Outline of the Results
of the 2002 Northeast Asia Economic Conference in Niigata

Summarized by ERINA

Date: 27th - 29th January 2002 Venue: Hotel Niigata (Niigata City) Organizers:  Niigata Prefecture, Niigata City, ERINA, Niigata Federation of Chambers of Commerce and Industry, Niigata Association of Corporate Executives Number of participants:  About 500 (180 participants from overseas)

Keynote Speech Monday 28^th January, 10:45 - 11:35

• Mr. Tasuku Takagaki, Chairman of the Japan Association for Trade with Russia and Central-Eastern Europe (ROTOBO) and Senior Advisor to the Bank of Tokyo-Mitsubishi Ltd., delivered the keynote speech on the theme Towards New Growth in the Northeast Asian Economy - Focusing on Russo-Japanese Economic Relations. The main points of his speech are outlined below.
• Mr. Takagaki stated that Russia's economy is doing well, with the GDP growth rate for 2001 reaching 5.5%. Looking at changes in Russia's external economic relations since the break-up of the Soviet Union in 1992, the volume of trade increased 1.8 times up to 2000, with trade with Europe rising 44%, that with the Americas increasing more than twofold, and that with Asia increasing by 60%.
• In contrast to this, trade with Japan, which had accounted for $3.2 billion in 1992, is in the doldrums, totaling $3.3 billion in 2000. Moreover, with regard to investment proposals, if we exclude the Sakhalin projects, there have been no conspicuous developments. Last year, an economic delegation, headed by the Chairman of the Japan Federation of Economic Organizations (Keidanren) was sent to Russia for the first time in 25 years. Among the impressions gained by the delegation were a sense of the healthiness of the Russian economy and the political stability in the country, the impression that the reforms underway had not permeated through to the microeconomy, and a sense of the great differences between the regions, with the Russian Far East lagging behind other areas.
• In order to develop economic relations between Japan and Russia, it is necessary to create a situation in which not only large-scale projects in the field of natural resource development, but also a broad range of ordinary trade transactions, such as the interaction of manufacturing companies, and investment activities can take place. The role that small and medium-sized businesses and regional businesses can play in this is also likely to be significant.

Special Address Monday 28^thth January 11:35 - 12:10

• Mr. Long Yongtu, Vice-Minister of Foreign Trade and Economic Cooperation gave a special address on the theme Regional Cooperation in Northeast Asia and China's Entry into the WTO. The main points of his speech are outlined below.
• At present, globalization is advancing throughout the world and each country is confronted with an important choice. China made a strategic decision to participate actively in globalization. It joined the WTO last year and is attempting to promote the realization of a legal system that conforms to international rules and the gradual opening up of its market in line with those rules.
• While the expansion of the domestic market is anticipated, the country is reducing tariffs in such fields as automobile production, where domestic production capacity is low, and promoting competition with foreign companies. By means of competition with foreign businesses as a result of opening up the market, Mr. Long believes that the competitiveness of all domestic industries will be strengthened.
• He also thinks that China wishes to participate actively in regional economic cooperation in Northeast Asia. In order to promote cooperation in the region, it is necessary for the central governments of each country to strengthen their support. Moreover, with regard to the private sector, in order that they can respond immediately to political decisions, it is necessary that they constantly carry out research into what they should do in such an eventuality.

Trade and Investment Panel Monday 28^th January 13:00 - 15:30

• Under the title A Business Model for Northeast Asia in the IT Age, discussions took place with regard to the possibilities for utilizing IT in order to respond to the globalization of and breaking down of borders in the economy. If international business collaboration utilizing IT were realized, effects including the expansion of trade and induction of freight distribution could be expected to result and the opinion was expressed that, for small and medium-sized companies in particular, major business opportunities could arise.
• In the summing up of discussions, it was indicated that utilizing each country's competitive edge, specialist fields and technology to undertake the international division of labor using IT is the most appropriate business model for the Northeast Asian region, which is diverse and has many complementarities. There were calls for consideration to be given to various measures in the region, such as electronic trading market services, in order to reduce costs, etc. by such means as effective inventory management, speedy delivery and the international division of labor.
• Other topics raised included the development of basic infrastructure, the nurturing of personnel as the instruments of the new business model and measures to promote the international mobilization of useful personnel, raising computerization standards in small and medium-sized businesses, and the development of international business practices and trading systems.

Development Finance Panel Monday 28^th January 15:50 - 18:20

• In this panel, comparative discussions took place with regard to a multitude of approaches to creating development finance schemes to supply finance for infrastructure development in Northeast Asia and participants presented the subject matter for future policy judgments with regard to this theme.
• The following four approaches were raised and their effectiveness and possible problems analyzed: 1) the establishment of a political and organizational framework, in which the private sector, governments and existing international development banks function reciprocally; 2) private sector-initiated project finance; 3) the establishment of a new development bank focusing on development in the Northeast Asian region; 4) the effective utilization of existing international development banks.
• Furthermore, apart from the individual approaches, the following lines of thought were expressed: As Northeast Asia is fraught with politically complicated factors, it is undeniable that approaches to development finance are confronted with a choice in responding to the political situation. With regard to development finance schemes, in order to make policy recommendations that are persuasive and have a theoretical basis, the creation is necessary of a "grand design" that is indicative of the economic development strategy for the whole of this region. Using this as an axis, it is vital to capture the attention of the world with regard to this region, and foster a spirit that attempts to promote development through multilateral cooperation.

