Examination of Witnesses (Question Numbers
83-99)
SIR STEPHEN
GOMERSALL KCMG AND
DR JIM
HOARE
2 APRIL 2008
Q83 Chairman: Gentleman, we are running
slightly late because we started slightly late. I have to warn
you that there will be a vote at 4 o'clock, which will interrupt
the proceedings, hopefully for only 15 minutes, but that is one
of the perils of having Committee meetings that run at the same
time as the House. We can never be sure what the business will
be on a particular day, but I think there will be at least one
vote at 4 o'clock. I would be grateful if you each introduce yourself
for the record.
Sir Stephen Gomersall: It is an
honour to be invited to give testimony to the Committee and a
great pleasure to see some old acquaintances again. As you know,
I left the Foreign Office in 2004 and have been working since
for a Japanese engineering company called Hitachi, orchestrating
its businesses in Europe. I would like to clarify that for today's
purposes, I am talking in a personal capacity and largely on the
basis of my diplomatic experience.
Dr. Hoare: I am Jim Hoare. I,
too, was a member of the diplomatic service, a member of the research
cadre, and I retired in 2003. In my time in the Foreign Office,
I worked on East Asia almost entirely. Since I retired, when I
thought I was going to work on East Asia, I have worked almost
entirely on North Korea, but I follow both Koreas and to a certain
extent China, and to a lesser extent Japan.
Q84 Chairman: May I begin with some
questions about Japan? How do you assess the current Japanese
economic position? Given the difficult decade or more experienced
by Japan, how vulnerable is it today to the repercussions of the
international problems emanating from the United States and the
possible global downturn?
Sir Stephen Gomersall: The perception
that Japan went into recession during the whole of the 1990s is
slightly mistaken because, in fact, it sustained about a 1% growth
rate. Indeed, some important structural changes in the economy
took place. Broadly, the exporting part of the economy that trades
internationally restructured itself and became internationally
competitive; it made a lot of changes, invested overseas and so
forth. That is basically why the Japanese economy today is still
driven, as far as growth is concerned, by the export sector. By
comparison, the domestic part of the economy—retail, construction,
insurance, financial services and so forth—remains rather
stagnant. The overhang of debt on the economy, coupled with policies
by the Government, which mistakenly tried to reinflate the economy
by excessive public expenditure, led to the polarisation of the
economy between an efficient export sector and a less efficient
domestic sector.
Since the Koizumi period, Japanese growth
rates have been higher. They have been comparable to those of
the European Union on the whole, in the 2% to 2.5% range. However,
if you differentiate between what is happening in the short term
and in the longer term, you would have to say that the Japanese
economy is underperforming in comparison to its potential. There
is no doubt about that.
In the short term, most people assess that
Japanese exposure to the sub-prime crisis is less than that in
other countries. However, the combination of dependence on export
markets, increase in import prices, the potential rise in the
value of the yen, the expected decrease in corporate earnings,
and generally low consumer sentiment inside Japan, means that
in the course of this year we will probably see a reduction of
growth to around the 1% to 1.5% level. That does not mean a collapse,
but it is less than is desirable, obviously.
In the longer term, although Mr. Koizumi
achieved quite a lot in being a catalyst for reforms, there are
still some major structural issues in the economy that politics
is finding it difficult to sort out. One of those is obviously
the ageing population. The essential problem is the difficulty
of dealing with such deep-seated issues and bringing about further
reforms in a situation where there is conflict between the two
houses of the Diet at the moment, and both the major political
parties lack a clear strategic vision of how to take the economy
out of its current situation.
Dr. Hoare: I am not competent
to comment on current Japanese economic development. The only
point that I would make is that, despite the perception that Japan's
performance in the 1990s was and continues to be poor, people
in the region still think of Japan as very much a major component
in the region's economic development. In South Korea, people still
look to Japan and think of it as more wealthy than South Korea.
It is a country to be emulated still. Of course, Japanese components
and technology go into much of the development in South Korea
and China, too.
Q85 Mr. Horam: Given what you said,
Sir Stephen, that the current economic situation in Japan is rather
fragile, how much scope is there to increase British exports there?
