As Asian rival China invests billions in Latin America and snaps up strategic commodities, Japan also is looking at the region with new interest.
Shortly after Chinese President Xi Jinping’s Latin American tour in July, Prime Minister Shinzo Abe made a 10-day, five-nation swing through Latin America and the Caribbean.
His trips to Mexico and Brazil were the first bilateral visits by a Japanese prime minister in a decade, and his trip to Chile was the first such visit by a Japanese prime minister since 1996. Abe’s stop-over in Port of Spain marked the first time that a Japanese prime minister had ever visited the twin-island nation of Trinidad and Tobago, and his trip to Colombia also was the first official visit for a Japanese prime minister.
In September, Abe also held a summit with Panamanian President Juan Carlos Varela while both were attending the U.N. General Assembly and they discussed participation of Japanese companies in expansion projects at the Panama Canal. The Japan Bank for International Cooperation is providing a portion of the financing for the canal expansion.
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For the record, Abe’s globe-trotting ways aren’t just reserved to Latin America. Since taking office in December 2012, he has visited 50 countries — a record for a Japanese prime minister.
But the region’s profile is clearly rising in Japan.
“During the trip people told us there was the feeling that Japan had returned to Latin America,” said Maki Kobayashi-Terada, of the Japanese Ministry of Foreign Affairs’ Latin American and Caribbean Affairs Bureau.
Takako Ito, director of the Ministry’s international press division, said in a recent interview with the Miami Herald that Abe’s Latam trip wasn’t so much a response to China’s growing influence in the region as a reflection of Japan’s desire “to strengthen our political, strategic, and economic relationships’’ in the Americas.
And while China may be a rival, Ito points out that it is also Japan’s biggest trading partner and Japanese companies create 14 million jobs in China.
“We’re not trying to compete with China, but, of course, we’re aware of how they’re expanding their influence in Latin America,” said Kobayashi-Terada. “We want to work constructively with China for effective development in Latin America.”
Yomiuri Shimbun, Japan’s largest newspaper, noted in an editorial: “China has been no less active in increasing ties with Latin American countries, with a view to securing natural resources from them. Japan should attach great importance to building reciprocal relationships with its Latin American partners, and emphasize its difference from China in dealing with these countries.”
For one thing, Ito said, Japan is interested in sustainable development. “Environmental impact is an important part for us,” she said. “Sometimes Japanese projects have been criticized as slow to start, but we’re slow because we care about environmental impact.
“If Chinese institutions aren’t taking this into consideration, it’s not good for a country or for the global community,” Ito added.
Increasingly, China also is tying the use of Chinese labor to regional loans and investment projects — something that doesn’t interest Japan, which has a declining population and labor shortages in some sectors.
With limited energy resources of its own and all its nuclear power plants shut down in the wake of the March 2011 Fukushima Daiichi nuclear disaster, Japan also is looking to Latin America as a potential source of energy and other natural resources, and it is eager to import liquified natural gas from the U.S. via an expanded Panama Canal.
The third largest net importer of oil after the United States and China last year, Japan gets most of its crude from the Middle East and would like to diversify its supply sources.
Still suffering through two decades of economic stagnation and now in a recession, the world’s third largest economy also is casting about for new partners in a region where at least some of the economies are still growing.
Despite the weak economy and with two years left in his term, Abe recently dissolved the lower house of parliament in preparation for a mid-December snap election. It’s viewed as an effort to solidify his mandate for Abenomics, his economic reform plan, at a time when the opposition is in disarray.
“Economically speaking, Latin America is very promising for us — along with Asia,” said Kobayashi-Terada.
Latin America’s growing middle class and its increased purchasing power, as well as the region’s need for infrastructure improvements that could be provided by Japanese companies, also are generating interest.
“For us, Latin America is the furthest away region on the globe,” said Ito, “but Latin America is also a growing economic region and we share some of the same values with many of the countries when it comes to peace and security issues.”
Chile and Mexico — the two countries that Japan has already signed economic partnership agreements, or free trade deals, with — and Colombia have similar values regarding democracy, respect for human rights, rule of law and free trade, she said. An EPA with Colombia is in the works.
“As Japan seeks to widen its diplomatic horizons, you are the partners we look to count on,” said Abe in Sao Paulo on Aug. 2 during the concluding speech of his Americas tour. “There is a commonality between us: of values, of visions.
“Japanese prime ministers and other ministers will visit Brazil and other countries of Latin America and the Caribbean with increasing frequency,” he pledged.
Going forward, Kobayashi-Terada said, Japan would like to forge “more normal relationships in the Americas. It’s a pity that we’ve missed all these opportunities with such friendly countries.”
Last year Japan became an observer of the Pacific Alliance, a Latin American trade bloc whose members — Chile, Mexico, Colombia and Peru — all border the Pacific Ocean. Costa Rica is in the process of becoming a member.
A delegation of 70 Japanese business executives accompanied Abe on at least one of his stops during his summer trip. Three of the countries Abe visited are the top destinations for Japanese investment in the Americas. Brazil leads the way with 578 Japanese companies, followed by Mexico with 545 and Chile with 83, according to the Foreign Ministry.
Japanese executives were wary of Latin America during the 1980s debt crisis, but the relative stability of the past decade has piqued their interest, said Kobayashi-Terada. “Now we have a common basis to work together,” she said. Climbing labor costs in China also are making Latin America more attractive for Japanese investors.
Now the Japanese automotive and auto parts industry is eying Mexico with renewed interest and Japanese companies are closely following Mexican reforms in the petroleum industry. Abe noted the possibility that Japanese companies might provide oil and shale gas technologies and Mexico might supply LNG to Japan.
Brazil’s planned infrastructure projects, its automotive sector, shipping, manufacturing, and natural resources and deep-sea petroleum potential are fueling a Japanese turn to Brazil where 1.6 million residents of Japanese descent make it the largest Japanese community outside Japan.
Abe said there also is potential for cooperation in cutting-edge areas such as satellite observation of the Amazon Rain Forest and for sharing Japanese labor-management practices.
In Chile, Abe said that Japanese companies are interested in investing in mining and infrastructure.
Japanese executives, he said, are taking note of the dynamic changes now underway in Colombia. “Our business people are pushing really hard to get the Colombia EPA done,” Kobayashi-Terada said.
Even though the Caribbean is distant from Japan, said Kobayashi-Terada, the world is getting closer and smaller. And Caribbean leaders have been vocal about two things that are important to Japan: climate change and environmental issues.
“They are also island countries with a great interest in maritime security issues,” she said. “We have many small islands in Japan that are facing similar issues.”
During his trip to Trinidad and Tobago, Abe attended the first-ever Japan-CARICOM Summit on July 28 and held individual meetings with leaders of 12 CARICOM members. Abe also signed an agreement for the Japan-Caribbean Climate Change Partnership, which provides a $15 million grant to help several Caribbean countries cope with the impact of climate change and natural disasters.
As part of its outreach effort, Japan is working with Japanese descendants (Nikkei) throughout the region, inviting young leaders for meetings in Japan, promoting Japanese language programs and arranging meetings between Japanese associations, said Kobayashi-Terada.
This fiscal year more than 1,000 young leaders and Japanese descendants in Latin America and the Caribbean are expected to take part in exchange programs.
“Most of our efforts are networking to make sure the attachment remains,” Kobayashi-Terada said.