Report of the Parliamentary Delegation to Japan and the Republic of Korea

Parliament of Australia

9 November to 21 November 2014

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/.

Members of the Delegation

Mr Don Randall MP Leader of the Delegation

Senator Alex Gallacher Deputy Leader of the Delegation

Senator Sean Edwards

Mr Ken O’Dowd MP

Mr Jerome Brown Delegation Secretary

Introduction The delegation was deeply honoured by the generous hospitality extended The aims of the parliamentary to us, particularly by the Presiding delegation to Japan and the Republic Officers and parliamentary friendship of Korea (ROK) were to: groups in each country.

. discuss the trade relationships, The delegation wishes to record its particularly in the context of the appreciation for the work of the free trade agreements being Parliament’s International and finalised with each country at the Parliamentary Relations Office and time of the delegation’s visit, and Australia’s diplomatic missions in to build on the Joint Standing Japan and the ROK for their efforts in Committee on Foreign Affairs, developing the programs and the Defence and Trade’s inquiry into excellent support provided during our the trade and investment visits. relationship with each country; . explore the role of Australia’s This report details the themes energy and minerals exports in the discussed in the delegation’s Japanese and ROK economies, and appointments and describes the site the countries’ approaches to visits in each country. The delegation’s energy policy in the aftermath of full program is included as an the Fukushima nuclear accident in appendix to this report. Japan; . learn about Japanese and ROK Tragically, the leader of the foreign policy perspectives, delegation, Mr Don Randall MP, died including the key strategic issues in 2015. The delegation members facing each of the countries, and express their sincere condolences to the bilateral relationships with his family and appreciation for his Australia; and leadership of the delegation. . reinvigorate the parliamentary relationships, noting that the last delegation visit to Japan took place in 2006 and the previous visit to the ROK occurred in 2010.

Japan and the ROK were highlighted in the Australia in the Asian Century White Paper as two of the key countries in the Asian region of strategic importance to Australia. Australia has longstanding and highly complementary trade relationships with both countries. This has been buttressed by extensive people-to- people contacts and, potentially, more extensive security cooperation.

Japan

Japan investment stocks worth over $174.6 billion in 2014, of which $66 billion was The delegation visited Japan from direct investment, notably in LNG 2 9 November to 15 November 2014. The projects. program commenced with appointments in Tokyo and a site visit in Japan is Australia’s third-largest source Yokohama, followed by meetings and of imports. Merchandise imports from site visits in Osaka. Japan were valued at $18.3 billion in 2014-15 and included passenger motor The bilateral relationship vehicles ($6.1 billion), refined The Department of Foreign Affairs and petroleum ($3 billion), and iron / steel Trade states that the relationship with pipes ($1.3 billion). Japan is Australia’s closest and most mature in Asia. The relationship is said Japan is Australia’s sixth largest to be fundamentally important to both destination for foreign investment, countries’ strategic and economic which was worth $69.6 billion in 2014. interests. The relationship is underpinned by a shared commitment In July 2014 Australia and Japan to democracy, human rights and the entered into a Japan-Australia rule of law, as well as common Economic Partnership Agreement approaches to international security.1 (JAEPA) which, at the time of the delegation’s visit, was yet to be The trade and investment relationship approved by the National Diet of Japan. between Japan and Australia is highly The JAEPA subsequently received Diet complementary and of critical approval and entered into force on importance to both countries. 15 January 2015.

Australia is viewed as a safe, secure and The JAEPA is claimed to be the most reliable supplier to Japan of minerals liberalizing bilateral trade agreement and energy resources, as well as food that Japan has ever concluded, and the products. Australia’s principal exports most significant economic accord to Japan are coal (valued at $11.7 between the two countries since a 1957 3 billion in 2014-15), iron ore ($6.6 Agreement on Commerce. billion), beef ($1.8 billion) and copper ($1.7 billion). People-to-people links between Australia and Japan are also very Japan is Australia’s second-largest strong. A record 244,600 Australians export destination, with merchandise visited Japan in 2012 and some 324,000 exports to Japan worth $44.5 billion in Japanese people visited Australia in 2014-15. In 2015, two-way trade was 2013. Links are fostered through a valued at $62.8 billion, almost 12 per myriad of connections, such as the 473 cent of Australia’s total trade. formal partnerships between Australian Australia’s trade surplus with Japan is and Japanese universities and the Japan the nation’s second largest. Exchange and Teaching Programme. The New Colombo Plan, which will Japan is the third largest source of assist many thousands of Australian foreign investment in Australia with undergraduates to undertake study and

Japan

internships in Indo-Pacific countries, provocations, together with the will also deepen knowledge of Japan abduction of Japanese nationals, are among younger Australians and foster also cited. people-to-people links. In responding to these challenges, Japan’s foreign policy and its Ministry of Foreign Affairs (MOFA) relationship with Australia officials told the delegation that Japan In December 2013 the Government led would, inter alia, strengthen its by Prime Minister Shinzō Abe issued diplomatic and defence capabilities, Japan’s first National Security Strategy. including its maritime surveillance and The Strategy defined Japan’s national cyber capabilities, revise the Guidelines interests as being: for Japan-US Defence Cooperation, and - maintaining the country’s enhance security and defence sovereignty, territorial integrity and cooperation with Australia, South-East safety; Asian nations, India and Europe. - achieving prosperity for the nation through economic development, Japan’s diplomatic efforts would also free trade and an international seek to contribute to the country’s environment that is stable, economic growth by taking an ‘All- transparent and predictable; and Japan’ approach to diplomacy, including - maintaining an international rules- ‘top level sales’ initiatives involving the based order underpinned by values Prime Minister and Minister for Foreign of freedom, democracy, respect for Affairs, Fumio Kishida, promoting human rights and the rule of law. economic partnership agreements, strategic use of Japan’s Official The Strategy outlined three national Development Assistance, and security objectives, as follows: supporting Japanese companies to - strengthen the country’s deterrent expand in emerging markets. capability so as to maintain Japan’s security; Illustrating Australia’s strategic - improve the security environment importance to Japan, MOFA officials of the Asia-Pacific region and stated that Japan relies very heavily on reduce threats to Japan by Australia for mineral and energy cooperating with the US and other resources and food products. Japan’s partners; and energy dependence on Australia was - play an active role in efforts to said to be 24 per cent - Japan’s largest. maintain the international rules- based order.4 It was noted that 290,000 Australians are learning to speak Japanese (the Security challenges in the Asia-Pacific fourth largest in the world), that 78,000 region identified in the Strategy include Japanese nationals reside in Australia the rapid rise of China, the massive (the third largest Japanese population expansion in its military capabilities and outside of Japan itself), there are 687 conduct in the East China and South Japanese-affiliated companies in China seas which, the Strategy argues, Australia and 109 sister city are contrary to international law. North relationships have been formed. Korea’s nuclear weapons capability and

Japan

The assistance that Australia provided Partnership (TPP) and Japanese to Japan following the Great East Japan investments in Australian energy earthquake in 2011 (a search and resources and infrastructure projects rescue team and C-17 aircraft) and were cited as measures to further former Prime Minister Gillard’s visit to strengthen the economic relationship. the affected area were mentioned Under JAEPA, some 97 per cent of favourably. Australia’s merchandise exports to Japan will receive preferential access or MOFA emphasised that Japan shares enter duty-free when the Agreement is fundamental values and has common fully implemented. strategic interests with Australia. It was noted that Prime Ministers Abe and The delegation had the welcome Abbott had elevated the relationship opportunity to explore the potential between the countries to that of a benefits presented by the JAEPA and ‘special strategic partnership’. The close other bilateral trade issues with rapport between the two Prime representatives of Murray Goulburn, Ministers was seen as particularly Meat and Livestock Australia, Austral valuable for the relationship. Fisheries and Horitomi Commercial and Industrial at a lunch held at the It was explained to the delegation that, Ambassador’s residence and hosted by from Japan’s perspective, there are two the Deputy Head of Mission, Mr Tom ‘major pillars’ to the bilateral Connor. relationship: strengthening the complementary economic ties, and For the security cooperation dimension security cooperation. of the relationship, MOFA mentioned the 2007 Japan-Australia Joint As examples of the economic Declaration on Security which elevated relationship, MOFA noted that Japan the bilateral relationship to a ‘strategic relies heavily on Australia for natural partnership’, bilateral consultation and resources and food. For instance, 64 cooperation (including on non- per cent of Japan’s coal imports are proliferation, peace keeping operations, supplied by Australia, 59 per cent of information sharing, disaster relief and iron ore, 21 per cent of natural gas and maritime security), joint military 19 per cent of uranium imports. In exercises and multiple rounds of 2+2 terms of food products, 62 per cent of Foreign and Defence Ministerial barley imports are sourced from consultations. Australia, 51 per cent of beef imports, 32 per cent of raw sugar and 17 per Measures to strengthen security cent of wheat imports. In total, cooperation mentioned to the Australia is Japan’s third largest food delegation included a Japan-Australia supplier and fourth largest trading Information Security Agreement (March partner overall. 2013), a Japan-Australia Acquisition and Cross-Servicing Agreement (January The Japan-Australia Economic 2013), and an Agreement Concerning Partnership Agreement, signed by the the Transfer of Defence Equipment and two countries’ Prime Ministers on 8 July Technology (2014). MOFA indicated 2014, along with the Trans-Pacific that Japan and Australia could further

