AUD14.2 billion), coal (AUD11.7 billion), iron ore and concentrates (AUD6.6 billion), beef (AUD2.2 billion), copper ores and concentrates (AUD1.1 billion) and aluminium (AUD0.8 billion).

On the other side of the trade ledger, in 2020, Japan was Australia’s third-largest source of goods and services imports, valued at AUD19.9 billion, including passenger motor vehicles (AUD8.0 billion), goods vehicles (AUD1.8 billion), refined petroleum (AUD1.1 billion), transport services (AUD0.9 billion), civil engineering equipment and parts (AUD0.8 billion), and personal travel (excluding education-related travel) (AUD0.8 billion). Total bilateral trade in services in 2020 was valued at AUD3.5 billion, mostly in the recreational travel, transport and education sectors. Services exports were worth AUD1.4 billion and services imports were valued at AUD2.1 billion.

The Japan-Australia Economic Partnership Agreement (JAEPA), which entered into force on 15 January 2015, gives Australian exporters significantly improved market access in goods and services and substantially improves investment protections. Both Australia and Japan are members of the CPTPP and RCEP.

Investment

The total level of investment between Australia and Japan is significant. Japan was the fourth-largest total investor in Australia in 2020, at a value of AUD265 billion. Japan was the second-largest direct foreign investor in Australia (AUD131.8 billion) in 2020, accounting for 12.8 per cent of total foreign direct 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 AUD34 billion Ichthys project located about 220 kilometres off the Western Australian coast.

Japanese investment has also begun to extend beyond the traditional areas of natural resources 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 transitions 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 2016 census, more than 65,000 residents identified with Japanese ancestry. There were 12,307 enrolments by students from Japan in Australia in 2020, ranking Japan as 16th 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 4,427 scholarships and 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, which provides 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.

Most Japanese travel to Australia on short-term visits as tourists or on business. Japan is Australia’s thirteenth-largest inbound market in terms of short-term arrivals and Australia’s eleventh-largest tourism market by expenditure.

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