Canon Head Fujio Mitarai Calls for Japan to Take Lead in Creating New Economic Bloc
The Yomiuri Shimbun
Fujio Mitarai
Fujio Mitarai, chairman and chief executive officer of Canon Inc., called for Japan to promote efforts to create a new economic bloc, during a recent interview with The Yomiuri Shimbun.
The following is excerpted from the interview conducted by Yomiuri Shimbun Staff Writer Miyabi Endo.
***
Following the end of World War II, the United States was the only country economically prosperous enough to produce quality consumer products. Led by such a country, the postwar free trade zone expanded.
But in the half century that followed, trade friction arose between the United States and other countries that had grown rich, especially in manufacturing. The United States took the initiative in establishing the World Trade Organization to create fair trade rules, but [economic] disparities within the United States widened, resulting in the emergence of the Rust Belt.
U.S. President [Donald] Trump has launched a high tariff policy in an attempt to revive U.S. manufacturing and save the Rust Belt, but it would be difficult achieve that with the current tactics alone. His first administration also pursued high tariffs, but the unemployment rates in the Rust Belt region have not declined.
Japan and Germany largely have superior technologies in the automobile and other industries. The United States has lagged behind other countries in cutting-edge technologies in the automobile, steel and other industries, partly because those countries made persistent efforts while the United States coasted on a manufacturing boom. The revival of the U.S. manufacturing industry will take a considerable amount of time.
Companies have limited options to respond to the U.S. high tariff policy. Even if a company establishes a base in the United States, it will not be able to procure all the necessary raw materials and parts in that country. Production in the United States with imported parts that are subject to high tariffs will drive costs higher.
Canon's sales in the United States account for about 30% of its global sales. However, it would be impossible for each of Canon's four sectors, such as medical equipment and all-in-one printers, to have a factory in the United States because it would be unprofitable to do so. One option is to concentrate production in countries with relatively low tariffs, but that would be difficult without [U.S.] tariff rates being determined worldwide. As each country faces a different tariff rate this time around, negotiations will take a long time. The situation has disrupted companies' operations around the world.
The United States has the world's largest gross domestic product and imports more than $3 trillion [about \430 trillion] of goods annually, so its high tariff policy will have a significant global impact. The United States will also inevitably suffer as the prices of imported items rise, but Trump's slogan of 'Make America Great Again' resonates with the patriotic sentiment of the American people. The Trump administration's momentum is still not slowing down, so the impact could linger.
In the long run, it will be necessary to restructure economic globalization. Japan has a treasure: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was put together by former Prime Minister [Shinzo] Abe. Last year, Britain joined the trade bloc, and other countries and regions such as China and Taiwan have also applied for membership.
I hope the Japanese government will strongly promote the CPTPP and set a clear direction for the development of an Asian economic zone. It will save many companies in Japan as well firms around the world.
Fujio Mitarai
After graduating from Chuo University's Faculty of Law, Mitarai, 89, joined Canon Camera Co., now Canon Inc., in 1961. He was transferred to Canon U.S.A., Inc. in 1966 where he was president from 1979 to 1989. He then served as president and chairman of Canon. Since 2020, Mitarai has led the company with the current double position of chairman and CEO. He was also chairman of Keidanren (Japan Business Federation) from 2006 to 2010.
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