Japan

expand cooperation between the two Government view Australia as a ‘quasi- militaries for peace keeping activities ally’ of Japan.5 and disaster relief operations. Asked to nominate Japan’s top foreign The outcomes of Prime Minister Abe’s policy priorities, MOFA officials said the highly successful visit to Australia in July following three were of particular 2014 were summarised. These included importance: strengthening the Japan- the signing of the JAEPA, commitment US alliance; deepening relations with to negotiations on the TPP, the China and the Republic of Korea; and announcement of an Australia-Japan strengthening Japan’s economic 135 East Longitude Initiative, joint relationships as a means to revitalising research on marine hydrodynamics, a Japan’s economy. decision to commence negotiations for an agreement to facilitate joint Added to these three priorities for operations and exercises, and an Japanese diplomacy, a fourth is Japan’s intention to further strengthen trilateral intention to contribute constructively to cooperation between Japan, the US and global issues, for example in UN Australia. The support expressed by peacekeeping operations and in nuclear Prime Minister Abbott for the Japanese disarmament and non-proliferation, in Government’s decision to revise its what Prime Minister Abe refers to as legal framework for security (the new Japan making a ‘Proactive Contribution constitutional interpretation on Japan’s to Peace’.6 collective self-defence) was also welcomed. With regard to the relationship with China, MOFA noted that Prime Minister In the context of the discussion on the Abe and the President of China, Xi bilateral relationship, it was of interest Jinping, were to meet in person for the that on the day the delegation arrived first time that morning on the sidelines in Tokyo the Asahi Shimbun, one of of the APEC summit taking place in Japan’s national newspapers, reported Beijing. This was seen as a significant that ‘Japan and Australia are becoming first step in restoring bilateral relations each other’s quasi-allies’, referring to a which had become strained, particularly joint military training exercise then over the Senkaku/Diaoyu Islands underway in Miyagi Prefecture dispute. involving Japanese, US and Australian military personnel. The paper also The delegation mentioned that there reported on Ministry of Defence had been a decline in the number of consideration of Japanese Self-Defense visitors to Australia from Japan and Force participation in Exercise Talisman enquired what the reasons might be for Saber, Australian consideration of a this. MOFA suggested that the decline status of forces agreement with Japan, might be due to the unfavourable possible export of submarine exchange rate and the availability of technology to Australia, and inexpensive airfares to closer holiday cooperation on the F-35 Joint Strike destinations in Asia. Fighter. The paper also reported that Prime Minister Abe and the Japanese In a briefing received from other interlocutors later in the Japan

Japan

program, the delegation was told that Asked about Japan’s current energy Australia had acquired a reputation in situation and the role of nuclear power, Japan for being expensive and providing the Minister noted that LNG imports poor customer service, which may also are very costly and, while restarting have contributed to the declining nuclear reactors is a very sensitive tourist numbers. The delegation also issue, Japan simply must utilise nuclear learned that the Japanese Government power. The Minister noted that he is has actively promoted domestic from the Kagoshima Prefecture in tourism. The delegation was told that which the Sendai nuclear units, single international tourism campaigns expected to restart shortly, are located. do not work in Japan, that more information about Australia needs to be While praising the extremely close made available in the Japanese market, economic relationship, the Minister and that Australia could learn from the expressed the hope that Japan and approaches taken by others, such as the Australia could strengthen security French. Nevertheless, Australia was said cooperation and the military to military to experience good ‘repeat tourism’ relationship also. from Japanese people who do visit, such as students. Japan’s public diplomacy efforts MOFA officials described the ‘Cool The delegation had the pleasure of Japan’ soft power public diplomacy meeting the Vice-Minister for Foreign initiative, which formally commenced in Affairs, Mr Takashi Uto, who made the 2012, as an attempt to shape welcome opening observation that perceptions of Japan held by the public Japan’s relationship with Australia had and other non-government actors in never been closer, and had been foreign countries. elevated to a ‘special relationship’. These efforts are intended to counter The Minister noted that Prime Minister what the officials described as Japan’s Abe would be attending the G20 declining profile relative to other Summit in Australia later that week and neighbouring countries (China and the would that day, 12 July 2014, be Republic of Korea in particular), as meeting with Prime Minister Abbott on measured by opinion polls the sidelines of the APEC summit. commissioned by the Foreign Ministry. Examples of this polling included The Minister welcomed the JAEPA and perceptions among US opinion leaders expressed confidence that it would of which country is the most important shortly be approved by the Diet. The partner for the US in Asia, the relative delegation was told that the Abe popularity of Japanese television Government’s highest priority was to programs, the number of foreign secure economic growth and to get the students learning Japanese, numbers of country out of deflation. The other key tourists visiting Japan relative to other issue for Japan was strategic, referring countries and so on. to China’s island building activities. The Minister was pleased to note that Japan It was noted that both China and the was chosen as one of the four pilot Republic of Korea had stepped up their countries for the New Colombo Plan. public diplomacy efforts in recent years

Japan

and, in some respects, Japan had network of Japan-East Asia youth lagged. It was commented that China’s and students; and massive infrastructure build as part of - promotion of Japanese language its development assistance is repeating studies, notably the Japanese errors that Japan allegedly made in the Language Education Program 1980s and 1990s. It was also observed conducted by the Japan Foundation. that China has succeeded in keeping a focus on the ‘comfort women’ issue, In a point of particular interest, it was which was said to have detracted from noted that Australia’s messaging has Japan’s efforts to focus on the post-war concretely assisted to foster a period. favourable opinion of Japan. The speech given by Prime Minister Abbott The three objectives of Japan’s public to welcome Prime Minister Abe to the diplomacy were summarised: Australian Parliament on 8 July 2014, in promoting public opinion favourable to which the then Prime Minister referred Japan; fostering ‘Japonophiles’; and to Japan as an ‘exemplary international promoting an understanding of Japan’s citizen’ and welcomed Japan’s decision history, culture and government to be a ‘more capable strategic partner’ policies. in the region were again mentioned as examples. Prime Minister Abbott’s Issues the various public diplomacy support of Japan on that occasion was activities are directed at include said to have received widespread and shaping views about Japan’s territorial positive coverage in Japan.7 integrity (for example, Japan’s perspective on the Senkaku Islands To coordinate public diplomacy dispute) and Japan’s history. activities, the Japanese Foreign Ministry has created a Public Diplomacy Strategy Two principal public diplomacy Division within the Foreign Minister’s activities were described: strategic Secretariat. The Division determines public relations initiatives, and utilising suitable messages, appropriate target Japanese soft power. groups, speakers, timing and tools for strategic public relations activities. It was explained that Japan’s soft power is comprised of three principal It was clear to the delegation that the elements: Japanese Government takes public - cultural exchanges, e.g. support for diplomacy seriously. MOFA officials sports and theatrical events, stated that it was currently a top promoting Japanese pop culture priority for the Ministry and that the and cuisine; budget for public diplomacy activities in - intellectual and people-to-people 2015 was expected to be approximately exchanges, e.g. support to foreign 50 billion yen (¥) - more than $500 think tanks and Japanese studies million. The final budget allocated to programs, the Japan Exchange and the Foreign Ministry for public Teaching (JET) Programme diplomacy activities in 2014-15 was (Australia is the fourth largest JET actually ¥70 billion.8 Programme participant), and the

