Japan and the OECD: How the sun rose on a global era

Page 8 

Haguiwara Toru and Thorkil Kristensen, Memorandum of Understanding to join the OECD, signature of the Convention, in the OECD Observer No 6, October 1963, page 3 ©OECD

OECD membership crowned Japan’s efforts to reintegrate into the international community after the Second World War, while helping to turn the organisation into a global, rather than European, player. But the country’s accession had to be managed with great care, reflecting tensions of the time. 

Japan joined the OECD on 28 April 1964, becoming the 21st member country of the organisation and the first Asian member country. The Cold War was at its most intense and in the US the Eisenhower and Kennedy administrations were keen to see Japan firmly ensconced, politically and economically, among those countries opposed to what they saw as the Soviet and Chinese threat. Similarly, Japanese Prime Minister Hyato Ikeda had increasingly stressed the need to develop strong ties with Europe to accompany Japan’s already close relationship with the US, developing “three pillars”, to support the free world. This included a security aim; increased influence in international economic policy co-ordination, especially as regards trade; a further restoration of Japan’s international status; and an enhanced opportunity for policy learning.

There were a number of motives at play in the Japanese decision to seek membership of the OECD which overlapped with those of other OECD countries: the desire to be in the “western”, anti-communist camp; the opportunity to access one another’s markets; the greater capacity to co-ordinate international economic policy that Japan’s membership would entail; and a means of persuading Japan to increase its aid efforts. In particular, one of the motives underlying the Eisenhower administration’s proposal to reorganise the Organisation for European Economic Co-operation (OEEC) was to open up the possibilities for full membership for itself, Canada and Japan, so creating a new, more global organisation. However, it was well aware of the difficulties it would face in gaining support for Japanese membership. On the domestic front, only the Japanese Socialist Party opposed accession, arguing it was an anti-communist move that would alienate the USSR and China, but there was no significant public opposition against joining.

Japan’s Prime Minister Shinzo Abe with OECD Secretary-General Angel Gurría at the prime minister’s official residence in Tokyo, 24 April 2013

Still, the path to Japan’s accession was challenging, given the context of historical memories and continuing trade disputes. As, in the context of bilateral discussions, British Chancellor of the Exchequer Derick Heathcoat Amory noted, the problem of Japan was “a bit awkward” and would complicate trade issues if it was brought into a “European organisation”. German Economics Minister Ludwig Erhard also noted that European countries could not agree on how to treat Japan regarding trade and membership issues. On top of this, transforming the OEEC into the OECD was already a difficult and sensitive process, with several European countries opposing change, so much so that the new OECD Convention had to be drafted off the premises, in the Hotel Majestic in Paris. In the end, following a series of informal, bilateral discussions, the US administration agreed that it would not push for full Japanese membership of the OECD immediately on its creation.

A solution to prepare entry was found in the shape of Japanese membership of the Development Assistance Group (DAG), established on 13 January 1960 to promote official aid to less developed countries. DAG had been proposed by US Under-Secretary of State Douglas Dillon to the December 1959 summit meeting of the US, the UK, France and West Germany. Initially it was not a part of the OEEC, with a membership restricted to the major aid donors associated with the OEEC. This smaller group had no difficulty in accepting the US proposal for Japan’s membership. The DAG became the OECD’s Development Assistance Committee (DAC) on the establishment of the OECD in 1961.

Japan’s second step toward membership took place in the 1961-62 period, with a series of consultations with the West German, British and French governments, as well as the OECD secretariat, supported by the Kennedy administration. Indeed, President Kennedy’s role in promoting Japanese membership, continuing that initiated by the Eisenhower administration, was important. As memos of the time show, just after taking office in January 1961, President Kennedy expressed interest in Japan’s joining before issuing his OECD ratification statement that March. Kennedy lived to see Japan sign an official invitation to join in 1963, but was assassinated in November of that year.

Another reason for Japan’s rather lengthy process of joining was that the Convention did not specify what the accession process to the new organisation should be. There was no acquis or roadmap, as is normal practice today. Negotiations came to focus on Japan’s reservations regarding the OECD’s Codes of Liberalisation, which are still at the core of the OECD’s agreements and related activities.

In particular, Japan was under pressure to limit its use of industry policy instruments, for example, its support for the shipping industry and restrictions on the use of its foreign capital and foreign currency laws to reject industrial imports. There was particularly strong pressure to reduce support for the shipping industry and shipbuilding at a time when they were competing strongly with European member countries. Japanese negotiators vigorously opposed the latter pressures, pointing out the increasing subsidies offered by European states for their increasingly uncompetitive shipbuilding companies, to the point that it looked as if accession would be delayed, though the matter was finally resolved.

Japan’s entry transformed the OECD into a more inclusive organisation, and as the first Asian economy to achieve rapid and major economic development, for 50 years Japan has brought an Asia-Pacific perspective to a predominantly Atlantic organisation. Though other East Asian economies are now flourishing, Japan continues to inspire new horizons, and will celebrate its 50th anniversary by actively promoting OECD’s new Southeast Asia Regional Programme to further ties with this burgeoning region.

References

Carroll, Peter, A. Kellow (2011), The OECD A Study in Organisational Adaptation, Edward Elgar, Cheltenham.

Clarke, Rory, Lyndon Thompson (2011), “A majestic start: How the OECD was won”, in OECD Yearbook 2011.

The Foreign Affairs Oral History Collection for Diplomatic Studies and Training (1987), “Interview with C. Douglas Dillon”.

Iwanaga, Kazuki (2000), “Europe in Japan’s foreign policy”, in Edstrom, A., (editor), The Japanese and Europe: Images and Perceptions, Richmond, Japan Library, Curzon Press.

Shimomura, Tetsuo (1964), “OECD kamei to Nihon keizai, Nihon Keizai Ch¯o sa Ky¯o gikai cho”, Tokyo, Keizai.

United States Department of State (1959), “Memorandum of Conversation, Bonn, 11 December 1959”, Item 85 in Foreign relations of the United States, 1958-1960, Western European integration and security, Canada, (1958-1960) Volume VII.

United States Department of State (1960), “Memorandum of Conversation, 11 January 1960”, Item 96 in, Foreign relations of the United States, 1958- 1960, Western European integration and security, Canada, (1958-1960) Volume VII. 

You read it here first: Covers from the OECD Observer, No. 45, April 1970 and No. 219, December 1999.

©OECD Observer No 298, Q1 2014




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