CHATHAM HOUSE - Research paper - Competing visions of international order 12 Is Japan’s model the future of the liberal order? Dr Jennifer Lind Associate Fellow, US and the Americas Programme

 

CHATHAM HOUSE - Research paper - Competing visions of international order

12 Is Japan’s model the future of the liberal order?

Dr Jennifer Lind

Associate Fellow, US and the Americas Programme

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Favouring pragmatism in diplomacy and human security over a Western-led liberal agenda has been the mainstay for Japanese foreign policy and may offer the way ahead for the liberal international order.

In the project of liberal order-building after the Second World War, it’s easy to tell a story of Japan as a leader in this effort. Indeed, Japan became one of the world’s most successful democracies and richest liberal nations, an economic powerhouse in the Bretton Woods trading order, a leader in global governance and a key US security partner. However, illiberal Japanese policies across a number of realms chafed against the international order. Japan’s post-war economic development was highly statist (rather than market-driven), and its trade policy notably mercantilist. This in fact led to significant vitriol between Tokyo and its US and European trading partners.

After the collapse of the Soviet Union in the 1990s, Western ambitions for the liberal order expanded further. A militarily dominant United States and its European partners sought to weaken the global sovereignty norm, to aggressively promote democracy across the globe, and to expand the movement of people across borders. During this period Japan stood awkwardly in the corner: a nationalist at the cosmopolitan party. Tokyo cooperated as far as it felt comfortable but pursued more restrained policies. Emerging new trends – the return to great power politics and a new class of middle powers – will check American and European cosmopolitan ambitions. In the coming, more conservative, international order, Japan will be much more at home. Indeed, the future of the liberal order resembles the version Tokyo has pursued all along.

Japan’s leading role in the post-war international order

Japan’s membership of the liberal international order created by the US and its European and Asian allies from 1945 was by no means inevitable. After all, many of the countries influential in post-war diplomacy and trade had fought Japan in the brutal Second World War; at its end, Japan was economically devastated and diplomatically isolated. But the US–Japan security alliance cemented Tokyo’s membership in the broader post-war order. The country was a key logistical and staging area in the 1950–53 Korean War, a role which boosted Japan’s initial post-war economic reconstruction.258 US occupation reforms brought democracy to Japan; the US drafted a new Japanese constitution, which enshrined democratic principles and women’s rights. Over time, seeking to build up Japan as an anti-communist ally, Washington sponsored Japan’s 1955 entry into the trading order (membership of the General Agreement on Tariffs and Trade (GATT)), and into other areas of global governance.

In many ways, Japan became a leader of the post-war international order. The country successfully transitioned to a stable democracy, in which its people now enjoy among the highest level of freedoms, health, security and prosperity in the world. It grew to become the world’s second largest economy (today, it is fourth largest). It is a global technological leader and a major exporter whose products are known and valued around the world. Tokyo has signed more than 20 free-trade agreements since 2000.259

In international finance, Japan has been a leading creditor nation and a powerhouse in global financial governance. In the late 20th century, as Japan became one of the world’s leading economies, the Japanese yen became globally influential as a reserve currency and in foreign exchange markets. Japan’s influence is evident in its contributions to international financial institutions such as the IMF and the World Bank. The country became one of the largest donors and shareholders in these institutions, playing a key role in shaping their policies, particularly in Asia. Japan also founded its own development bank: the Asian Development Bank (headquartered in Manila) in 1966. The Japan Bank for International Cooperation (JBIC) and other state-supported financial institutions have been instrumental in funding projects across Asia, Africa and Latin America, contributing to global economic development in alignment with liberal international values. Today, Japan continues to engage in global financial governance, particularly through the G7 and G20 forums.

Japanese diplomats have occupied prominent leadership positions in UN agencies, guiding their work on disaster relief, peacekeeping, refugee and other human rights issues. Japan’s highly educated people work at home and around the world in numerous non-governmental organizations in the fields of global health, nuclear disarmament and climate. Across numerous realms of the international order, then, Japan has played a leading role.

Trade reveals limits of Japan’s role in the liberal order

A closer look at Japanese policy shows a significant strain of nationalism in Japanese policies that departed from the spirit (and sometimes the letter) of liberal order-building. In its post-war reconstruction, Japan’s government pursued a statist approach to economic development and enacted numerous trade barriers (both formal and informal) that adversely affected its trading partners’ ability to do business in Japan and to compete overseas with Japanese products.

A closer look at Japanese policy shows a significant strain of nationalism in Japanese policies that departed from the spirit (and sometimes the letter) of liberal order-building.

