SUNSTAR Press Digest 3 ,September 2, 2016

1 Introduction and Silly Season: Benson the Carp Dies
2 Apple’s €13bn Tax Bombshell
3 BREXIT, Syria, Turkey: Putin the Winner
4 Japan Big Changes Coming
5 TTP, TTIP, EU-Japan Tade: Is Free-Trade Stalling?
6 China, North Korea, Senkaku and the US Elections
7 China and Japan’s Role in Africa
8 Italian Earthquake
9 Artisan Sake gets the Top Vintage Treatment


1 Introduction. The Silly Season: “Benson the Carp Dies”
Each month I will prepare a more Japan focussed Press Digest, which will also be translated into Japanese.  This is the first such Japan Press Digest. Some of the stories reported here have already featured in previous Digests, however in this Japan Edition I take a longer overview of each story.  So the themes of Brexit, US Elections, Russian diplomatic manoeuvres and the woes of TTP and TTIP will be familiar to you, but I hope that you will find the monthly summary useful.

One story not covered in the Japan Digest, but included here is the European Commission’s €13bn Apple tax bombshell. The EU is claiming that the tax advantage given to Apple by the Irish Government is tantamount to state aid, something that is not permissible under EU law. This story has been rumbling for a while, and still has some way to go. The Irish Cabinet has just announced they will challenge the decision.

In the Japan Digest I have, of course, given more focus to news from Japan, the Emperor’s announcement, Mr Abe’s intended constitutional changes and the modest financial easing to boost the Japanese economy. 

The Pacific Region is very far away from Europe, but tensions there are of huge importance. The Japanese Embassy in London, plays a key role alerting UK decision-makers and opinion-formers of what is going on and of the potential threats. How will the eventual outcome of the US Elections affect the stability of this increasingly tense part of the world?

China has stolen a march of most western countries including Japan in itsinvestment in Africa, So it was good to see PM Shinzo Abe taking 75 Japanese business leaders to Nairobi for the 6th Tokyo International Conference on African Development, the first to be held in Africa and making a big financial commitment to African development.

Finally, the Italian earthquake. The funerals have taken place, the mourning for the victims continues, but the recriminations have begun. Had the Italians approached the problem of protecting its people and building like the Japanese have done the destruction and the loss of life would have been less catastrophic.

Two big stories not covered this time: the Hangzhou G20 Summit taking place this weekend and the continuing EU migration crisis which once again is becoming big news. Both of these stories will feature in the next Digest.

So where does Benson the Carp feature? August is traditionally holiday time, Parliaments and schools close for the summer and this year many of us where taken over by the spectacle of the Rio Olympics.  In England they call August the “silly news season” because newspapers trying to fill their pages end up giving space to “silly stories”. A prime example of this was the death of a carp covered by all the media in August 2009. Complete with large colour photographs, the media thought that one of the most important stories of that day was the death of Benson, a 25 year old female carp, that had been caught and re-released 63 times. Benson’s death was covered by all major UK papers and the BBC with much speculation about the cause of her death.  Read More 

2  APPLE’s €13 bn Tax Bombshell
The EU is claiming that the tax advantage given to Apple by the Irish Government is tantamount to state aid, something not permissible under EU law. This story has been rumbling for a while, and still has some way to go. The Irish Cabinet has just announced they will challenge the decision. At the heart of the matter is the sovereignty of a nation to determine it’s own tax affairs and to support regions in need of development. Ireland will argue that the tax it forfeited is counterbalanced by the employment and development it generated in a part of the country that was seriously in need of it. You can expect the European Parliament, the White House amongst others to get involved, but ultimately it will be a matter of legal interpretation of eu law by the court in Luxembourg. Expect this story to run and run.   BBC NEWS  and The Guardianhas a good background story.

3  BREXIT, Syria, Turkey: Putin the Winner.
Of course there have been some “silly season” stories this year too, however the international mood is sombre.  In Europe nobody knows what BREXIT will mean for the European Union or for the United Kingdom.  What is certain is that the uncertainty is bad for the economy and bad for the Eurozone recovery. The USA is in the throes of a tough Presidential election, with huge foreign relations implications for Europe, but maybe more importantly for Pacific Region. The winner from all this uncertainly appears to Russia’s President Putin. Putin’s support of Assad is helping the Syrians  push back Daesh/ISIS, but at a terrible cost of civilian lives. Putin is also making his presence felt supporting the Turkish PM Erdogan, who was heavily criticised by the EU for his human rights abuses  following last month’s failed coup. Turkey is a strategically important NATO  ally, so no surprise that President Obama sent VP Biden to Turkey to smooth the waters and warn against too comfortable relations with Russia.  Meanwhile the UK’s new PM, desperately trying to find a new international role for the UK outside the EU,  telephones Putin to say that she wants a better relationship with Russia, ignoring or forgetting that Russian agents murdered a UK citizen on UK soil using the highly radioactive polonium-210. Once again Putin gains from the West’s disunity .  Murder  of Alexander Litvinenko

4  Japan: Big Changes Coming
One big Japanese story that featured in all the global media, was of course the announcement by Emperor Akihito of his wish to abdicate. The dignity of the announcement impressed everybody. Earlier in the month the media had reported PM Shinzo Abe LDP’s impressive Upper House election win. Abe’s win, and his appointment of Mrs Ikeda as Defence Minister, was seen as a sign that he was intent on changing Article 9 of the Constitution, which limits Japan’s armed forces to a purely defensive role. Mr Abe has the votes to win in Parliament, but would then have to take the decision to the electorate in a referendum.  Opinion polls, the London Guardian said are close: 49% in favour of change and 44% against. Referendums are often unpredictable as the london Guardian well knows. Western commentators who are not Japan specialists often do not understand the pressure Japan is under from China and North Korea, nor do they understand that having to rely on the US for its defence is not satisfactory to many Japanese.