Japan

Asked how the Foreign Ministry intends The Japan Foundation conducts to measure the outcomes of this programs, in partnership with other investment, MOFA indicated that organisations in and outside Japan, with effectiveness is difficult to measure. a focus on three main activities: arts However, a ‘greater familiarity with and cultural exchange; Japanese- Japan’, while not entirely satisfactory, language education overseas; and would be one measure. More specific Japanese studies and intellectual success measures would be determined exchange. for each individual program (e.g. the number of favourable articles Support and promotion for the study of published, responses to surveys etc.). Japanese language in foreign countries is a key aspect of the Foundation’s People-to-people links – Cultural, work. Programs include organising the scientific and educational exchange Japanese-Language Proficiency Test, In a briefing which fitted well with the developing teaching materials, preceding discussion of Japan’s soft supporting Japanese courses, and power, the delegation was informed providing training programs for about the role and work of the Japan Japanese language teachers. Foundation by its President, Mr Hiroyasu Ando. It was explained that in 1979 some 127,000 people were learning Japanese The Japan Foundation was established outside Japan, while in 2012 the in 1972 and is an independent number had risen to almost four administrative institution under the million. The Foundation also sends jurisdiction of the Foreign Ministry. The native Japanese language teachers to Foundation has the objective of various South East Asian Nations, with promoting Japanese culture 65 sent the month before the internationally or, as stated in its delegation’s visit. The Foundation’s aim corporate information, to promote is to send 3,000 teachers overseas by international cultural exchange through 2020, including some to Australia. a comprehensive range of programs in Quoting a figure larger than that all regions of the world. mentioned by MOFA, Mr Ando stated that there are 360,000 students The Foundation has a staff of 230 and a learning Japanese in Australia, more budget in 2014 of ¥19.8 billion than are learning Chinese, and that it (approximately $198 million), but was appears Australia needs additional said to be under financial pressure. The native Japanese language teachers. Foundation has 22 overseas offices in 21 countries, including an office in Mr Ando noted that 2016 would mark th Sydney which opened in 1978. Based on the 40 anniversary of the signing of a Japanese Government endowment of the Basic Treaty of Friendship and ¥78 billion, the activities of the Japan Cooperation between Australia and Foundation are financed by Japan which sought to broaden bilateral government subsidies, investment relations beyond an economic revenue, and donations from the partnership. private sector.

Japan

As examples of its activities involving the Shinkai 6500 submersible vessel Australia, Mr Ando mentioned that the and a seismic observation network that Foundation is supporting an art was developed in the aftermath of the exhibition and sending Japanese Great Hanshin-Awaji earthquake (the theatrical productions to coincide with Kobe earthquake), which occurred in the anniversary of the opening of the January 1995. Japanese Embassy in Australia. The Foundation will support a Japanese Film Miraikan engages in three main Festival in Sydney and supported a activities: disseminating information lecture series held in July 2014 at the about Japan’s cutting edge science and Art Gallery of NSW on Japanese developing methods to communicate Performing Arts. this science; training science communicators; and maintaining a link Noting that Japan has such an with eight stakeholder science exemplary international reputation, museums around the world, one of particularly as a manufacturer of quality which is the National Science and high-technology goods, the delegation Technology Centre (Questacon) in enquired about the necessity for the Australia. Foundation’s work. Mr Ando responded that the purpose of the Foundation is to Half of the original construction cost for ‘present Japan’s face to the world’, so Questacon ($10 million) was paid for that the world can understand the with a generous grant from Japan. The Japanese way of living and better MOU with Questacon and the other appreciate that Japan is ‘not just science museums relates to gadgets’. He also made the point that cooperation in academic research and the Foundation’s objective is not about educational research. dominating other cultures but facilitating two-way exchanges and The delegation enquired how interest in collaboration. The work of the science could be stimulated in young Foundation was said to lay solid ground people. Miraikan staff responded that it for improved people-to-people links is important first to create a ‘sense of between Japan and other countries. wonder’ in science amongst children, then later encourage study of STEM The delegation had the welcome subjects. The advantage of Miraikan opportunity to visit Miraikan, Japan’s and similar facilities is that they allow National Museum of Emerging Science young people to have these real and and Innovation which opened in 2001, engaging experiences with science. and to tour its exhibits. These included the Museum’s ‘symbol exhibit’ Geo- It was also remarked that teaching Cosmos – a large suspended globe with science is challenging and tends to be a 6 meter diameter made up of over more male focused. Japan, and 10,000 panels which realistically project Miraikan specifically, were said to be the figure of the Earth from space with making efforts to open opportunities super high resolution exceeding 10 for women to engage with science. million pixels. The delegation was also fascinated to see the famed humanoid It was noted that the day before the robot ASIMO in operation, as well as delegation’s visit, the Japanese

Japan

Antarctic research vessel travelled via the Ministry of Economy, Trade and Fremantle to Antarctica. Hope was Industry (METI) and its Agency for expressed there could be greater Natural Resources and Energy (ANRE), cooperation between Australia and the consequences of the nation-wide Japan in Antarctic research and logistics nuclear shutdown were profound. in the future. Japan’s power generation mix changed During its visit to Tokyo, the delegation rapidly and significantly. The was also pleased to meet seven percentage of power obtained from extremely impressive students, from fossil fuel use rose from 60 per cent in universities across Australia, 2010 to 90 per cent in 2014. In participating in the New Colombo Plan particular, the share of gas-fired pilot. The delegation appreciated electricity generation rose markedly - having the benefit of their views on the from 32 per cent in 2010 to almost 50 program and hearing about the per cent by 2012, and associated placements they are undertaking. demand for liquefied natural gas (LNG) increased by 30 per cent. Use of oil for Japan’s energy situation following power generation trebled from 5 per the Fukushima nuclear accident cent in 2010 to 16 per cent in 2012. The Fukushima Daiichi nuclear accident, which occurred as a consequence of a The increased fuel cost to power tsunami triggered by the magnitude 9.0 companies was ¥2.3 trillion in 2011, Great East Japan earthquake on ¥3.1 trillion in 2012 and ¥3.6 trillion in 11 March 2011, had a significant and 2013 - a cumulative total for the three enduring effect on the electricity years of ¥9 trillion (approximately $110 market and the Japanese economy as a billion). Losses across Japan’s power whole. companies were in the order of ¥1 trillion ($12 billion) per year. All of Japan’s 48 nuclear reactors, which had been supplying 32 per cent of the As a consequence of the increased fuel country’s electricity needs, were either costs, notably for oil and LNG, Japan closed or had their operations recorded a balance of trade deficit in suspended pending assessments by the 2011, the first time in 31 years. The newly established Nuclear Regulation deficit rose to a record ¥11.5 trillion Authority (NRA) that the reactors met (approximately $126 billion) in 2013. heightened safety requirements.9 The cumulative trade deficit from April 2011 to the end of March 2014 was Prior to the accident and under the ¥23.25 trillion ($255 billion). Japan’s country’s 2010 Basic Energy Plan, the current account has also been affected nuclear share in Japanese power by the deterioration in the trade generation was set to increase to 50 per balance. cent by 2030. Instead, by May 2012, all of Japan’s nuclear reactors had been The average cost of electricity shut down. generation rose by 57 per cent following the nuclear accident, from As explained to the delegation in a ¥8.6 per kilowatt-hour (kWh) in 2010 to comprehensive briefing by officials of ¥13.5kW/h in 2012.

Japan

Electricity prices for consumers rose the viability of the country’s economy. steeply. Between 2010 and 2014 To this end, Japan intends to bolster its average electricity prices rose by 25 per resource diplomacy, diversify its range cent for households and 38 per cent for of suppliers and reinforce the security industry due to the increased use of of transportation routes.11 fossil fuels, rising fuel prices and the rising renewable energy promotion Japan’s Strategic Energy Plan surcharge. In April 2014, three years after the nuclear accident, the Japanese The effect of the nuclear shutdown on Government issued a new Strategic Japan’s carbon emissions was also Energy Plan which is intended to guide dramatic. Approximately 100 million Japan’s energy policy for the next 20 tonnes more carbon dioxide per year is years. A principal objective of the Plan being emitted than when the nuclear is to reform the country’s energy sector reactors were in operation, adding so that Japan remains a competitive 8 per cent to Japan’s total emissions. location for business and to encourage The country’s emissions target adopted economic growth. prior to the Fukushima accident had to be abandoned. Japan’s emissions target As explained to the delegation, the Plan of a 25 per reduction on 1990 levels by details a range of structural challenges 2020 was changed in 2013 and that facing Japan’s energy sector, several of year emissions were almost 11 per cent which were exposed by the Fukushima higher than 1990 levels.10 accident. These problems include: - reduced security of energy supplies In 2012, Japan was self-sufficient for brought about a record high just 6 per cent of its energy demand, dependence on imported fossil primarily from hydro. Japan’s reliance fuels, combined with a significant on imported primary energy resources outflow of national wealth, (including oil) was over 90 per cent at mentioned above; the time of the delegation’s visit. METI - an excessive dependence on some officials stated that this degree of resource suppliers, referring import dependence presents a major specifically to the fact that Japan vulnerability for Japan, the energy depends on the Middle East for 83 security of which would clearly be per cent of its oil imports and 30 per threatened if supplies were disrupted. cent of its LNG imports (Australia It was emphasised to the delegation supplies 21 per cent); that a top economic priority is reducing - the differences in electricity electricity prices, and a key focus for frequency between East and West energy policy is diversifying the sources Japan, and the absence of an of energy supply so as to lower fuel emergency system to deliver oil import costs. products; - a power supply system Similarly, Japan’s Diplomatic Bluebook characterized by regional 2014, which was provided to the monopolies comprised of ten delegation, states that it is imperative vertically-integrated electricity for Japan to secure stabile supplies of power companies (EPCOs), also energy at reasonable prices to ensure referred to as general electricity