Sir Stephen Gomersall: I started
to give an economic analysis, but Jim's point is valid. With 10%
of the world's economy, Japan is still an enormous market. Even
when, in relative terms, the economy is in the doldrums, particularly
domestically, Japan is still putting out a lot of new technology
and still accumulating a large current account surplus, which
indirectly helps to sustain American debt. It is still making
an enormous contribution to international aid, so even at this
relatively low level, it is making a sizeable contribution to
the global economy.
British exports are, relatively, a great
success story. Japan is still the third largest market after the
United States and the European Union, so something must be right.
If you would like me to address trade barriers and so on, I would
be happy to do so, but the bottom line is that after 20 years'
effort, most of the barriers that have impeded foreign exports,
particularly western exports to Japan in the past, have been taken
away one by one, thanks to a combination of EU action and bilateral
actions. The market is open, but challenging, and our advice to
British exporters is that they must do a lot of research before
going into the market. They must have the right product, and the
three critical factors are presence in the market, quality and
delivery of the product, and relationships and trust with those
with whom they are doing business.
Having said all that, while I was there,
we had some major successes on the export side, including the
sale of Westland helicopters to the Maritime Self-Defence Force,
which was worth about £400 million, and the sale of Rolls-Royce
aero-engines and marine engines to All Nippon Airways and the
Self-Defence Forces. British telecommunications companies had
big investments, which have since been unwound, but at that time,
they were major British stakes in the ground.
Our exports cover a broad range of commodities.
Some 70% of them are industrial, so they have not benefited so
much from the imports to Japan that have been strongest, paradoxically,
during this period of recession—luxury goods from the European
Union. Companies producing fashion, high-quality jewellery, liquor
and automobiles have had high levels of growth during the past
15 years.
Q86 Mr. Horam: What is the best way
in which the FCO and other Departments can help British companies?
Sir Stephen Gomersall: We—I
am sorry, I am slipping back. A lot has been done over a considerable
period, beginning as far back as Mr. Heath's Government. Mechanisms
were set up in the then Department of Trade for directly helping
and subsidising exports to Japan. That helped us to get an early
foothold in the market.
In terms of official assistance, partly because
of the priority given now to new markets, the volume of subsidy
has been reduced, probably rightly, for Japan, and some of the
mechanisms for promotion and hand-holding for British exporters
have been unwound, but there is still a lot of expertise in the
market, in the embassy and in the British Chamber of Commerce
in Japan.
Q87 Mr. Horam: By direct subsidy,
do you mean export credit guarantees?
Sir Stephen Gomersall: No. I was
thinking more of small subsidies for trade missions, market surveys
and so on, aimed at the smaller end of the market. There is a
very powerful trade and investment section in the embassy, which
is still a large part of the embassy's effort in looking after
trade missions, and you will no doubt hear a lot more about that
when you are there. At the front end, I would say that it is still
the most important part of the embassy's mission, along with inward
investment.
Q88 Mr. Horam: Looking at the UK
and Japan the other way round, do you think that Japanese investment
in the UK is likely to be sustained?
Sir Stephen Gomersall: The major
investments that we have here in the automotive industry and in
the manufacture of machine tools and construction machinery is
almost certainly likely to continue for the foreseeable future.
I think that what has happened in the market is that it has become
more cost driven, and the sort of investments that we got in the
`70s and `80s, which came in support for the automotive industry
and other electronics businesses that dealt with components and
that sort of thing, will now go to eastern Europe—it has
done for the past five or six years.
The second trend is that, among European
countries, there is now a more level playing field. We got a lot
of investment from Japan in the initial phases because we put
out the welcome mat: Mrs. Thatcher said that, if they came and
had 60% local content, she would stand up for them in Brussels
as though they were British companies, and that made a big impact.
Of course, 20 years ago, companies took their decisions sometimes
on a personal basis, because of the predilections of the chairman
or the president of the company, but I think that, today, companies
analyse the cost-effectiveness of different locations very carefully
when deciding where to go. The UK is still very competitive, as
we have an open market and a relatively benign labour climate.
Of course, we are vulnerable on the cost of living side, but with
the English language and our general infrastructure, the UK is
still very attractive.