Japanese industrial policy in the post-war period resulted in discriminatory trade practices. Through its Ministry of International Trade and Industry (MITI), Japan targeted the development of strategic industries such as automobiles, electronics and shipbuilding. MITI subsidized firms, protected sectors from foreign competition, guided private sector investment and directed cheap capital towards specific sectors. Furthermore, the Japanese government’s procurement system essentially blocked foreign firms from bidding on government contracts (for example, in public infrastructure projects) due to opaque bidding processes and a preference for local suppliers. Thus, long before the US began complaining about discriminatory Chinese trade policies in the early 21st century, Washington had been frustrated by similar policies in Japan.

Although a member of the GATT,260 Japan continued to enact high tariffs in some areas, notably the agricultural sector. Rice, as a staple of the Japanese diet and a cultural symbol, was one of the most protected commodities. For decades, Japan maintained a near-complete ban on rice imports through high tariffs and quantitative restrictions. Beyond rice, Japan also imposed high tariffs and quotas on other agricultural products such as dairy, beef and pork. In the 1980s and during the 1990s Uruguay Round of GATT negotiations, these restrictions were a major sticking point in trade negotiations with the US, Australia and other countries that were seeking better market access for their agricultural exports.

Japan also became notorious for enacting an array of informal or non-tariff barriers (NTBs) that protected domestic firms against foreign competition. NTBs refer to regulations or policies other than tariffs that make it difficult for foreign goods to enter the domestic market. Complex licensing procedures discouraged foreign firms from entering the Japanese market by creating delays and raising costs. For example, obtaining approval to sell pharmaceuticals or agricultural products in Japan involved a long, complicated process, often requiring extensive documentation, product-testing and inspections.

Foreign firms protested that onerous product standards and technical regulations were overly strict relative to international norms. For example, in the 1980s Japan was accused of using stringent technical standards to block the import of foreign-made automobiles, despite their compliance with international safety and quality regulations.

Another aspect of discriminatory trade practices was Japan’s keiretsu system, a network of interlinked corporations with close financial ties. Keiretsu were vertically or horizontally integrated conglomerates, often consisting of suppliers, manufacturers and financial institutions, which collaborated closely and were linked by cross-ownership of shares. Because keiretsu firms favoured doing business within their own network, they avoided foreign companies. In the 1980s and 1990s, this became a major point of contention in Japan’s trade relations with the US and Europe. Foreign governments accused Japan of creating an insular market where domestic firms had a built-in advantage, despite the country’s formal commitment to free trade.

All told, these Japanese policies created significant challenges for US and European firms. Bolstered by domestic protection, Japanese products outcompeted those of Japan’s trading partners. This imbalance triggered a fierce backlash from Western policymakers, who accused Japan of ‘unfair trade’ and creating an uneven playing field. In the 1980s Washington imposed import quotas on Japanese goods such as cars and electronics, and pressed Japan to ease its restrictions. Such trade disputes led to a period of sustained tension, with Japan’s trade practices perceived as protectionist and mercantilist, undermining international trust and fuelling wider debates over equitable trade and globalization.

For a leading country in the liberal international order, Japanese policies – particularly over trade – departed notably from both the letter and the spirit of this order. US and European retaliation further eroded the liberal trading system.

Abe’s ‘Free and Open Indo-Pacific’

The collapse of the Soviet Union and the end of the Cold War transformed the international system in the 1990s from bipolarity into one dominated by the US. Unconstrained by a great power competitor, US and European partners encouraged the liberal order to expand across several realms261 – notably by greatly increasing population flows, by advocating a ‘responsibility to protect’ that challenged the long-standing and foundational norm of sovereignty,262 and by actively promoting democracy.

At times, Japan has appeared to join its partners in pursuing a more expansive version of liberal order. During Prime Minister Shinzo Abe’s first term in 2006–07, he initially articulated the ‘Free and Open Indo-Pacific’ (FOIP) vision, which became the foundation of Japan’s regional diplomacy. Abe stated:

Now, as this new ‘broader Asia’ takes shape at the confluence of the two seas of the Indian and Pacific Oceans, I feel that it is imperative that the democratic nations located at opposite edges of these seas deepen the friendship among their citizens at every possible level.263

The then foreign minister, Taro Aso, similarly advocated an ‘arc of freedom and stability’ and support for countries that shared Japan’s values of human rights, democratic governance and the rule of law.264

Abe advocated a ‘democratic security diamond’ (consisting of Australia, India, Japan and the US) and his administration promoted security cooperation with those countries, notably through the ‘Quad’.265 Such cooperation was animated by the belief that, ‘At the end of the day, Japan’s diplomacy must always be rooted in democracy, the rule of law, and respect for human rights,’ he wrote in 2012, adding: ‘These universal values have guided Japan’s postwar development.’266 It was the first time that a Japanese administration had openly articulated its willingness to contribute to creating a global system of democratic norms.267 Beyond Asia, Japan extended its diplomatic efforts to increased cooperation with European countries with interests in East Asia, as well as with the EU.268