Japan

utilities (GEUs).* These EPCOs lack a efficiency, and allow greater choice system to transmit electricity for consumers; and is beyond regions, maintain strong - increasingly ‘self-sufficient’, by price control and are exposed to deploying more renewables, nuclear little completion, and are limited in energy as a quasi-domestic energy their ability to handle changes in source, and use of resources in energy mix, including an increase in Japan’s EEZ such as methane renewables; and hydrate. - the development of unconventional (shale) gas and crude oil in North Of the ten measures detailed in the America (the so-called ‘shale Plan, each of which contains a number revolution’) which is having a major of sub-elements, the following were impact on global fossil fuel supply brought to the delegation’s attention by structures, notably causing large METI. gaps in international gas prices which is predicted to make energy- First and foremost, Japan will seek to intensive industries in Japan (and secure stable supplies of energy Europe) significantly less resources. It aims to achieve this by competitive. diversifying major energy resources and, for each resource type, reduce To address these challenges, the Energy procurement risks by diversifying Plan proposes a series of strategies supply sources, secure interests in based on a ‘3E + S’ policy: ensure upstream projects and enhance stability of energy supplies (‘Energy relationships with supplying countries. security’); reduce the cost of energy supplies by enhancing efficiency As examples, Japan intends to obtain oil (‘Economic efficiency’); climate change and natural gas from Russia and engage mitigation (‘Environment’); and ‘Safety’. in an expanding range of upstream oil, gas, coal and metals projects in The Plan proposes an energy supply and Australia, Indonesia, Russia, US, demand structure for Japan which is: Canada, Kazakhstan, Mozambique, - ‘multilayered’, in that there is a Vietnam and the Middle East. Mention range and combination of energy was made of Japan’s intention to sources available so that each accelerate projects operated by source can exert its advantages to Japanese firms, such the Ichthys LNG complement others’ drawbacks; project in Australia which is operated - ‘resilient’, so that stability can be by INPEX and expected to commence assured even in times of crisis; production in 2016. - ‘flexible’ so that new players can enter the electricity and gas In terms of diversification of gas markets in order to increase supplies, METI observed that the shale competition and promote revolution may be a ‘game changer’ in that it could make available significant * A ‘vertically-integrated’ power company refers additional supply and add flexibility for to one which includes the generation, Japan. Japan currently has five LNG transmission, distribution and retail supply of projects in the US, equivalent to the electricity. total imports from Australia today. LNG

Japan

supplies from these projects are 1 April 2015 and the commencement of expected to start in 2016 and will put full retail competition on 1 April 2016.12 downward pressure on the LNG price. Unbundling of the transmission and Japan also has LNG projects underway distribution sector and full liberalisation in Canada (production start: 2019), of retail electricity rates are planned to Russia (start: 2018) and Mozambique occur by 1 April 2020. (start: 2018). Japan will also engage in reforms to the It was noted that while US shale gas is electricity grid. The delegation was inexpensive, the projects involve more intrigued to learn from METI officials risk. Australia was said to be ‘very that Japan does not have a single stable’ and Japan has a ‘strong electricity grid, but instead has separate relationship’ with the country. It was eastern and western grids which also remarked that Woodside and other operate at different frequencies LNG producers are attempting to put (Eastern Japan at 50 Hz and Western downward pressure on costs for Japan at 60 Hz). The separate grids are Australian LNG projects. In the longer connected by frequency converter term, Japan expects price convergence stations but these have limited for LNG across regions. capacity. After the Fukushima accident, severe electricity shortages occurred in Significant reforms to Japan’s electricity Eastern Japan but sufficient power supply structure are also envisaged and could not be transferred from the commenced with a Cabinet decision in Western grid. Hence, a priority under April 2013 to realise objectives which the Plan is to strengthen the include suppressing electricity prices to interconnection between the regions the maximum extent possible and and increase the combined grid’s expanding choices for consumers and capacity to handle changes in the businesses. energy mix, particularly a planned increase in renewable penetration. The three main steps in this reform are to: Under the Plan, there will be an - enable cross-regional flows of accelerated introduction of renewables electricity, including by creating a through measures such as: shortening body to control supply and demand periods for environmental assessment of electricity on a national basis; for onshore wind farms; grid - introduce full retail competition; reinforcements and the establishment and of the cross-regional transmission - unbundle transmission and organisation (the OCCTO) to manage distribution from each of the GEUs expanded renewable supply; promoting (i.e. separate transmission and distributed energy systems; and distribution from the operation of continuing the feed-in-tariff (FiTs) power plants and retail sales). scheme (for solar, wind, hydro, geothermal and biomass) which was The first two steps have been achieved, introduced in July 2012, while closely with the creation of the Organisation monitoring the cost burden on for Cross-regional Coordination of consumers. Transmission Operators (OCCTO) on

Japan

The solar FiT was introduced at currently being used at the Isogo power ¥42/kWh (41¢ US) for ten years, but plant at Yokohama, which the this was reduced in April 2013 to ¥38 delegation subsequently visited. for small systems, and reduced again in April 2014 to ¥37 for residential and In July 2015 METI specified the ¥32 for systems over 10 kW. The wind percentage goals for each energy FiT in 2012 was ¥23.1/kWh for units source under the Strategic Plan. Japan above 20 kW.13 The FiT scheme has now intends to generate between 20 seen a significant percentage increase and 22 per cent of its power from in deployment of solar PV in Japan. nuclear by 2030, with increased use of energy efficiency measures, a doubling Asked about the current contribution of of renewables (to 22 per cent) and renewables to Japan’s energy supply, increased thermal power generation METI advised that renewables (LNG – 27 per cent, coal – 26 per cent contribute approximately 10 per cent at and oil – 3 per cent). This is a marked present, comprised of 9 per cent hydro change in the country’s power mix and 1 per cent solar PV. Renewable compared to the previous (2010) sources that are said to present the Energy Plan which forecast that coal greatest potential in Japan are and gas would supply just 10 per cent geothermal and wind. However, the each and nuclear would provide 50 per two issues for greater renewable cent.14 penetration in Japan were said to be the higher cost to consumers and the Prospects for nuclear power capacity of Japan’s grids to manage the A notable measure in the Strategic nature of renewable supply. Energy Plan is the reestablishment of nuclear energy policy and endorsement The Plan calls for the power supply mix by the Abe Government for the restart to include hydro, geothermal, nuclear of nuclear reactors, subject to NRA and coal as the country’s four baseload approvals. (i.e. low cost and constant generation) power sources. Gas is seen as an The Strategic Energy Plan supports use intermediate (i.e. middle cost and of nuclear energy because it: adjustable generation) source for - represents a quasi-domestic energy power generation and oil is a peaking source (i.e. nuclear power can be power source (i.e. high cost but produced for several years just with generation can be controlled). domestic stockpiles of fuel); - generates an overwhelmingly large In terms of strategies for each energy amount of power per unit of fuel; source, it was remarked that coal is - has low and stable operating costs; very attractive to Japan because it is a and relatively cheap baseload source and - produces zero carbon dioxide for this reason will continue to be used. emissions at point of generation. Particular mention was made of next- generation high-efficiency and low- The Plan states squarely that, even emissions coal technologies such as prior to the Fukushima accident, integrated gasification combined cycle concerns with nuclear power and and the ultra-supercritical technology resentment towards the Government