Q89 Mr. Horam: Does it matter that
we do not have the euro?
Sir Stephen Gomersall: I think
that that has become a non-issue, because people understand that
a decision to enter the euro is probably a long way off. Whereas
five or six years ago, they were very exercised about it, other
factors have now supervened and, as I have said, the low-cost
investment in any case would probably not come to the western
end of Europe. What people are looking for in the UK is probably
much more high tech and science and technology-related. They are
looking for research tie-ups with British universities or want
to set up their own research or design facilities in the UK, where
they can benefit from being at the crossroads of finance and commerce
and where the number of employees is going to be smaller. They
need a good supply of international graduates and well-qualified
people, not only British, but Europeans predominantly. They need
scientists, so a lot of collaborations have grown up between Japanese
companies and universities. My own company has a laboratory at
Cambridge University that has been going very productively for
15 years. A lot more companies have come in since then to do the
same sort of thing, and I think that the role of development organisations
in the UK is often to put potential investors in touch with British
centres of excellence in universities in a competitive manner.
Dr. Hoare: The only point that
I will make—it is a bit tangential and I have made it before—is
that, in Japan and other East Asian countries, the perception
of interest in Britain has been damaged by the closure of certain
academic departments and the withdrawal of such studies at Durham,
Stirling and other places. Those things add up: they may not be
in themselves the most important, but they add up to a perception
of a lack of British interest.
Chairman: When we produced our report
on East Asia two years ago, we commented on that. No doubt it
is an issue that we can revisit in this inquiry. I am conscious
that the bell is just about to ring, but we will start the next
question.
Mr. Hamilton: Following on from the question
of my colleague, Mr. Horam, about investment, is Japan the largest—
[Interruption.]
Chairman: We will hopefully be back in
15 minutes. Thank you.
Sitting suspended for Divisions in the House.
On resuming—
Q90 Chairman: We were in the middle
of a question from Fabian Hamilton, but I will pick up that question
and carry on. We should get through as quickly as we can. I am
sure that there will not be another vote until 7 o'clock, so we
have that advantage. Fabian was beginning to ask a question that
followed on the remarks about scientific and technology co-operation.
The Government have told us that there are huge benefits to be
obtained from deepening co-operation between the UK and Japan
with regard to research and development. First, do you agree with
that? I think from your earlier remarks, Sir Stephen, that you
do. How can that best be achieved, especially given the global
competition from not only South Korea and China, but the United
States?
Sir Stephen Gomersall: The first
thing that is obvious is that Japan is very much a superpower
when it comes to research and development, with 3% of GNP going
on research and development, most of which is from the private
sector. There is a lot of innovation coming out of Japan on to
the world's markets. Quite a lot of that innovation will be developed
partly in Japan but also partly overseas. Therefore Japanese companies
are certainly looking for research partners around the world to
help develop and implement innovation. Japan's science base is
very complementary with our own. There is an enormous emphasis
on energy technology, sustainability of society on low-carbon
technologies, intelligent transport systems, nanotechnology, aerospace
and areas like that, which coincides with our own agenda.
The UK began a formal framework for partnership
with Japan in this area in the 1990s, but it came to life more
after 2002 and 2003 as a result of an increase in effort by the
Office of Science and Technology, which sent a lot of missions
and research council missions to Japan at that time. As a result
of that, relationships have built up—for example, the relationship
between the Met Office Hadley centre and the Japanese climate-modelling
supercomputer in Yokohama—which have direct and tangible
benefits for UK science. Relationships are always important, and
so the Government's effort and the embassy's effort in organising
and helping to orchestrate visits of researchers in both directions,
particularly from the UK to Japan to see what is going on in Japan,
is vital from the point of view of stimulating the first stages
of collaboration.
The second area is obviously continuing to
try to attract Japanese investment, and particularly science-related
investment, to the UK. By and large, the UK is probably ahead
of most other European countries in that. There was a perception,
even inside Japan, in the early 2000s that Japan spent a lot of
money but did not get good value for what it spent on R and D,
because it did not have the right techniques or the right organisation.