Japan’s FOIP vision and its close partnership with the US even prompted observers to describe Tokyo as a potential new leader of the liberal international order. During the first Trump presidency, commentators speculated that Japan might step in to fill the void created by the absence of strong US leadership.269 Trump’s 2016 election had been a significant blow for Tokyo, as he pulled the US out of the Trans-Pacific Partnership (TPP) trade agreement which Abe had spent significant political capital to get adopted by Japan’s parliament. After the US withdrawal, Solís argues, Tokyo stepped up, ‘deftly’ preventing the TPP from ‘unravelling’. Due to strong Japanese leadership, the accord was later signed as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.270

But the narrative of Tokyo assuming the mantle of liberal order-building was flawed for a few reasons. It ignores the extent of Japan’s nationalist/mercantilist policies in the post-war era, and it disregards how in more recent years Japan resisted the ebullient liberalism and cosmopolitanism favoured by its Western partners. This is evident in Japanese pragmatism in diplomacy towards autocratic states, in its preference for human security over a human rights-driven interventionism,271 and in immigration policies that advance nationalist – not cosmopolitan – goals.

Pragmatism in diplomacy and regional relations

Japan’s pragmatic rather than values-based diplomacy means it maintains cordial and engaged relations with authoritarian regimes. In the 1970s, under Prime Minister Takeo Fukuda, Japan practised what it called ‘omnidirectional diplomacy’, particularly aimed at China, in an effort to prioritize economic engagement over politics. This led it to expand economic and political relations with China and Southeast Asian countries.

Japan’s pragmatic rather than values-based diplomacy means it maintains cordial and engaged relations with authoritarian regimes.

After Japanese leaders introduced the FOIP concept, criticism at home and among regional partners led Tokyo to downplay rhetoric about liberal democracy. Japan’s neighbours worried that, in an international environment increasingly characterized by US–China tensions, support for a Free and Open Indo-Pacific suggested participation in an anti-China balancing coalition: something that regional countries wanted to avoid.272 The emphasis on liberal democracy also threatened productive relations with Japan’s autocratic neighbours. Seeking good relations in Southeast Asia, Tokyo avoided criticizing certain regional countries for their lack of democratic reforms and human rights protections. According to Ichihara, this meant that ‘in practice democratic norms and principles [did] not become a major feature of Japan’s engagement in the region or beyond’.273

Within Japan, critics of the FOIP vision also worried that an emphasis on liberal democracy would poison relations with China. Tokyo’s concerns about maintaining stable relations with that key partner resulted in a shift away from ‘values-based’ diplomacy. Satake and Sahashi argue that Japan anticipates that ‘by means of gradual persuasion’ China can be transformed into supporting a rules-based international order. In their view, ‘Japan’s vision does not necessarily include pursuing balancing acts against China or confrontational order-making’.274 These perspectives differ strikingly from the US view that rejects liberal engagement with China as a disastrous failure, and from Washington’s shift towards a highly competitive, counter-hegemonic policy towards China.275 By contrast, Nakano writes that because China’s and Japan’s futures – economic, environmental, social and political – are closely linked, ‘Japan has no choice but to work with China while managing China’s multiple risks’.276 Japan’s participation in the trilateral summit with China and South Korea in May 2024 can be interpreted in this vein; that is, as seeking to create a floor below which relations do not drop.

The FOIP concept has evolved into what Hosoya has called ‘FOIP 2.0’ – from a values-based concept emphasizing liberal democracy to one that emphasizes the rule of law and promotes principles of sovereignty and non-intervention.277 Priority issues on the FOIP agenda all invite cooperation with authoritarian states: for example, the development of regional infrastructure, trade, institutional capacity-building, non-proliferation, and counterterrorism and counter-piracy activities.278 Solís argues that Japan pursues ‘lower-case democracy’ efforts rather than pushing a values-based approach. Such efforts include funding development projects in judicial capacity-building, civil code development and election support considered essential to prevent abuse of state power, protect human rights, adjudicate conflicts and develop the institutions of a market economy.279

Human security and conservative immigration policy

Japan has been unenthusiastic about increasing calls for interventionism based on ideas about a ‘responsibility to protect’ (R2P) against human rights abuses. The reaction stems in part from Japan’s conceptualization of human rights. Rather than emphasize human rights grounded in Western ideas about individual liberty, Japan prioritizes policies that promote poverty reduction and institution-building: ‘community building though empowerment and protection of individuals to live happily and in dignity, free from fear and want’, according to the Ministry of Foreign Affairs.280