Japan

and the nuclear industry was decommissioning of the four Fukushima widespread among the Japanese public. Daiichi reactors will take up to 40 years. Difficulties at the Monju prototype fast breeder reactor, repeated delays to the Under the Plan, the Government construction of a reprocessing plant in intends to develop Fukushima as a Rokkasho and delays in selecting a final centre for energy industry technology, disposal site for high-level waste all including building an integrated generated public distrust. Cover-ups of gasification combined cycle information on the Fukushima accident demonstration project, floating and ongoing difficulties at the plant offshore wind technology and an LNG site, notably the treatment of terminal. contaminated water, are further causes of public concern. The Government also intends to ‘drastically reinforce and METI explained that, notwithstanding comprehensively promote’ efforts to the establishment of an independent manage the disposal of spent reactor Nuclear Regulation Authority and fuel.15 This will include selection of a rigorous new safety standards, opinion final disposal site while allowing for polls show that 60 per cent of Japanese retrievability, expansion of people remain opposed to the country’s intermediate storage facilities, and the nuclear reactors being allowed to development of technologies to reduce restart. the volume and radiotoxicity of nuclear waste. It is not surprising then that, as one its key priorities, the Japanese On this issue, the delegation enquired Government intends to address public about Japan’s approach to the anxiety about nuclear energy and the treatment of used nuclear fuel and was distrust of nuclear regulatory agencies advised that there are essentially two and plant operators. It was explained options: direct disposal, typically that the Government is endeavoring to following a ‘once-through’ cycle; or to communicate scientific and factual reprocess the spent fuel, in which the information about the risks of nuclear unused fissile material is extracted and energy and the impact of the recycled in the fabrication of fresh fuel. Fukushima accident, including through public hearings in affected regions. It is The Strategic Energy Plan commits also seeking to reestablish trust with strongly to reprocessing used fuel in local municipalities hosting nuclear Japan and to utilising the recovered plants. plutonium in light water reactors. A large reprocessing plant has now been The Plan emphasises the reconstruction constructed which is located at of the Fukushima Prefecture, ensuring Rokkasho (Honshu). However, with NRA compensation is paid to victims, assessments pending, the plant is not decommissioning the four units at the expected to commence operating until Fukushima Daiichi plant and tackling at least 2016. the problem of contaminated water at the plant site. It is expected that full Until a reprocessing facility was constructed, most used fuel from

Japan

Japanese reactors was sent for by local residents seeking a temporary reprocessing to the UK and France, and injunction against the operation of the then returned to Japan as vitrified high- Sendai reactors, with the presiding level waste, together with mixed judge determining that, according to (plutonium-uranium) oxide (MOX) the latest scientific knowledge, the new reactor fuel. Shipments to Europe safety requirements are adequate and ended in 1998 and used fuel now that the plant is at no specific risk.18 accumulates in Japan, mostly at reactor sites. The Plan commits to solving the It was explained that under the new various problems that have arisen regulatory requirements plant concerning the Rokkasho plant and to operators must receive approval from the construction of a MOX fuel both national and local governments for fabrication plant.16 a restart to occur.

METI noted that two of the key benefits As at March 2016, four units had been to reprocessing used fuel are that it restarted (Sendai 1 and 2, and enables a 75 per cent reduction in the Takahama 3 and 4). However, a district volume of high-level radioactive waste court issued an injunction on 9 March and significantly shortens the period 2016 which required Kansai Electric required for the radiotoxicity of the Power Company to shut down the used fuel to decline to that of natural Takahama units.19 Nevertheless, some uranium to less than one-tenth of direct commentators estimate that between disposal. METI also noted that the Fast six and 12 units will resume commercial Reactor / Fast Breeder Reactor fuel operation by March 2017.20 cycle, which is being studied in Japan, may be able to further reduce the METI observed that the restarts may amount of high-level radioactive waste. eventually place downward pressure on Reprocessing is also expected to gas prices and reduce Japan’s extreme significantly reduce the cost of final reliance on imported fossil fuels. disposal. Asked about the relative costs of power As noted above, the Abe Government generation by energy source in Japan, has now set a goal of generating METI advised that energy generation between 20 and 22 per cent of costs for 2010 were as follows: nuclear electricity from nuclear plants by 2030. power costs at least ¥8.9/kWh METI explained that 20 reactor units at (approximately 11¢/kWh), coal costs 13 plant sites are now under review for ¥9.5/kWh, and LNG costs ¥10.7/kWh. restart by the NRA, in accordance with Costs for oil-fired plants were estimated new processes and safety regulations at between ¥22 and ¥36/kWh. Wind issued in July 2013.17 costs in the range of ¥10 to ¥17/kWh and solar PV cost in the range of ¥33 to Two units at Sendai (Kyushu) were the ¥38/kWh.21 first to obtain approval to restart and were expected to do so in early 2015 The cost figure for nuclear power (the units were restarted in August and includes capital, operational and back- October 2015). On 6 April 2016 a end costs, as well as additional post- Japanese high court rejected an appeal Fukushima safety measures, subsidies

Japan

given to host communities of nuclear - Darwin (INPEX, Tokyo EPCO, Tokyo plants, R&D costs, and damages Gas) identified at present for the Fukushima - Sunrise (Osaka Gas) accident (¥5.8 trillion, or ¥0.5/kWh). - Prelude (INPEX) - Ichthys (INPEX, Total, Tokyo Gas, However, the accident risk fund Osaka Gas, Chubu EPCO, Toho Gas, component was said to be a minimum Kansai EPCO, Osaka Gas, Kyushu figure and costs would increase by EPCO) ¥0.09/kWh for each additional - Browse (Mitsubishi, Mitsui) ¥1 trillion (approximately $12 billion) of - North West Shelf (Mitsubishi, damage, including compensation to Mitsui, Tokyo EPCO, Kansai EPCO, residents, resulting from the accident. Chubu EPCO, Chugoku EPCO, For example, if damages amount to an Kyushu EPCO, Tokyo Gas, Osaka additional ¥10 trillion (approximately Gas, Toho Gas) $120 billion), then nuclear generation - Pluto (Kansai EPCO, Tokyo Gas) would cost ¥9.3/kWh. Even in this - Wheatstone (JOGMEC, Mitsubishi, scenario, however, nuclear power NYK, Tokyo EPCO, Kyushu EPCO, would still be less costly than other Tohoku EPCO, Chubu EPCO) baseload power sources in Japan. METI also noted that the Ichthys Project Japan-Australia energy relationship is the first Japanese-operated world- Australia’s energy relationship with class LNG project. The Project, which is Japan is extremely close. Australia is being led by INPEX, represents a $34 Japan’s largest supplier of energy billion investment. Australia’s share of resources, providing almost 25 per cent Japan’s energy imports will expand of Japan’s energy needs, including: further once Ichthys commences 64 per cent of Japan’s coal imports production. (valued at $11.9 billion in 2014), 21 per cent of LNG ($14 billion) and 19 per The delegation notes that on 20 March cent of uranium imports. 2016 Chevron announced that the first shipment of LNG from the Gorgon As noted by METI officials, Japan is a Project had departed Barrow Island off vital export market for Australia’s northwest Western Australia for Chubu energy resources, receiving 81 per cent EPCO in Japan.22 of Australia’s LNG exports, 37 per cent of Australia’s coal exports and 23 per Low emissions coal-fired power cent of uranium exports. generation technology Having been briefed by METI on the METI explained that Japanese place of coal in Japan’s future power corporations have interests (both as mix (forecast to be 26 per cent in 2030) participants and buyers) in ten LNG and the country’s intention to expand projects in Australia at the present R&D in high-efficiency and low- time: emissions (HELE) coal-fired power - Gorgon (Tokyo Gas, Osaka Gas, technologies for export, the delegation Chubu EPCO) was fascinated to visit the Isogo - Curtis Island (Tokyo Gas) Thermal Power Station, reputed to be

