[Provisional Translation]

Opening Statement by Prime Minister Yoshihiko Noda

PRIME MINISTER NODA: Asia-Pacific Economic Cooperation (APEC) is a forum for Asia-Pacific economies to deepen economic ties within the region and discuss the future of the region based on each economy's voluntary will, which Japan has been leading and fostering since its establishment in an attempt for regional economic integration. At Honolulu, a beautiful city situated right in the middle of the Pacific and overlooking blue oceans under a clear sky, I was able to reconfirm with the state leaders the unquestionable potential of the Asia-Pacific region as the world's growth engine, and renewed my conviction that we are now entering the Asia-Pacific Age. In light of the philosophy of "the Yokohama Vision" which Japan compiled as APEC chair country last year, Japan made active contributions to the discussion, and agreed on specific actions from the perspectives of regional economic integration and promoting economic growth.

In particular, I regard the following three points as major achievements for Japan.

First, we agreed on the common rules for removing trade barriers and fostering innovation to bring about economic growth across the region, as well as on efforts to spread eco-products for green growth.

Second, we agreed on establishing targets for improving energy efficiency in the entire APEC region. Upon the request of the APEC chair, US President Barack Obama, I led the discussion by explaining Japan's past experiences and lessons learned thereof, as well as our future challenges.

Third, for the realization of the Free Trade Area of the Asia-Pacific (FTAAP), I explained that Japan will enter into consultations toward participating in the Trans-Pacific Partnership (TPP) negotiations with the countries concerned, currently the only FTAAP scheme for which negotiation has started, and several economies expressed their welcome.

With regard to bilateral meetings, I first held talks with US President Obama who is the chair, and then with President of the People's Republic of China Hu Jintao, President of the Russian Federation Dmitry Medvedev, and President of the Republic of Peru Ollanta Humala, and was able to have constructive exchanges of views in a congenial atmosphere on such issues as strengthening bilateral relations and cooperation in the Asia-Pacific region. With US President Obama, in addition to cooperation at APEC, I confirmed that Japan and the United States will exert leadership in East Asia in light of the US's first participation in the East Asia Summit next week.

By cooperating with each APEC economy, I intend to achieve even greater results at the next year's meeting in Vladivostok. I will promote economic diplomacy in order to harness the dynamism of the Asia-Pacific region, the world's growth center, for revitalizing Japan.

Q&As

REPORTER (SUGITA, KYOTO NEWS): As you stated in your opening comments, you have used the opportunity presented by the APEC Economic Leaders' Meeting to explain the policy of Japan concerning participation in the Trans-Pacific Partnership (TPP) Agreement negotiations, and this policy has been welcomed by a number of leaders, including President Obama of the United States. On the other hand, in Japan there are strong views that your comments at APEC do not represent a formal announcement of participation in negotiations, nor do they assume such participation, and there are expectations from some quarters that Japan will withdraw from the negotiations part way through the process. How do you perceive this gap in overseas and domestic perceptions and how do you fill in the gap? In addition, do you believe that it will be necessary to go through the governmental and ruling parties' decision-making processes again once prior consultations among participating countries move to enter formal negotiations on the TPP?

PRIME MINISTER NODA: What I have already stated in the press conference I gave in Japan and what I also stated in meetings with the leaders of economies already participating in the TPP negotiations, including President Obama, was that Japan will enter into consultations with the countries concerned towards participating in the TPP negotiations. My statements in these various situations have been consistent, and I trust that they will be perceived as no more and no less than what I have stated. With regard to the process from now, consultations among the countries concerned will be launched and we will make efforts to gather further information as to what each country would expect from Japan. The process will then continue through sufficient national debate, and we will reach a conclusion on the TPP faithfully from the viewpoint of our national interests.

REPORTER (TANDON, AFP): With regard to the launch of negotiations on participating in the TPP, and also during your visit to Honolulu you have made frequent mention of the necessity to build rule-based structures in Asia. What views do you have concerning the participation of China in the TPP negotiations? Do you think the participation of China has the potential to be beneficial? In addition, how do you view the changes in China since the incident close to the Senkaku Islands last year? Do you consider that China has become more accepting of international rules and standards? Or do you believe that this is not the case?

PRIME MINISTER NODA: I think it may be perceived as presumptuous of me to state an opinion on this matter about a third country's position, and in any case the reality is that the TPP is open to all economies that are participating in APEC. As the TPP is open to all APEC economies, it is therefore for each one to determine whether they will participate. As was discussed a moment ago, Japan will enter into consultations with the countries concerned towards participating in the TPP negotiations, however in terms of relations with China that you have just raised, there are in fact a variety of routes for consultations in order to materialize the Free Trade Area of the Asia-Pacific (FTAAP), including such forums as Japan-China-Republic of Korea meetings, ASEAN+3, and ASEAN+6. Japan's position is to engage actively in promoting all of such forums and we will seek to continue partnership and cooperation with all economies participating in APEC, including China.