A lot of exchanges took place to discover how the UK got value
for money out of science and research, particularly in the Government
sector. This has helped, together with the reform of the universities
in Japan, which can now form partnerships not only with Japanese
private companies but with overseas private companies to do research
and development. The doors have been opened in a big way, and
the UK has a very good reputation in innovation—and research
particularly—that we can trade on.
Dr. Hoare: The UK also has a historical
link with Japan. I would not want to make too much of the history,
but the Japanese have a long tradition of co-operating with Britain
over such things as the Japanese railway system, which began with
British assistance, shipbuilding, and so on. Those things matter.
They do not matter on their own, but in conjunction with the sorts
of things that Stephen has described, we have there a bit of historical
support for turning to Britain rather than to the United States.
In South Korea, for example, the inclination is much more to turn
automatically to the United States. I suppose that the only competitor
in Europe might be Germany, in terms of that sort of legacy.
Q91 Chairman: Can I now switch to
some questions about South Korea? Does the recent election of
President Lee—he has been in office for less than two months,
I think—mean that there will be more protectionist policy
in South Korea?
Dr. Hoare: He has said the opposite.
He has made lots of noises about opening up to the outside world.
He has talked about everybody having to be taught in English in
schools and universities. I suspect that the reality is that at
this stage nobody really knows what Mr. Lee's policies will be.
As you say, he is only a couple of months into office. He comes
from a particular background—the chaebol, which is a big
business background—but I think that he realises that there
are problems within the South Korean economy, and that one way
to get round those will be more international links and trade.
His programme is very long on rhetoric at the moment, and rather
vague on details, and I suspect that it will be some time before
it really settles down. He knows that he has problems, but I am
not sure that you can yet say that he knows how to deal with them.
Q92 Sir John Stanley: Do you think
that the British Government should be supporting the EU-Republic
of Korea free trade agreement? Are there any particular bottom
lines that you think the British Government should insist on in
that negotiation?
Dr. Hoare: That particular agreement
is popular in South Korea—at least it was under the previous
President. It was expected to have an easier ride than the US-ROK
free trade agreement. I think that it is a good development and
that the South Koreans have decided that free trade agreements
are positive. They have just been celebrating the one they have
had with Chile for some years. I am not sure how much trade they
do with Chile, but nevertheless that is a positive attitude towards
such agreements. It is essential that an eye is always kept on
the free trade agreement with the United States and what is in
that, because South Koreans' normal instinct is, I think, to take
account of US interests first and not necessarily think through
other people's.
There is going to be the question over European
attitudes towards the Kaesong industrial zone, which is situated
just across the demilitarised zone in North Korea. It is financed
and managed by South Korean managers, with North Korean workers.
The United States has had problems with that, because it has various
measures in place effectively forbidding trade with North Korea—Europe
does not have quite the same restrictions. There will be much
pressure from the South Korean authorities for Europe to accept
that products from the Kaesong zone are Korean products rather
than North Korean products. I suspect that the United States might—at
least as long as the present Administration are in place—try
and put pressure on Europe over that particular issue, although
I do not know what form that pressure might take. Such free trade
agreements bind the South Koreans into more open trading practices
and are therefore a good thing.
Chairman: May we move to some questions
on climate change? Eric.
Q93 Mr. Illsley: It has been suggested
that in the past, the Japanese have allied themselves to the United
States on climate change. Although South Korea does not come within
the Kyoto protocol, it is a high per capita producer of emissions.
Bearing that in mind, what are your views on the efforts of both
countries to comply with international action on climate change?
Dr. Hoare: I really would not
know much about the current Japanese attitude. South Korea often
pays lip service to such things, but the pressure there is still
for economic development and growth, and that tends to override
other considerations. There is a lot of talk about the beautiful
hills and streams of Korea, but in reality a lot of those streams
are polluted by industrial development, or have been in the past.
The new President has put forward an ambitious programme of economic
development to raise South Korea's position in the OECD league
from its current 11th to seventh position, to raise salaries to
$40,000 per year and to raise annual growth to 7%. That is all
put forward as the 747 policy.