Japan

the most advanced commercial coal- levels for coal-fired plants. Worldwide, fired power station in the world. the average efficiency for coal-fired generation is 35 per cent. As a The Isogo Power Station, which is consequence, the Isogo plant emits comprised of two units with a more than 25 per cent less carbon combined generation capacity of 1,200 dioxide (0.8kgCO2/kWh) than a plant megawatts (MW), is located in operating with global average Yokohama and operated by J-Power, a efficiency. wholesale electricity company operating 66 (mostly hydro) plants As a comparison, in 2010 the energy across Japan. The Isogo plant uses coal efficiency of coal-fired power sourced from Australia and Indonesia. generation in Australia was 34 per cent and the carbon dioxide intensity was The Isogo Power Station originally 1.01kg/kWh.23 consisted of two 265 MW units which were constructed in the 1960s. J-Power The Isogo Power Station also emits very entered into a pollution prevention low amounts of nitrogen oxides (NOx) agreement with Yokohama city in the (0.07g/kWh compared to 1.2g/kWh for 1990s which involved maintaining US plants) and sulphur oxides (SOx) power supply while constructing new (0.03g/kWh, compared to 3.3g/kWh for units on the same site. In what J-Power US plants), making it the cleanest coal- described as a ‘Build, Scrap and Build’ fired power plant in the world. The approach, a new (600 MW) unit was Isogo plant’s NOx and SOx emission built on the site while the original levels are similar to those of combined facility remained in operation. Once the cycle gas-fired power plants. new unit became operational in 2002, the older units were shut down and Combined, the two new larger units demolished. A new second unit (also generate more than double the power 600 MW) was then constructed on the but emit 50 per cent less SOx, 80 per site of the old plant and commenced cent less NOx, 70 percent less operating in 2009. particulates (soot and dust) and 17 per cent less CO2 than the older subcritical As explained to the delegation by units that they replaced. Dr Hiroshi Sasatsu, the Director of the Isogo Power Station, the new units use J-Power has calculated that if its USC a technology which raises the steam technology were used in place of pressure and temperature to the ultra- current coal-fired power stations supercritical (USC) level; specifically, the operating in the US, China and India plant operates at a steam pressure of carbon dioxide emissions could be 25 megapascals (3,626 psi) and a reduced by a combined total of temperature of 600°C. 1.3 billion tonnes per year. This figure is equivalent to approximately 5 per cent This USC technology allows the plant to of the world’s total carbon dioxide achieve an energy efficiency (i.e. the emissions, or about the same as Japan power output achieved for a given emits annually. J-Power hopes to input of fuel) of 45 per cent, which is transfer the technology both as a among the world’s highest efficiency business opportunity for the company

Japan

and as a contributor to global emissions Business perspectives on Japan’s mitigation. energy policy Following the briefing from METI and Asked about the economics of USC, the visit to the Isogo power station, the METI stated that the capital costs of delegation met with Mr Katsunori USC units are approximately 20-30 per Nemoto, Managing Director of cent higher than conventional Keidanren, Japan’s Business Federation, (subcritical) units. However, the greater to gauge business perspectives on the thermal efficiency of USC technology nation’s energy policy. The delegation reduces fuel and emissions costs by 25 was briefed by Mr Masami Hasegawa, to 30 percent and hence significantly Senior Manager of Keidanren’s reduces operating costs over the life of Environment Policy Bureau, who the plant.24 presented the delegation with two of Keidanren’s energy policy position J-Power is continuing to make R&D papers. investments to lift the efficiency of coal- fired power generation even higher, Keidanren’s membership comprises and thereby reduce emissions. In over 1,300 Japanese companies, 112 particular, the company is working on nationwide industrial associations and oxygen-blown coal gasification 47 regional economic organisations. technology and applying this to integrated coal gasification combined Keidanren noted that following the cycle (IGCC) and integrated coal earthquake in 2011 electricity prices for gasification fuel cell combined cycle businesses rose by some 30 per cent, (IGFC) systems. Advanced ultra- and that this had significantly affected supercritical (A-USC) and IGCC are seen business operations. Combined with the as the next stages in the evolution of costs of fuel imports and Japan’s low-emissions coal technologies. declining current account surplus, Keidanren argued that four energy The delegation notes that should USC policy measures needed to be taken and other HELE technologies become urgently in order to support economic more widely adopted this would growth: undoubtedly be beneficial, both for - Accelerate the process for restarting Australia’s coal exports and global nuclear power plants. Specifically, carbon emissions. Japanese business wishes to see the Government provide clear METI officials made the telling explanations to the public about the observation that Japan and Australia necessity for nuclear power and do have the same position on the role of more to encourage its utilisation. It coal and coal-fired power generation was argued that efforts should be into the future; a view which is opposed made to expedite the safety review to that held by the US and UK. Specific process for plants by increasing the mention was made of the Obama NRA’s resources; Administration’s opposition to the - Abolition of Japan’s carbon tax. financing of new coal-fired power Keidanren wish to see the ‘Tax for plants in developing countries by Climate Change Mitigation’, which multilateral lenders. was introduced after the

Japan

earthquake, abolished. It was operation of the reprocessing and MOX argued the tax has accelerated the fuel fabrication plants. However, it rise in energy costs, is hindering called on the Government to clarify the economic growth, may discourage extent of the ‘grave natural disaster’ investments in R&D and may exemption in the legislation for actually increase emissions by compensation for nuclear damage. moving business offshore. - Overhaul renewables policy. Asked about the intensity of public Keidanren notes the potential opposition to nuclear power, Keidanren presented by renewables but is commented that, once the Sendai units concerned at the burden placed on restart, it is hoped that the atmosphere consumers by the FiT and that the in Japan will start to change. scheme has encouraged an inappropriate growth in solar PV. Parliamentary engagements Business would like to see the FiT The delegation was honoured to meet mechanism reviewed and the Presiding Officers of the National preferably abolished, arguing that Diet - Mr Masaaki Yamazaki, President efforts at emissions reduction of the House of Councillors, and Mr should be focused on R&D and Bunmei Ibuki MP, Speaker of the House technological innovation. Keidanren of Representatives - and to hold noted several drawbacks to wider meetings with members of the Japan- deployment of renewables, such as Australia Parliamentary League of its low efficiency, instability, Friendship, led by Chairman, Mr Ichiro intermittency and relatively high Aisawa MP. cost. - Reduce energy costs. Noting the The JAEPA and its consideration by the limits on the capacity of businesses Diet figured prominently in discussions. to operate more energy efficiently, It was noted that the Agreement Keidanren argues for reforms to the represents an historic development in subsidy, financing and taxation economic relations between the two systems associated with energy countries and will strengthen the efficiency measures. partnership between Japan and Australia. In terms of electricity market reform, Keidanren expressed concern about the League members observed that 2014 possible impacts of deregulation and was an extraordinary year in the unbundling of transmission and relationship between Japan and distribution on the ability of generators Australia, noting that the Prime to obtain finance. Keidanren argued Ministers have visited each other’s that consideration should be given to countries, meetings have been held using capacity mechanisms or an open between the Foreign Affairs and bidding procurement method for future Defence Ministers, and the trade power generation projects. relationship has never been stronger. It was remarked that Australia is a very Keidanren supported the Government’s special friend and that Japan would like efforts to identify a location for a high- to deepen this partnership in both the level waste repository and for early economic and security fields.

Japan

Issues raised in discussions with the plans to stimulate Japan’s economic League included how Japan and growth; so-called ‘Abenomics’. The Australia could cooperate on the setting Liberal Democratic Party, led by Mr of international trade rules, such as for Abe, won the subsequent general the TPP. Delegation members were election and retained its two-thirds asked how the economic reforms majority of the Diet with coalition party, undertaken in Australia in the 1980s Komeito. came about. Protection of agriculture in Japan was raised and Japanese Australia’s business relations with Parliamentarians noted that while the Kansai region tariffs on rice are very high, the Following informative briefings in Tokyo reductions on beef tariffs will be rapid which provided national policy once the JAEPA comes into effect. It perspectives, the delegation was able was also noted that Prime Minister Abe to explore Australia’s business relations has commenced agricultural reform in with the Kansai region, briefed and Japan but that this will take time. hosted by the Australian Consul- General and Senior Trade League members also remarked that Commissioner, Ms Catherine Taylor. Australia and Japan have an important role to play as democracies. It was In particular, the delegation was noted that some countries act against delighted to be able to witness the use democratic values and that it was of Australia’s mineral and energy important for these principles to be resources exports with visits to Osaka upheld and affirmed by both Japanese Gas Co, the Osaka Steel Works of and Australian Parliamentarians. Nippon Steel & Sumitomo Metal, the Sakai LNG Terminal and Sakaiko Power The welcome shown to the delegation, Station owned by Kansai Electric Power which was hosted to a meal showcasing Company. Japan’s exquisite cuisine in the beautiful surrounds of the Speaker’s These visits gave the delegation an residence, was quite extraordinary. The insight not only into the central role delegation records its gratitude to the that Australia’s energy and mineral League of Friendship and the Speaker exports play in the Japanese economy, for their generous hospitality. The but also the impressive scale and delegation was deeply honoured by this sophistication of Japanese industry. occasion and very much enjoyed the warmth and friendliness of our The delegation was informed that the interaction. Kansai region has a population of over 22 million, which is 17 per cent of the While in Tokyo the delegation learned nation’s total population. The region is that Prime Minister Abe may call a snap responsible for 16 per cent of Japan’s general election. This occurred on GDP and has a gross regional product of 18 November, after the delegation had US$879 billion. Osaka was said to be departed for Korea. Prime Minister Abe the hub of manufacturing in Japan, with called the election for 14 December and companies such as Toyota and Honda, stated that he was seeking public as well as leading electrical companies support to continue his Government’s located there. The region is also