Another influencing factor is Japan’s traditional emphasis on human security. Since the Second World War, Japan’s foreign policy has included policies of significant military restraint as well as respect for the United Nations. As such, Japan’s government has stressed that militarized intervention should remain a last resort and be tightly bound by UN authorization, aligning with a multilateral approach that prioritizes diplomacy and capacity-building within sovereign states. In 2008, Prime Minister Yasuo Fukuda stated Japan’s position on R2P as follows:

Japan does not intervene by force, as a matter of national policy, in such conflict situations where the international community may have to seriously consider fulfilling their ‘responsibility to protect’; we are a nation that has primarily focused on humanitarian and reconstruction assistance.281

This position reflects Japan’s broader commitment to sovereignty as a fundamental norm of international politics as established in the 1945 UN Charter. Japan’s caution is also influenced by its regional context and its close diplomatic relationships in Asia, where sovereignty is highly valued.

Consequently, rather than endorse a trend towards militarized humanitarian intervention, Japan has focused on the first two pillars of R2P – prevention and assistance to build state capacity – in addition to its commitment to human security. Such activities have included human development initiatives in conflict zones and areas hit by climate change, efforts to support developing countries during the COVID-19 pandemic, and efforts around the world to promote universal health coverage. In fact, Japan’s approach towards advancing human rights dovetails with China’s efforts (much criticized in the West) to re-conceptualize human rights away from Western ideals and towards a ‘right to development’.282

Japan’s immigration policy remains decidedly nationalist rather than cosmopolitan.283 In 2019, Japan received more than 15,000 applications for refugee status, of which 38 were approved. Two years before, when millions of Syrian refugees were seeking asylum around the world, Tokyo agreed to accept 150 Syrian young people – as exchange students, not as refugees.284 Japan’s immigration policies sometimes trigger criticism from UN refugee agencies – despite significant Japanese financial aid to refugee programmes – and from among Japan’s liberal partners. Although Tokyo accepted a larger number of refugees in the wake of the Ukraine war, Japan is still widely criticized for its tight refugee policies.285

Japanese officials underline significant obstacles to integration posed by their difficult language and unique culture for immigrants from, for example, the Middle East, Latin America and Africa. Because Japan prioritizes social harmony, most of Japan’s immigrants come from Asia or from small Japanese communities in South America, whose residents already have Japanese language skills and cultural knowledge.

In stark contrast to trends in Europe and the US, the share of the Japanese population that is foreign-born has grown very slowly. In 1990 that share was less than 1 per cent; this rose to 1.7 per cent by 2010.286 The number in 2021 remained quite low, at 2.2 per cent.287 Japan’s cautious approach to immigration is perhaps the factor that differentiated it the most from its liberal partners in recent years.

The future of the international order is Japanese

Japan’s approach to the international order has been to maintain stable relations with autocracies, and to prioritize human security and the rule of law rather than liberal democracy. Tokyo’s cosmopolitan critics have chastised Japan for not accepting more immigrants (particularly refugees). Furthermore, critics have attacked Tokyo’s pragmatism to argue that, as a leading democracy, Japan has a responsibility to isolate, shame and pressure dictators who engage in human rights and other abuses.288

Japan’s approach to the international order has been to maintain stable relations with autocracies, and to prioritize human security and the rule of law rather than liberal democracy.

Yet new developments in international politics may throw a new light on Japan’s approach. Decades of liberal expansionism are being curtailed by several trends. An increasingly powerful China is supporting authoritarian states and undermining the spread of democracy in numerous ways.289 More capable but less liberal middle powers are pushing back against a perceived West-led internationalist agenda.290 

The US and other leading architects of the liberal international order will necessarily find themselves more constrained in the future – and Japan’s model offers a way forward.

The Japanese model offers a vision for international order that is liberal – yet works pragmatically with and respects the sovereign rights of authoritarian countries. Its emphasis on advancing human security favours quiet, constant work in global public health and infrastructure-building rather than high-profile militarized intervention during crises. Although this may elicit criticism for inaction at times of crisis, this approach has the potential to save more lives while avoiding the high costs – diplomatic, financial and human – associated with military solutions, as well as the other inevitable problems that such solutions entail.291 Finally, the Japanese model pursues liberal goals while prioritizing the national interest. Leaders’ failures to do this in the US and Europe have led to significant public backlash in recent years – in the form of Brexit, far-right European electoral victories, and the rise and resurrection of Trump. Today, as liberals in the US and Europe are looking for how to navigate their goals amid such challenges, Japan offers a way forward.