The Emperor’s announcement has no doubt complicated the political landscape.  Abdication is not envisaged as a possibility in the Imperial Household Law, and starting the discussion, it has been reported, could open a box of surprises.

The Emperor’s TV statement came days after the announcements by the Bank of Japan of some modest financial easing and by PM Abe of a Yen 28.1Tn (.9% of GDP) in additional government spending to boost lagging consumer spending and counter the effects of the drag on exports caused by the strength of the yen. The Bank of Japan’s modest financial easing also received some press coverage.  Commentators have been sceptical about the effect both measures are likely to have.

5  TTP, TTIP, EU-JAPAN Trade: Is Free-trade Stalling? There has been a post-cold war consensus that free trade is good for economies and develeopment. That notion might have been a little over-simplistic; very true that trade and economic growth has lifted millions out of poverty, however, particularly in developed countries, large sections of the workforce, mainly the less-educated, have lost out to global competition from Asia and particularly from China. Not enough has been done to help these workers, and now both in the US and in Europe, there is evidence of a backlash against free-trade agreements, seen by many as the cause of loss of jobs or of income. The result is that politicians, eager for votes, start backing trade-protectionist policies.  Two big examples will illustrate this.  The TTP (Trans-Pacific Partnership agreement between Japan, Singapore, Vietnam, Australia, Brunei, Canada, Chile,  Malaysia, Mexico, New Zealand, Peru,  and the US – encompassing  12 countries and 40% of world GDP is now unlikely to be agreed during Obama’s last days in the White House, worse still Trump and is publicly opposed to the deal, and Hillary Clinton is at best lukewarm. Meanwhile the TTIP, the Transatlantic Trade and Investment Partnership agreement, being negotiated between the US and the EU is also on the ropes, with Germany’s Foreign Minister declaring it has failed, and France also getting cold feet. The European Commission says a deal is still possible, but the clock is now against them as France, Germany as well as the US prepare for elections.

Progress is, however being made in other areas, away from the media spotlight. The EU-Japan Trade negotiations, launched in 2013 are making quiet progress. Japan is the EU’s second biggest trading partner in Asia after China, and the EU and Japan, together account for 1/3 of the world’s GDP.  (See EU Commission Website). The next phase of the negotiations  takes place in September.

6  China, North Korea, Senkaku and the US ElectionsThe Japanese Embassy in London does a very good job of alerting key opinion-formers and decision-makers of the worrying situation developing the Pacific Region with particular reference to China’s expansionist exploits in the South China Seas and their activities around the Senkaku Islands. These issues are reported in the quality press, but perhaps not adequately explained. European politicians, eager to attract Chinese investments, and increasing their share of trade with China, can gloss over China’s human right’s abuses and their territorial ambitions.

The current ongoing tension of course are complicated by North Korea, who last week fired a submarine launched ballistic missile which for the first time reached Japan’s air defence identification zone (ADIZ).

Pacific region international relations will be affected whoever gets to the White House in January 2017. Hillary Clinton is likely to be more hawkish in response to Beijing’a ambitions; Donald Trump, however is more likely to be more laissez-faire in their regard, and may take the view that it is not America’s business. Whoever wins tensions in the area will continue.

7  China and Japan’s Role in Africa

PM Shinzo Abe in Nairobi, with 75 Japanese business leaders, for the 6th Tokyo International Conference on African Development, the first held in Africa.  Japan’s trade with Africa declined for $17billion in 2014 to $14 billion in 2015.  Japan pledged to invest $30 in Africa, about half the amount being invested by China. China’s communist People’s Daily has been dismissive accusing Japan of trying to woo Africa in its attempt to get a UN Security Council seat, a move that China opposes. See Financial Times (Please google “Japan Looks to Boost Trade with Africa)

8  Italian Earthquake
A magnitude 6 earthquake in central Italy caused the almost total destruction of many villages and the death of almost 300 people.  Old buildings, shoddy renovations and extensions greatly contributed to the scale of the disaster. It is estimated that 18% of Italian new buildings have no planning permission and that the number for extensions and renovations is much higher. The use of cheap cement and too much sand in the cement mix seems to have contributed to the number of casualties. In one village where funds were spent to make buildings safe the destruction was minimal.  Meanwhile PM Matteo Renzi has enlisted world famous architect Renzo Piano do advise on how to make the country’s buildings safer from earthquakes. The feeling in the country is that if Italy had done as much as Japan to protect its buildings the death toll would be lower and fewer buildings affected.  Read More: If the Italians had built like the Japanese  and Lax Building regulations contribute to death toll and also Fortune: Italy Investigates Whether Shoddy Buildings Worsened the Death Toll

9  Artisan Sake Gets the Top Vintage treatment
In the 24 hours since Robert Parker’s Wine Advocate released its first ratings guide for Japan’s pure polished rice sakes — the premium version of rice wine — bottles of the 78 highest-ranked names have become hot property. Collectors who tried to buy sake bottles mentioned by Parker only hours after publication were disappointed. The Financial Times reported that whilst a bottle of top Bordeaux will sell for $1,000 top sake retails for Yen 10,000. There are some fabulous long established artisan breweries not far from the Takatsuki plant well worth a visit.