Japan

significant for R&D, for example, in people. In 2014 the Group had assets pharmaceuticals and semiconductors. valued at US$15.7 billion and annual Osaka also has the highest revenues of US$13.9 billion. It was concentration of SMEs in Japan – some explained to the delegation that the 40,000. company invests ¥9 billion (approximately $100 million) on R&D The delegation was informed that activities annually and employs over Australia has a strong relationship with 230 staff for this purpose. the Kansai region. Osaka is a base for Australia’s imports to Japan, notably of Upstream LNG projects in Australia in food and energy resources. There are which Osaka Gas has an interest include some 96 connections between Gorgon (1.25 per cent), Sunrise (10 per Australian universities and those in the cent), Evans Shoal (10 per cent), region. Several Australian companies, Ichythys (1.2 per cent) and Crux (LNG such ANZ, NAB and the Goodman and condensate) (3 per cent). Osaka Group have a presence in Osaka. Gas’ downstream projects in Australia are currently Hallett 4 Wind Farm (39.9 The delegation visited the headquarters per cent) and EII gas plants and of Osaka Gas Co and was pleased to pipelines (30.2 per cent). meet with Mr Kazuhisa Yano, Senior Executive Officer and a member of the The Osaka Gas Executives noted that Board, and Mr Shigeki Hirano, Chairman Ichyths and Gorgon will soon of Osaka Gas Australia. commence producing and that Australia’s Resources Minister has Founded in 1897, the Osaka Gas Group stated that he would like to see more is a leading energy supplier in Japan. LNG projects constructed. Noting the The Group supplies natural gas to 7.1 resources available in Canada, the US million customers in the Kansai region, and some African countries, the including the urban centres of Osaka, Executives expressed their hope that Kobe and Kyoto. It is the second largest Australia would remain a competitive domestic supplier, accounting for 25 and stable supplier. per cent of all natural gas sold in Japan. Osaka Gas imports 8 million tonnes of It was explained that Osaka Gas is LNG annually (from seven countries: looking to diversify sources of supply Indonesia, Malaysia, Brunei, Australia, and the company’s Annual Report Oman, Qatar and Russia), which is 9 per states that the Group is looking to cent of Japan’s total LNG imports. Some procure additional supplies from 20 per cent of Osaka Gas’ LNG is projects in Papua New Guinea and sourced from Australia. Osaka Gas is Australia. In the future, Osaka Gas involved in all aspects of the natural gas intends to obtain shale gas from the US. supply chain, from LNG production, LNG receiving terminals (three in Kansai), The delegation commented how vital gas transmission and distribution, and Japanese investment has been to the retail sales. development of Australia’s iron ore and now LNG resources. The Group consists of 150 affiliated companies employing over 21,000

Japan

The delegation raised Australian monitoring, safety monitoring and domestic gas policy issues, noting the dispatching. As explained to the debate occurring about reserving gas delegation, measures to deal with for domestic use and the differences earthquakes and other natural disasters between Western Australia and the include a back-up distribution control eastern states on this question. centre, the use of ‘blocks’ in pipelines Mention was also made of the which prevent supply to only the infrastructure needs for piping of gas damaged areas, installation of hundreds and the Executives expressed Osaka of seismometers, and wireless and Gas’ interest in this type of satellite communication networks. Gas infrastructure investment. Mr Yano supply is automatically suspended advised that Osaka Gas is participating when a seismometer detects an in the Cooper Basin resource earthquake above a specified level. development talks and would very much like to be part of projects for the Following its visit to Osaka Gas, the supply of gas for domestic use in delegation was briefed on Nippon Steel Australia. & Sumitomo Metal Corporation (NSSMC) and toured the rail wheels Asked about the company’s casting works at the Corporation’s involvement in power generation, the Osaka Steel Works. delegation was advised that Osaka Gas is pursuing power generation as a Sumitomo Metal Corporation, which second core business. It operates 15 was established in 1901, merged with plants in Japan, using gas, coal, wind Nippon Steel in 2012. The merged and solar. Outside Japan, the company corporation is a major steel maker and operates eight generation projects manufactures products in the following using gas, oil and wind, producing a eight categories across 15 countries, total of 6.6 gigawatts (GW). These including at 16 steel works in Japan: plants are located in the US, Australia, - steel plates for structures such as Spain and the UAE. Osaka Gas has plans ships, bridges, high-rise buildings, to expand its investments in coal-fired storage tanks and large marine generation, noting that this fuel source structures; is relatively cheap. The delegation was - flat sheet steel products, for also told that the company has an automobiles, beverage cans, interest in exploring brown coal electrical appliances and housing; gasification in Victoria. - bar and wire rods for products such as vehicle suspensions and drive The delegation was conducted on a tour trains; of the company’s Central Security - construction products, such as H- Control Centre and the Iwasaki Energy beams; Centre to learn about the deployment - pipes and tubes, used in of district heating and cooling applications such as oil and gas installations in Kansai. extraction; - railway, automotive and machinery Osaka Gas manages a 60,000 km parts, notably railway rolling stock pipeline network in the Kansai region. and forged crankshafts for This includes central control automobiles;

Japan

- titanium and specialty stainless 1964. The delegation observed many steel products, including for aircraft impressive forming, machining and engines; and assembly processes at the Steel Works, - stainless steel products. including a die-forging shop for crank shafts, a rail wheel rolling mill, high- NSSMC employs 84,000 people and in speed precision forging machines, and 2015 had net sales of ¥5.6 trillion wheelset and bogie assembly shops. (approximately $54 billion). The company produced 49.3 million tonnes The delegation was briefed on the of crude steel in 2014, the second operations of Kansai Electric Power largest by volume in the world. The Company (KEPCO), the processes for company has a global market share of receipt of LNG and supply of natural gas 10 per cent. from the Sakai LNG Centre to KEPCO’s Nanko and Sakaiko power stations, and The delegation was informed that saw the Sakaiko Power Station in NSSMC sources 50 per cent of its iron operation. ore from Australia and has done so for the past decade. The company is The delegation was briefed on the developing new materials for rail freight operations of the Sakai LNG Centre by use and has tested its high-hardness the President, Mr Tetsu Shiota. The wheels in Australia to improve their Centre is located in the Sakai-Senboku anti-wearing and anti-shelling coastal industrial zone in the Osaka properties. These field tests were Prefecture. The LNG supplied by four successfully completed in May 2014. As producer countries (Australia, Malaysia, a consequence, the rejection rate of the Indonesia and Qatar) is received at the company’s Class D rail wheels is much Centre, which is an LNG regasification lower than Class C; specifically, the terminal. The gas is then supplied to the survival rate of Class D wheels is 1.8 KEPCO power stations and to a factory times more than the C Class. NSSMC in the vicinity. intends to deepen its relationship with Australia, for example, by seeing its Some 3.9 million tonnes of LNG is wheels introduced into vehicles for received at the Sakai terminal each year mining. and Australia supplies the largest share - 1.5 million tonnes, or 38 per cent, in The delegation had the opportunity to 2013. The Australian LNG is sourced tour the facilities at the company’s from Woodside’s Pluto project in which Osaka Steel Works and saw an array of KEPCO has an interest. Australia’s share finished railway and automotive of LNG supply at Sakai is expected to products, such as car and truck increase. crankshafts, bogies for subway trains, solid and corrugated train wheels, The processes for the receipt and forged steel brake disks and hollow supply of LNG were explained in detail. axles. Of particular note, the Steel LNG arrives by tanker, transported at a Works has been the sole manufacturer temperature of minus 160°C. The LNG is of the axels and wheelsets for Japan’s then piped from the tankers into one of Shinkansen high-speed (‘bullet’) trains three LNG storage tanks at the Centre. since they commenced operating in These have a capacity of 140,000kL