It is unlikely that any of that will be
reached—unless the dollar falls and falls and its value
is reduced—but none of it seems to take much account of
the climatic consequences of such a push for growth. Some of you
will know that Mr Lee's biggest proposal so far is to construct
a canal from Pusan in the south to Seoul in the north of the country—about
450 km—through mountains and over plains. It will go through
areas that need economic reconstruction—former coal-mining
areas and so on—but the environmental consequences of building
a canal capable of carrying seagoing ships are horrendous, if
you think about the construction traffic and so on. That seems
to indicate a not very strong commitment to taking account of
environmental factors. The rhetoric will be there, because the
Koreans know the rhetoric, but the reality is slightly different.
That said, they have cleaned up the Han river. When I lived in
Seoul, it was a dead river; now it is used for recreational purposes
and has fish again. There have been other efforts to improve particular
environmental black spots, but there is no more widespread commitment.
Sir Stephen Gomersall: Japan is
an absolutely pivotal country in the debate on climate change
and for various technological solutions to deal with the effects
of that. It is a founder signatory of the Kyoto protocol, and
it is a large emitter with the potential to make very large reductions
in its emissions. It has tried, in recent years, to find ways
of bringing the US into the process and keeping the door open
for that. I have mentioned the technology that it is prepared
to share with other countries. Japan is struggling to meet its
original Kyoto targets because they were set at a time when Japan
was probably more advanced in its control of pollutants than the
EU. Japanese industry up to now has been rather negative on mandatory
reductions in carbon emissions, particularly in circumstances
where its competitors across the water in China are not subject
to that kind of regime. There is a lively debate going on about
that at the moment.[11]
As you are doubtless aware, when he was at
the Davos meeting, Prime Minister Fukuda came out with quite a
significant statement, saying that he would have it as his objective
at the G8 to try to get agreement on a post-Kyoto framework that
would bring in all the major emitting countries and that he would
try to set a global target of 30% for an increase in energy efficiency
by 2020. He announced a multilateral fund, in conjunction with
the UK and the US, of $10 billion for aid to developing countries.
He said that he wanted Japan to play a leading role in transforming
the globe into a low-carbon planet, and by that he included sharing
Japanese technology with other countries.
On the mechanics of carbon reduction, it
is quite significant that the Japanese Government set up two panels,
one in the Cabinet Office and one in the Ministry of Economy,
Trade and Industry, to study the benefits of cap and trade policies,
which implies a step which will be taken later. The EU has been
urging Japan assiduously—I know that the British embassy
has been involved in this—to shift its position by the time
of the G8 so that we can get the sort of agreement that Mr. Fukuda
was talking about. Given that the position of the American candidates
in the American election is positive towards cap and trade, Japan
in any case will see the need to make a shift in its position.
Most people are expecting Japan to move.
The private sector, while being bound by
an industry consensus to not yet accept these mechanisms, nonetheless
sees climate change and carbon reduction as both a duty and a
business opportunity. Companies such as mine are developing technologies
in carbon capture, hybrid vehicles and things like that, which
hopefully will come to the world market in a reasonably short
period of time. On the whole, Japanese industry is trying to get
ahead of the curve, so that it will be in a position to make a
contribution to the solution of the problem, when there is a global
agreement.
Q94 Mr. Illsley: So, the country
is committed to reducing climate change in terms of the mechanics
of how we achieve it, or how they achieve it?
Sir Stephen Gomersall: There is
not yet consensus on accepting a mandatory regime, although the
Prime Minister said that he was prepared to accept a national
target.
Chairman: We now move to some questions
about cultural education.
Q95 Ms Stuart: I noticed that Dr.
Hoare, in one of the observations, made some reference to the
impact that we had when we stopped the Japanese teaching relief
in universities. What I want to explore a little more is, over
the years in which you have had involvement, either in Korea—north
or south—or Japan, what changes have you observed in the
way the UK is perceived?
Dr. Hoare: This is always a very
difficult question to answer. My own experience over the last
30-odd years—Stephen's will be very different, being an
ambassador in Japan—is that there is a lot of respect for
Britain, often for quite the wrong reasons. Britain is still seen,
despite all the changes and developments, as the country of gentlemen—no
doubt of ladies as well, but of gentlemen in particular. It is
regarded as a place that is rather polite and a good model for
courtesy and how to behave. However, often, particularly in Korea,
it is seen not to be as dynamic as some of our European partners.
