Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Tuesday, October 18, 2011, from 9:37 a.m. to 10:03 a.m.)

[Opening Remarks by Minister Jimi]

Today, I do not have anything particular to report to you.

[Questions & Answers]

Q.

At the G20 meeting (of the Finance Ministers and Central Bank Governors) held last weekend, discussions were held about how to solve the European debt problem. Could you tell me how you view the results of the discussions at the meeting?

A.

At the G20 meeting of Finance Ministers and Central Bank Governors that was held in Paris on Friday, October 14 and Saturday, October 15, as was pointed out in the question, discussions were held on the current status of the global economy, including the European debt problem, and financial regulatory reform, and I understand that an important agreement was reached concerning progress in financial regulatory reform ahead of the Cannes summit in November.

I welcome the fact that this agreement was reached among the G-20 countries amid the recent growing stresses in the global financial markets. Japan will continue to participate in international cooperation to prevent the recurrence of a financial crisis and strengthen the financial system.

Q.

I understand that you will go to the disaster area today. About what matters would you like to hear from people there and what will be the messages from the Financial Services Agency (FSA)?

A.

I am scheduled to visit Iwate Prefecture today for a one-night stay. Immediately after the earthquake, I visited Sendai and Ishinomaki Cities in Miyagi Prefecture, and the other day, I visited Fukushima Prefecture and met with, in particular, the presidents of regional banks, Shinkin banks and credit cooperatives in the area affected by the nuclear power station accident. This time, I will visit Iwate Prefecture - regional banks in the prefecture in particular, as well as Miyako and Kamaishi Cities in the Sanriku region. I hear that Shinkin banks are operating there, so I would like to hear about their circumstances, and I also have in mind the (amended) Act on Special Measures for Strengthening Financial Functions, which was enacted on June 22 with the unanimous support of all political parties and parliamentary groups. By now, three banks have applied for the use of this law, and two of them have received public capital injection by using this law. This is an extraordinary law specifically intended to deal with the impact of the earthquake by covering Shinkin banks and credit cooperatives. I hope that financial institutions will use this law, although it is basically up to the management of private financial institutions to make a decision, as supporting small and medium-size enterprises borrowing business loans and individuals borrowing housing loans is the most important element of the financial intermediary function.

Q.

I am Nomura from Sekai Nippo.

Regarding the attention-grabbing issue of whether Japan should participate in negotiations about the TPP (Trans-Pacific Partnership), I hear that you have become a member of the council of cabinet ministers on this issue. As the Minister for Financial Services, how are you going to approach this issue? I would appreciate if you could comment on that.

A.

Although it has been reported in newspapers as if I have become a member of the council of cabinet ministers on the TPP, the Chief Cabinet Secretary has not yet consulted me about that.

Regarding the TPP and free trade, as I said when I was reappointed as a cabinet minister, basically, Japan would not be able to maintain its current economic power unless it pursues processing trade whatever its political system may be.

As I said previously, Japan has maintained economic prosperity because it imports raw materials, such as coal and iron ore, and processes them into products with high value added, such as personal computers and color TVs. If Japan is to maintain its prosperity in the future amid the shrinking population, it is essential that the entire country strives to create high value added and improve productivity.

At the same time, however, as I said at that time, there is the issue of agriculture. Agriculture, which already existed three thousand years ago, is the oldest industry in human history. It is a life-sustaining industry, as I may say so from my standpoint as a doctor by profession. Human beings cannot live without food, water and air. Agriculture is greatly constrained by natural conditions, and although agriculture is a highly intensive industry in Japan due to the development of chemical fertilizers and advances in cultivating technologies, there are natural impediments, such as the size of cultivated land and the aging of people engaging in agriculture. At the same time, farmland has multifaceted benefits, as I mentioned the other day. For example, the amount of water held by rice paddy fields across Japan is more than double the amount held by the dams that have been built since the Meiji era. On the day after torrential rain, you will see rice paddy fields flooded all over. A rice paddy field has such large water-retention capacity that the amount of water held by paddy fields across Japan is double the amount held by the dams that have been built since the Meiji era. Rice paddy fields prevent water from pouring into rivers at once. Forests are said to be the source of nutrition for paddy fields. If mountains are bare, there would be flash floods. However, if there are forests, rain that soaks into the ground is absorbed by the roots of trees, so water does not pour into rivers at once. If forests are very well maintained, floods and landslides can be prevented.

There are many such examples. Agriculture has multifaceted functions: it is essential to everyday life and contributes to the sustenance of life in many ways. While I have cited only agriculture and the manufacturing industry, the TPP covers 24 various fields, including the service industry, although there are still points that remain to be thrashed out, and our party is holding various discussions. Of course, the timing is important, so we will keep a careful watch on future developments.

Even though the issue of my participation in the council of cabinet ministers has been mentioned in newspapers, I have not been formally consulted about it.

However, there is one thing that I would like to emphasize. China is the largest trading partner for Japan now. Even so, participation in the TPP would basically mean that Japan forms partnerships with countries other than China. We must keep that in mind and keep watch on China's reaction and intentions. While the Japan-U.S. partnership is naturally the centerpiece, Japan is an Asian country, so it is important, as I have been saying, that if we shake hands with the United States with the right hand, we make sure to do so with Asian countries, such as China and India, with the left hand. We must give very grave consideration to China's intentions.

While Japan may start negotiating with countries like the United States and New Zealand now, no mention has been made about China. However, in reality, although China is different from Japan in political and social systems as you know, as it is a one-party communist state, it has always had a close economic relationship with Japan due to the reform and open-door policy it has pursued since the era of Deng Xiaoping. As the TPP is an economic partnership, I believe that we must consider this matter very carefully and cautiously with the relationship with China in mind.

Q.

Let me make sure about one important point.

Last Friday, you mentioned the prospect that you would participate in the council of cabinet ministers on the TPP. What has become of that?

A.

I have not been consulted about it at all. All the same, I have mentioned to the Chief Cabinet Secretary the media reports about my participation.

Q.

At your press conference Last Friday, you said that the Chief Cabinet Secretary had asked you to participate, if I remember correctly.

A.

I said so at that time.

Q.

What has happened since then and what is the current situation?

A.

The situation is that I have not been consulted as a procedural process, but I suppose I will probably participate.

Q.

Doesn't that mean that the plan to include you in the council of cabinet ministers has been cancelled?

A.

I think that that is not the case. That is not the case, I believe.

Thank you very much.

(End)