With regard to recent changes in China, in recent years China has accomplished rapid development and in my summit talks with President Hu Jintao I mentioned that this rapid development represents an opportunity for the international community, including Japan. Under the recognition that China's development presents just such an opportunity, we engaged in exchanges of opinions from a broad perspective, concerning the importance of Japan and China both playing a responsible role and engaging in processes for the benefit not only of our two countries, but for the peace, stability and prosperity of the region and the entire world. I believe that it is important for Japan and China to engage in mutual cooperation and respond to the various global challenges we currently face, including those relating to the global economy and finance.

REPORTER (KANEKO, ASAHI SHIMBUN): I have a question concerning the issue of consumption tax. At this APEC meeting you have announced the policy of Japan towards participating in the TPP negotiations, which will also mark the launch of full-fledged discussions surrounding an increase in consumption tax. The announcement you have made concerning the policy toward participating in the TPP negotiations represents a somewhat vague decision, which is viewed by TPP supporters as being a declaration of participation in negotiations, and by those who are against the TPP as an understanding to enter into preparatory consultations. The issue of an increase in consumption tax is likely to arouse greater resistance than the TPP, so how do you plan on achieving consensus within the Democratic Party of Japan (DPJ)? Are you resolved to stake your political life on tackling this issue? Also, your statements to date about the formulation of legislation for a consumption tax increase have been limited to "formulation at an early juncture," but are you aiming to formulate such legislation within the next regular session of the Diet next year?

PRIME MINISTER NODA: The comprehensive reform of the social security and tax systems and particularly whether social security is truly sustainable in the future is something that the younger generations are also concerned about. Given the necessity of securing stable financial resources to support social security in the future, consumption tax is positioned as such a stable resource, and the issue is one that cannot be avoided or further delayed by any Cabinet. Based on this premise, rather than comparing the discussions on consumption tax to those on the TPP, it is the case that within the DPJ there are various opinions and ongoing discussions, which, rather than being opposed to an increase in consumption tax, and are giving due consideration to the various conditions to be placed on an increase, such as a favorable upswing in the economy prior to such an increase. I believe that it is important for such matters to be carefully discussed. Whatever the case, in June this year a final draft of the proposal for the comprehensive reform of social security and taxation systems was compiled by the Headquarters of the Government and Ruling Parties for Social Security Reform. As we move forward with the process of crystallizing the content of that final draft, it is also the case that Article 104 of the supplementary provisions of the Tax Reform Act 2009 stipules that legislation should be submitted by the end of FY2011. The government and ruling parties will therefore engage in full-fledged discussions on the preparation of this legislation, and we will compile the legislation while also seeking to consult with opposition parties. The Government's basic stance in addition to submitting the draft bill, is to make every effort to ensure its passage through the Diet.

REPORTER (ITO, BLOOMBERG): I have a question concerning the deteriorating debt crisis in Europe, which I imagine has been one of the central agenda items at this APEC Economic Leaders Meeting. As one of the world's leading economies Japan has continued to provide support to Europe by purchasing approximately 20% of the bonds issued by the European Financial Stability Facility (EFSF). However, at the beginning of this month the proportion of bonds purchased was no more than 10% of the total and there are concerns that Japan's support to Europe is shrinking at a time when it is most needed. Why has Japan reduced the proportion of the EFSF bonds it purchases? What support measures is Japan considering in the future in response to the debt crisis in Europe?

PRIME MINISTER NODA: In the meeting various opinions were exchanged, and I shared an almost total common recognition with other APEC leaders here in Honolulu that it is essential that the current crisis facing Europe be dealt with through the steady implementation of the agreement on a comprehensive strategy that was recently agreed by the Euro Zone countries in Europe. In other words, Europe will make the first efforts to overcome the crisis. That is the first step in truly gaining the confidence of the financial markets. All leaders here shared the common desire for Europe to engage in such efforts and that is also my view. As I have said before, if Europe can engage in concerted action and demonstrate a stance to overcome the crisis, Japan stands ready to provide the cooperation that it is possible for us to provide, given the global desire for European financial stability. With regard to the proportion of EFSF bonds purchased, there has never been a decision on the purchase of a fixed proportion of bonds and if Europe responds unitedly to the current situation, Japan is prepared to extend commensurate cooperation.