It is often hard to pin down why that is the case.
When I was in South Korea, we had trade campaigns.
They were not as intensive as those in Japan, as we never had
quite the same number of staff, although that has now changed.
The number of staff at the embassy is greater than it used to
be, as is the concentration on trade. However, when we are dealing
with Korea in particular and Japan to a lesser extent, the dominance
of the United States as the favoured world power is very strong.
We were the major power until the 1930s in
Japan, then the United States began to take over, and after the
second world war there was no contest, until recently perhaps.
We never had a very strong presence in Korea; it was always the
United States there, through American missionaries and educators.
Two, at least, of the major Korean universities and the biggest
international hospital are American missionary foundations. There
were a few cottage hospitals run by the Anglican Church, but they
never came to anything much.
Similarly in South Korea, educational models
have been very much based on those from the United States rather
than Britain. If it was not the United States, they tended to
look to Germany as an international model. Germany and France
have often made a bigger cultural impact in South Korea than Britain.
The British Council has tended recently to concentrate on English
language training, and some of the other things that go into the
pot marked culture have been rather neglected. So, the impression
of Britain there also is that we are not quite the leaders.
To a certain extent I have found that impression
in Japan as well, in the past. It is the old whisky and Burberry
syndrome. Those were the sort of things that Britain sold. In
fact, we contributed to Japanese shipbuilding, and South Korean
shipbuilding effectively began with British money and know-how.
The Korean car industry began with British money and to a certain
extent British know-how, although there was a lot of Japanese
input as well. However, the initial impetus was not kept up and
the memory of Britain tended to fade somewhat. This is one person's
perception. Even though I have been working within a British Government
context in the embassy, others will have a different perception
I am sure, including Stephen. However, that is what I have found
about Britain in East Asia, and also in China, incidentally.
Q96 Ms Stuart: So, Stephen, would
you like to add whether UK-Japan 2004 has made any difference,
in your assessment?
Sir Stephen Gomersall: I would
like to say a number of things. On the question of universities
and Japan studies, there was indeed quite an outcry four or five
years ago when Stirling University closed its Japanese Studies
programme, and Durham threatened to do the same. Many people became
very active on the matter and the Japanese embassy became involved.
As a result of representations from, among
others, Peter Mandelson and the 21st-century group, the Department
for Education and Skills took a look at the matter, and the result
was a stream of funding for which universities were entitled to
bid. As a result, the White Rose Universities of York, Sheffield
and, I think, Leeds were given funds for something called the
White Rose East Asia Centre, which is now in operation. That funding
is time-limited, but I think that it has eased the problem for
quite a while and as a result it has brought in other groups like
the Great Britain Sasakawa Foundation and the Daiwa Foundation
to fund teaching posts either at those universities or at secondary
schools that will feed them. There is more demand for places,
particularly graduate positions, in those universities than five
years ago. It is a very healthy sign.
I agree with what I think is the premise
of your question, which is that cultural diplomacy is an important
part of projection and ultimately our effort to win friends and
trade, and that it should be part of a joined-up co-operative
enterprise between the British Government agencies involved. In
my time in Japan the embassy and the British Council worked very
closely together. I have a lot of admiration for the British Council
because, together with the embassy, it worked very intensively
and successfully on changing the perceptions of Britain as a country
of castles, Beatrix Potter and that sort of thing. It introduced
contemporary arts and fashion and showed Britain as a diverse,
multicultural society, and brought together a lot of artists and
NGOs in the process. That work is rather tenuously funded and
depends on funds from local sponsors for these kinds of activities,
even more so today because of cuts in British Council funding.
Nevertheless, that is an important part of the work in Japan.
It was pretty successfully executed.