Meeting of Transportation Experts Monday 28^th January 13:00 - 18:00

• The Vision for the Northeast Asian Transportation Corridors, which sums up the results of the Transportation Subcommittee's research activities over a period of a year and a half, was presented and an exchange of opinions took place regarding measures to translate the vision into reality, having learned from such leading examples as the European Transportation Corridors and the broad regional distribution undertaken in the southern part of South America, in which the development of a similar transportation network is being tackled.
• With regard to the realization of the concept, the importance was highlighted of considering the Northeast Asian Transportation Corridors not simply as transportation routes, but comprehensively, as development corridors and trade corridors; the importance of giving sufficient consideration to environmental aspects in development was also indicated.
• Among the initiatives aimed at realizing the vision, the following four points were emphasized: 1) there is an immediate need for involvement on the part of central governments; 2) in order to support the activities of central governments, it is important that the private sector, including the Transportation Subcommittee, continue their on-going research in the future; 3) the role of international institutions, such as the UNDP, is important in order to undertake coordination between each country and to promote specific projects; 4) it is necessary to propose this vision to international organizations, such as APEC and ESCAP, and obtain their cooperation.
• It was stated that the utilization of various international conferences would be effective in obtaining the participation of central governments and ensuring that this vision gains prominence in all related countries, including the countries of Northeast Asia. Moreover, it is necessary continuously to implement the dissemination of information to cargo owners and other interested parties, and to attract users to and promote the use of the transportation corridors.
• With regard to the direction of movement in the concrete development of the transportation corridors, it was pointed out that making a start on the development of soft infrastructure is practical; for example, it was suggested that making border-crossing procedures more efficient or expanding the area within which trucks from another country can operate, could be effective. As far as the development of hard infrastructure is concerned, it was reported that there are many cases in which a vast amount of funding is required and that, as a means of securing the necessary resources, establishing and utilizing a fund could be extremely effective.
• Taking the above into account, as part of the Transportation Subcommittee's activities for the next fiscal year, aimed at the realization of the Vision for the Northeast Asian Transportation Corridors, it was decided to make approaches to international institutions and related departments in each national and regional government, and to utilize various international conferences and seminars, publications and homepages to publish information about the transportation corridors throughout a wide area.

Meeting of Regional Cooperation Experts Monday 28^th January 13:00 - 15:30

• At the meeting of regional cooperation experts, an outline was provided of the international joint research ERINA has been commissioned to carry out by the China and Mongolian Division of the Japanese Ministry of Foreign Affairs, regarding regional cooperation, and the research recommendations reported upon.
• A representative of the joint research team reported on trends in international cooperation between local authorities and the possibilities for the use of ODA by regional governments. In addition, cooperation in the fields of medical technology and road paving devices, and a joint project to establish a history museum, which utilize the sister city relationship between Niigata Prefecture and Heilongjiang Province, were proposed as cooperative projects using ODA.
• Moreover, it was indicated that, in order to link the development of hard distribution infrastructure and the results of establishing freight routes to ports on the coast of continental Northeast Asia, which have until now been the main current of internationalization policies in Niigata Prefecture, with the promotion of the region, the nurturing of human resources is of the utmost importance, in addition to existing measures.
• The panelists, comprising representatives of the UN Department for Economic and Social Affairs, the Japanese Ministry of Foreign Affairs, the Japan International Cooperation Agency, Niigata Prefecture and Heilongjiang Provincial Academy of Social Sciences, commented on inter-regional cooperation initiatives being undertaken by each group and on the main proposals. Each panelist agreed with and supported inter-regional cooperation using ODA, which was included in the main proposals. In particular, each participant emphasized the extreme importance of international cooperation with benefits for both the side offering support and the side receiving it, as seen in the cooperation between Niigata Prefecture and Heilongjiang Province in the field of medical technology for treating leukaemia. Furthermore, many participants pointed out that the project that is currently of the greatest importance to Niigata is the nurturing of human resources.
• With regard to the realization of ODA projects at the local government level, it was pointed out that international policy collaboration at the regional level is required. The Ministry of Foreign Affairs praised the academic exchange agreement concluded between ERINA and academies of social sciences from China's three northeastern provinces as an experiment in this.

