Prime Minister Dr. Manmohan Singh’s successful visit to Japan on 24-26 October 2010 formed one more significant milestone on the road to strengthening and consolidating India’s partnership with Japan. It was the sixth annual summit meeting between the prime ministers of the two countries that was set up in 2005. It is significant to note that whereas Japan has had six prime ministers during these five years, Dr Singh has stayed at the helm and given the much-needed stability and continuity to the partnership. It is also important to bear in mind that political changes in both countries during the last ten years have not had any negative impact on the bilateral ties. In other words, one has to recognise that the value of the bilateral partnership has transcended political divides in both countries. For instance, the then Prime Minister Taro Aso signed the Declaration on Security Cooperation in October 2008, but his successor who belongs to the rival Democratic Party of Japan (DPJ ), Mr. Yukio Hatoyama, strongly supported it by signing an action plan with India – a follow- up measure of the Declaration envisaged by Mr Aso.
Comprehensive Economic Partnership Agreement
The visit of Dr Singh aroused a good deal of interest among the public, both in India and Japan, on how the two key pending issues would be handled. The first one relates to the comprehensive economic partnership agreement (CEPA) negotiations which had passed through 14 rounds of talks since 2006. It was reported in December 2009, at the time of Mr. Hatoyama’s visit to New Delhi, that an agreement would be ready by the time the next summit took place in Tokyo in 2010. At the Tokyo summit, both Mr Naoto Kan and Dr Singh accepted the agreement in principle and asked their respective governments to facilitate its entry into force at the earliest. Now only certain technical details of the agreement need to be scrutinised by the Japanese legal bureau. According to reports, the agreement will be signed by the end of the year. This slight delay should not cause any concern because it is reliably learnt that even if it had been signed now, it would still not come into force until at least the spring of 2011 as it needed the Japanese Diet’s ratification. Considerable optimism is expressed in both countries on the prospects of the bilateral trade witnessing giant strides in the coming decades as a fallout of the CEPA. Much broader than a free trade agreement (FTA), the CEPA is expected to give an overall boost to all aspects of the bilateral partnership. In particular, it will enhance Japanese investment in India, contribute to regional integration and bring in a bigger presence of Japanese businessmen in India. Under the CEPA, India will eliminate tariffs on 90% of its imports from Japan in ten years and Japan will eliminate tariffs on 97 % of its imports from India. Some of the main items that would witness tariff cuts include electronic goods, auto parts, agricultural products and generic medicines. As Dr Singh said, “It is an important achievement that signals the economic alignment of two of the biggest economies of Asia.” In this context, it would be useful to note how a similar CEPA signed between India and South Korea recently has contributed to significant growth of trade and investment. In 2009, South Korea’s trade with India surpassed that from Japan.
Cooperation in the civilian nuclear field
The second subject that attracted great attention concerns how Japan and India would cooperate in the civilian nuclear field. Given Japan’s traumatic experiences following the dropping of atomic bombs on Hiroshima and Nagasaki in August 1945 and the strong pacifist groups that vehemently oppose anything nuclear, signing a civilian nuclear accord with India, a non-signatory of the NPT, is a very sensitive issue. Though the two countries have been engaged in an energy dialogue for a few years now, cooperation in the nuclear energy field has not occupied their attention so far in a pronounced way. After India was freed from the decades old ban on nuclear trade with outside world, the question of Indo-Japanese nuclear cooperation came up increasingly for serious discussion. In the October 2008 summit held in Tokyo, Dr Singh clarified that India was not in a hurry to rush through the negotiations, but would like to move “at a pace at which the Japanese people and government are comfortable.” In December 2009 when Hatoyama visited Delhi, he gave a broad hint that he would look into the question of Japan’s export technology regime that had blocked the transfer and sale of dual technology to India. Mr Kan, who succeeded Mr Hatoyama in July 2010, dramatically changed the course and initiated negotiations for an agreement in the civilian nuclear field. Since then, two rounds of negotiations have already taken place and the third one is scheduled to be held in November in Tokyo. So far, these negotiations have served the purpose of clarifying their positions on the issue. First, Tokyo expects India to be committed to the NPT and CTBT. Many in India understand the compulsions of the Japanese government. It could ill afford to turn a blind eye to the anti-nuclear campaign carried on by the pacifist groups in Japan. As for India, it has reiterated its long standing commitment to nuclear disarmament and explained why it cannot support the NPT. But on the CTBT, Dr Singh had indicated a subtle change in India’s position in December 2009 that it could consider test ban treaty if the US and China ratified it.
During the two rounds of negotiations, Japan reportedly insisted on including a specific clause stating that if India conducted a nuclear test, Japan would terminate the agreement. On its part, India took the position that its commitment to refrain from conducting any more test is well known and that its agreement with Japan could not be different from those signed with other countries. How the two countries will hammer out a mutually acceptable solution to this stalemate will be seen during the ensuing negotiations.
But there are compelling reasons for both countries to work out a compromise quickly. India needs additional energy on a massive scale to sustain its expanding economy, and cooperation in the nuclear trade with Japan is quite crucial. For Japan, there are pressures from the powerful business groups that nudge the government in the direction of working out an understanding with India. New Delhi has already signed agreements with the US, France, Canada and Russia. Even South Korea has initiated negotiations for a nuclear agreement with India. American and French companies which expect to enter into contracts with India for constructing nuclear reactors will not be able to implement their projects unless they receive the vital components from Japanese companies like Toshiba, Hitachi and Mitsubishi. Further, the sagging Japanese economy which needs to bolster its exports, would consider these reactor projects as god send opportunities.
Attitude towards China
Dr. Singh’s visit to Japan coincided with a period of increasing tension in Tokyo’s relations with Beijing. Both Dr. Singh and Mr. Kan showed utmost caution while explaining their respective positions on China. Both believe in a policy of engaging with China in productive dialogues and mutual cooperation. Dr. Singh expressed his readiness to supply earth minerals to Japan since China has stopped its supplies to Japan recently. China has the biggest stocks of minerals in the world and Japan wholly depends on China for almost all its requirements. The present crisis with China has forced Japan to diversity its supplies and India could fulfil at least some of its requirements. Dr. Singh’s assurance that India would be inclined to supply some portions of Japan‘s needs would open a new window of opportunities for closer cooperation. Dr. Singh has also done well to state categorically that the current minerals trade is in no way directed against China.
Lastly, both Dr. Singh and Mr. Kan expressed their full satisfaction at the smooth progress of bilateral ties in the security sphere with many well-structured mechanisms at different levels. Similarly, they were quite satisfied with the smooth implementation of yen loans programme. India has been the biggest recipient of Japanese assistance since 2003 and it is important to note that while Japan’s overall volume of its aid has been on the decline, its assistance to India has been increasing. This shows the importance Japan attaches to India.
(Prof. K.V. Kesavan is a Distinguished Fellow at Observer Research Foundation)
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