There were, as you mentioned, a number of
specific promotions. There was the big one in 1998, another in
2003, and another related to scientific innovation in 2004. There
is UK Japan in 2008, which you will hear about. That is all very
important. Again, it is run on a shoestring and developing the
concept and implementing it is very much down to the people at
the front end, but it seems to work. The effort is firstly to
project modern Britain and secondly to bring in grass-roots schools,
including primary and secondary schools, to make an acquaintance
with the UK. A lot has been done through online means, both in
advertising British educational services and putting schools in
Japan in touch with schools in the UK so that they have some joint
classes at particular times of the day and so forth. That is very
good.
On top of that, the British Council's other
big responsibility is to try to compete in the education market.
Japan is an enormous market for British educational services,
both for language teaching inside Japan and also for students
coming to British institutes of learning. There are about 8,500
students in the UK on full-time studies and about 80,000 per year
coming for short-term language courses. That is a very competitive
business, and the British Council is trying to position itself
so that if and when the Japanese Government decide to make English
language learning compulsory in Japanese primary schools, the
British Council is seen as a provider of those services. In the
meantime it helps to administer British standard English language
tests for business men and students, competing all the time obviously
with the Americans and the Australians and Canadians.
A final element which is very valuable for
us, as well as the other countries involved, is the JET programme.
I am sure that you know all about it. It was invented by a British
man, called Nicolas Maclean, in the 1980s. It involves British
graduate students going for two years or so to teach as assistant
language teachers in schools throughout Japan. It is a wonderful
resource. We used to have about 1,200, but about 700 students
now go out each year. They are literally dotted around the country
in Japan, sometimes in very offbeat places. As a result, they
acquire a very deep knowledge of how Japan works, and in many
cases good Japanese language. A lot of the students from the programmes
then come back and take up jobs related to work and business with
Japan. It creates a virtuous circle. The British Council has about
90 staff to deal with everything. It has about 37 language teachers.
It does a very good job on relatively thin resources.
Q97 Ms Stuart: It seems that both
of you are saying that we are making a good job of the fact that
English is a preferred language and that we have an advantage.
To what extent do you think that we are held back in our business
relationships by what could be described as a degree of ignorance
of East Asia as a business area on the UK side? Do you think that
that is a problem in the development of business? Are we held
back in terms of building on our strength? Is business in the
UK not as well informed about East Asian affairs as it should
be?
Sir Stephen Gomersall: That is
the thinking behind the re-expansion of Japanese studies that
we were discussing a moment ago. If we do not have such skills,
that is a disadvantage. Businesses in the financial sector, for
example, operate in English. It is no great disadvantage to go
with only English. In any case, many young people going there
pick up the language to a sufficient degree quite quickly.
Q98 Ms Stuart: Even in Japan?
Sir Stephen Gomersall: Even in
Japan—up to a certain point. Japanese is a very difficult
language to read and write, but it is not impossible to speak.
Dr. Hoare: Something Sir Stephen
said at the beginning is very important not only in Japan but
in the whole of East Asia. I am sure that Sir John Stanley will
back it up. It is very important to become known, to have a presence,
to go regularly and to show a commitment. To have the language
is an important element to show that you are committed to the
area and the people with whom you are dealing. As Sir Stephen
said, it is true that there has been an attempt to undo the damage
caused by closing a whole series of university departments.
Unfortunately, there is a pattern. It comes
partly from our short-term funding approach. There is a burst
of enthusiasm and an establishment of university departments not
only in Japanese but in Korean. The Government funding then falls
away. The universities are not committed for one reason or another,
such as a change of vice-chancellor, different priorities or the
university senior management not seeing the importance of East
Asia because it does not have anything to do with it. The university
then refuses to take on the funding, and there is a crisis.
So what do we get? Another input of Government
money that funds things for five years or whatever. That is fine.
Perhaps the universities keep it on for another two or three years,
but then the same thing happens. That has happened over and over
again. It creates the opposite impression from the commitment
that Sir Stephen said was important in business. It creates an
impression of, "We don't really care, although if money is
available, we will take it." That was particularly true of
Korean studies. When the Korean Government were handing out money,
the universities, including Durham, were very keen to have it.
When that stopped, they said, "Well, hard luck." In
the case of Durham, they refused to give back money that they
had received, even though they were proposing to stop the programmes
that they had received it for. That creates the wrong sort of
impression.