Environment Panel Tuesday 29^th January 9:30 - 12:00

• Based on the outcomes from previous conferences, this year's discussion paid more attention to concrete proposals for encouraging and expanding cooperation in the region aiming at breaking through the tradeoffs between the environment and economic development.
• The common issue of environmental conservation necessitates extensive cooperation in the encouragement of environmental industries in Northeast Asia. Therefore, immediate action needs to be taken to nurture environmental industries in the region. Emphasis was placed on the necessity of improving the exchange of information using various communication tools, such as round-table meetings of experts, web-based information networks, and joint research.
• The following observations were made regarding concrete action:
  

  a)	The "hard" (i.e. equipment, etc.) and "soft" (i.e. technological know-how, financing, personnel, etc.) approaches of the environmental industry have to be addressed simultaneously in the development of environmental industries;
  b)	The financial market for the environmental industry should be established through such mechanisms as environmental funds, green bonds, and green insurance, thus encouraging green investment by firms and consumers. Government policies and consumer preferences are essential tools for encouraging and expanding these initiatives.
  c)	Great efforts should be made to integrate the environment and education in order to respond to the need to shift the environmental consciousness of consumers from its current "infant stage" to an "adult stage";

• Japan and China have great potential to play a leading role in encouraging environmental cooperation and should determine their environmental strategies for cooperative action. It was pointed out that the high cost of environmental equipment and technology in Japan may prove a major barrier to the widespread adoption of these industries in the region.
• A delegation from the Republic of Buryatia (Russia) delivered an address from Mr. L.V. Potapov, the President-Chairman of its government, in which it was proposed to form a joint working group to elaborate a draft program on launching a pilot project "Baikal - world model territory of sustainable development and civilization dialogue", to be submitted for consideration for inclusion in the agenda of the forthcoming WSSD RIO+10 in Johannesburg.
• It was recommended that ERINA take a leading role in initiating concrete action aimed at translating into reality the recommendations and proposals for cooperation discussed at the Conference, which is the next step that needs to be taken.

Energy Seminar Tuesday 29^th January 13:20 - 14:00

• Mr. Susumu Abe, Director of the Asian Pipeline Research Society of Japan, spoke on the theme Energy Cooperation in Northeast Asia: The Role of Natural Gas.
• Firstly, it was pointed out that the role of natural gas is increasing, amid fears of a deterioration in energy security and the environment in Asia. It was explained that the Northeast Asian Gas and Pipeline Forum, which consists of the Asian Pipeline Research Society of Japan (APRSJ) and groups from five related countries, has proposed a vision linking Northeast Asia by means of a natural gas pipeline and, with a view to the realization of this, is engaging in research activities and holding conferences.
• It was also asserted that, while appealing for the strengthening of cooperation between various interested parties, including central governments, regional governments, the private sector and international institutions, the APRSJ has plans to undertake activities aimed at expanding the use of natural gas, including joint international research into market cultivation.

Trade and Investment Seminar Tuesday 29t^thh January 14:00 - 15:10

• On the subject of The Northeast Asian Trade and Investment Environment 2001 - 2002, after Mr. Susumu Yoshida, the Director-General of ERINA, outlined the trade and investment environment in each country and region of Northeast Asia, five participants reported on recent events in each region.
• Mr. Dong Zuomin, Mayor of Suifenhe, asserted the importance of Suifenhe, which accounts for 73% of Heilongjiang Province's volume of trade with Russia, and indicated the direction being taken in the development of transportation infrastructure and the Suifenhe-Grodekovo Mutual Trade Zone.
• Mr. Kingo Hasegawa, Business Advisor to the Sakai Port Trade Promotion Association, spoke about the Hunchun region of China, whose importance is increasing with such developments as its designation as an export processing zone, and initiatives aimed at the establishment of regular freight routes to border ports and the promotion of economic interaction.
• Mr. Dashnyam Nachin, a visiting researcher at ERINA, spoke about the current status of Mongolia's external trade and foreign investment, and expressed his hope that adjustments to the foreign investment law would improve the investment environment.
• Mr. Evgeny Makarov, Head of the APEC Division at the Russian Ministry of Foreign Affairs, proposed the utilization of energy projects, high technology and transportation routes, against the background of the resurgence of the Russian economy.
• Finally, Mr. Fumiaki Fujino, General Manager of Itochu Corporation's Institute of China Studies, suggested that, given trends in China (entry into the WTO, free trade agreement with the ten ASEAN nations), Japan should look at the big picture for the whole of Asia, and confront the issue of strategic cooperation with China.

Concluding Session Tuesday 29^th January, 15:35 - 18:00

• After reports giving outlines of the discussions that took place in each panel and meeting of experts, one panelist from each of China, Mongolia, the ROK, Russia and Japan spoke about the most salient points covered during the two days of the conference.
• Panelists emphasized the importance of cooperation in the fields of transportation and energy. In addition, the opinion was expressed that efforts should continue to obtain concrete achievements with regard to the other themes raised at this year's conference, including IT, the environment, development finance and regional cooperation. With regard to the direction in which cooperation should progress, it was suggested that participation by think-tanks connected to each government should be requested and that energy be devoted to cooperation in the field of soft infrastructure.
• Mr. Hirayama, the Governor of Niigata Prefecture, one of the organizers of the conference, stated that it was necessary to explain the Vision for the Northeast Asian Transportation Corridors to the relevant national governments and obtain their support, and asserted that he was prepared to explain the concept himself.
• Finally, the conference closed after the adoption of the resolution, which focused on participants continuing various activities aimed at moving from theory to practice, and being unstinting in efforts to realize this aim.