I am not much of a linguist—I have
always been very conscious of that—but I think that while
you can do business in most of these countries without the language,
the language indicates a depth of commitment and helps you to
a depth of understanding which is very important. Even if you
can manage in English, the fact is that you will then often be
dependent—in the case where English is not in use—on
the other side to interpret your position. That is not necessarily
a very strong position to be in.
These things all tie together, both our domestic
interest in East Asian studies—let us not pin it down to
one country or another—and the bigger commitment globally.
Chairman: Thank you. We have just a few
minutes more and want to move on to some security questions.
Q99 Mr. Illsley: I think that my
question follows on. I was going to ask in relation to our Foreign
Office whether there is sufficient commitment to Japan and the
Korean peninsula by our Government. Are we as involved as we should
be in that region? I was interested in what you were saying about
business—sometimes it does not show enough commitment. Do
our own Government show enough commitment?
Dr. Hoare: You have here someone
who indicates the commitment. Stephen was a language student—that
is when I first met him. That language student qualified and then
went back to Japan several times, ending up as ambassador. I think
that that has an effect on the Japanese. They see that as a commitment.
We have just had our first ever Korean-speaking ambassador, just
retired—Warwick Morris—and succeeded by another Korean-speaking
ambassador. That matters too.
Throughout East Asia we have a long-established
tradition of believing that the people on the ground doing the
job for Government did need to have the local languages. There
is a long-established school in Kamakura that teaches people Japanese.
We have been less successful in having the same sort of structure
for Chinese and Korean, but we make an effort to train people
in these languages. That is important, and also a sign of the
more general Foreign Office acceptance that, to understand these
places, you should have people who have lived there, know the
language and understand the people.
Sir Stephen Gomersall: That is
absolutely right. I am glad to say that the British embassy has
the reputation of being certainly the best in the EU, by a long
chalk, for that. The Chinese, Russians and Koreans are also very
strong in that area.
I think your question is a bit wider than
language skills. On the issue of whether British diplomacy is
giving enough weight to East Asia and Japan, I would say that
the FCO does a lot with the relatively thin resources that it
has in this area. The question is broader than just the FCO. It
is a question of how much expertise there is in all the other
Departments that deal with Japan. On the whole, the number of
Japan experts within the British Government is relatively limited,
although departments like the Bank of England and the Financial
Services Authority and so forth, for obvious reasons, have quite
a lot of skill in that area.
At the time that I was ambassador, certainly,
the preoccupation in the FCO was with, first, the transatlantic
relationship, secondly the European Union, and thirdly all the
other big global security issues. There was very little quality
time for dealing with East Asian issues. That was not entirely
bad news, because it meant that the front line, in a sense, had
the initiative. The embassy in Japan has two particular strengths.
One is that its staff includes a lot of people on secondment from
other Government Departments. There are regularly secondees from
the Bank, from BERR, the Office of Science and Technology, the
Treasury and so forth in the mission, which means that it has
direct access to those Departments, and that can help, therefore,
to get decisions when they are needed. The second strength is
that there is a high percentage of staff with previous Japan experience,
and therefore the expertise is on the spot. So the absence of
that in-depth knowledge in the Foreign Office or elsewhere does
not matter too much. But we are skating on thin ice when we consider
that the trend in the global economy and politics is that East
Asia will have a greater share of wealth and influence than up
to now, and that there are important unresolved security issues
there. We have big investments in East Asia. We need to be careful
not to neglect that.
It is very difficult to say to Ministers
that they should spend more time on Japan when there are not a
lot of major problems on the agenda, and business can be done
effectively at official level most of the time. But the symbolism,
the body language, matters a great deal and—if it is not
the wrong thing to say—I think that Mr. Blair was superb
in communicating to his opposite numbers and to Japanese visitors
who came through No. 10 that Japan mattered to the United Kingdom.
Those little gestures, for example Ministers getting on the phone
from time to time to their counterparts, even if just for 10 minutes,
make a lot of difference when it comes to following up on the
substance of issues. I would argue not for an excessive re-calibration,
but certainly for not forgetting the need to invest a bit more
in expertise in official Government structures in these regions.
11 Note by witness: In the Federation of Japanese
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