Japan

each. The LNG tanks have very large The conversion to CCGT also dimensions (80 metres in diameter and substantially improved the plant’s 50 metres high) and are constructed of environmental performance. For double containment steel and 70cm of instance, carbon dioxide emissions have pre-stressed concrete. The tanks sit on been reduced by 30 per cent (from a foundation made up of vertical steel 510gCO2/kWh to 360gCO2/kWh), and pipes, each of which is 40 metres long, SOx and particulates have been which can withstand large scale reduced to zero. NOx emissions have earthquakes. When required, the LNG is been reduced by 60 per cent. By regasified using the heat from undertaking the upgrade to CCGT, the seawater. The natural gas (NG) is then amount of land required for the power piped, at room temperature, to the two station was also halved. gas-fired power plants and the factory. The delegation was shown the Centre’s The delegation was briefed and Control Room and was able to view the escorted on a tour of the power station, storage tanks from the Centre’s roof. including the turbine floor, by the Station’s Manager, Mr Tetsui The Sakaiko Power Station comprises Yamamoto. In CCGT systems gas and five 400 MW units and the Nanko steam turbines are used in combination Power Station is comprised of three 600 to generate electricity. Power is MW units. The two power stations have dispatched from the plant on 154kV a combined generation capacity of transmission lines to four substations in 3,800 MW. Gas received at the Sakai the region. terminal travels along a 3.5 km pipeline, which has a width of 75 cm, at a Sakai also supplies LNG and NG to pressure of 4.58MPa to the Sakaiko HydroEdge Co, which is located next to Power Station. the Centre and operates one of the largest production plants of liquefied The Sakaiko Power Station commenced hydrogen in Japan. It was explained operating in the 1960s with eight 250 that hydrogen is currently used for the MW oil-fired units. These were manufacture of semiconductors, converted to operate on natural gas in ammonia, optical fiber and, in the 1974. In 2006 the facilities were future, for fuel cells and liquid hydrogen upgraded to five 400 MW combined fueled cars. cycle gas turbine (CCGT) units which have improved the Plant’s thermal KEPCO supplies electricity to the Kansai efficiency by 40 per cent (now 58 region and sells the second largest percent, compared to 41 per cent amount of power after TEPCO among before the conversion). Japanese utilities. Sales amounted to 140,400 gigawatt-hours in 2014. KEPCO Thermal or generating efficiency is has total generation capacity of 35.9 crucial to a plant’s economic GW, across a fleet of thermal (17.9 performance. It was pointed out to the GW), nuclear (9.7 GW) and hydro (8.2 delegation that even a one per cent GW) plants. This accounts for 17 per increase in thermal efficiency can cent of Japan’s total generation reduce the cost of operations by several capacity, which was 208 GW in 2014. hundred million yen. For comparison, total generation

Japan

capacity in Australia’s national given the context of national population electricity market is 44.6 GW. decline, actions should be taken to: promote a ‘Kansai Brand’ for high Among KEPCO’s fleet of thermal plants value-added industries; improve the (LNG, oil and coal) LNG and oil both utilisation of IT; invest in human capital account for 45 per cent, or 8 GW of capable of developing overseas generation capacity, while coal markets; and deepen links with growing accounts for 10 per cent. KEPCO Asian economies. Specific sectors officials noted that the effect of the identified as having high potential for Great East Japan earthquake and the leading growth in the region were: nuclear shutdown, which took all the medical innovation, tourism, company’s nuclear plants offline, was to ‘womenomics’ and developing global significantly increase the shares of oil human resources. and LNG in supplying baseload electricity demand. The additional cost It was explained that Kansai is the top of fuel put KEPCO into a loss. region in Japan for medical drug related production and that Kansai boasts 200 The delegation concluded its visit to universities and seven major medical Osaka by meeting staff of the Asia clusters. For tourism, it was noted that Pacific Institute of Research (APIR) and over 2.3 million foreign visitors arrive in receiving two presentations given by Japan through Kansai International Dr Yoshihisa Inada and Mr James Brady Airport (KIX) each year and this has on the topic of ‘Growing Kansai: grown significantly since 2011. Strategies and Sectors’, and by Encouraging Chinese tourism is a Dr Toshihiko Hayashi on the topic of ‘A priority because the Chinese purchase very long-term prospect for the high-value products and will spend up Australian economy’. to 20 per cent of annual income while visiting Japan. APIR was established in 2011 with the aim of supporting sustainable In regards to ‘womenomics’, it was development in the Asia Pacific region. explained that the region lags behind APIR supports its research through the national average in terms of female financial support from a large number employment. Modelling conducted by of contributing firms, which was said to APIR has found that if the number of enable the Institute to be neutral and working women in the region were unaffiliated with any particular increased by 250,000, Kansai’s gross government or corporate entity. regional product would rise by 1.8 per cent or ¥1.5 trillion. A population effect The presentation on ‘Growing Kansai’ would be likely to follow as female noted that the region produces 21 per employment and the fertility rate are cent of Japan’s total exports and over positively correlated in Japan. 26 per cent of exports to Asia; that is, Kansai has a relatively high exposure to In terms of the links between the Kansai Asia. Governments in the Kansai region region and Australia, Kansai’s share of issued a policy in 2012 which major imports from Australia is well articulated a number of strategies for above the region’s share of national regional revitalization. In APIR’s view, population. Australian arrivals at Kansai

Japan

range between 3,000 – 5,000 per immigration is effectively banned but month. Jet Star has five direct flights the country will accept high-skilled per week from KIX to Cairns / migrant workers. Japan’s fertility rate is Melbourne. Australians are 50 per cent 1.4 (i.e. 1.4 births per woman). As a more likely to visit Kansai than the consequence, Japan’s population is now average visitor to Japan and the declining and the economy is facing an average spend of Australian tourists acute shortage of labour in some was ¥237,000 in 2013, the highest of all sectors. However, it was explained that tourists. the issue of immigration is very sensitive in Japan and no political party The presentation on ‘A very long-term will dare propose immigration as a prospect for the Australian economy’ means of making up the deficit created argued that population growth is the by a low birth rate. defining feature in Australia’s continued economic growth. On the assumption The delegation expresses its thanks to that current population expansion the presenters and APIR’s Executive continues into the future, APIR predicts Director, Mr Yoshinobu Iwaki, for the continued growth in Australia’s per efforts that they went to in preparing capita GDP and that Australia’s ranking what were interesting and insightful among the richest countries will rise presentations. (from 7th in 2000 to 5th in 2050). Conversely, APIR predicts that Japan Hiroshima will decline from 13th in 2000 to 21st in The delegation concluded its program 2050. In terms of GDP rankings among in Japan with a deeply moving visit to the G20 countries, APIR predicts that the city of Hiroshima, which was Australia’s ranking will rise from 12th in devastated by the atomic bomb 2000 (US$915 billion) to 10th in 2050 detonated over the city at 8.15 am on ($2,344 billion) and rise again to 6 August 1945. seventh by 2100 ($2,959 billion). Again, Japan’s relative position is forecast to The delegation records its gratitude to decline. the Deputy Director of the Hiroshima Peace Memorial Museum, Mr Noriyuki APIR discussed the so-called ‘resource Masuda, who facilitated the visit and curse’ and the Malthusian trap. Unlike accompanied the delegation through some resource rich Middle Eastern the Museum. countries, Australia had maintained continued growth in per capita GDP According the city’s estimates, by the while the population has risen. It was end of December 1945 the number of argued that countries risk a loss of deaths caused by the use of the momentum on this dimension if they weapon had reached approximately don’t make investments in education, 140,000. infrastructure and so on. The delegation was honoured to lay a Noting APIR’s predictions for Japan’s wreath at the Memorial Cenotaph, per-capita GDP performance, the located in the beautiful Hiroshima delegation enquired about population Peace Memorial Park, which contains policy in Japan. APIR responded that

Japan

the names of all the people killed by the atomic bomb.

The delegation laid a wreath at the Memorial Cenotaph which contains the names of those killed by the atomic bomb detonated over Hiroshima on 6 August 1945. In the background to the right is the A-Bomb Dome.

Japan

The delegation with Mr Masaaki Yamazaki, President of the House of Councillors, National Diet of Japan.

The delegation with Mr Bunmei Ibuki MP, Speaker of the House of Representatives, National Diet of Japan, together with Australia’s Ambassador to Japan, His Excellency Mr Bruce Miller.

Japan

The delegation with members of the Japan-Australia Parliamentary League of Friendship, Chaired by Mr Ichiro Aisawa MP (front row, second from left).

The delegation with Mr Takashi Uto, Japan’s Parliamentary Vice-Minister for Foreign Affairs.

Japan

The delegation being briefed on the operations of the Sakai LNG Centre in Osaka by the President of Sakai LNG Corporation, Mr Tetsu Shiota.

The delegation with Australian university students participating in the New Colombo Plan in Japan.

Republic of Korea

Republic of Korea million in 2014-15) and tourism ($635 26 million). The delegation visited the Republic of Korea from 15 November to 21 The ROK is Australia’s third-largest November 2014. The program source of foreign student enrolments commenced with appointments in after China and India. In 2013, there Seoul and a visit to the Korean were 27,580 enrolments by ROK Demilitarized Zone, followed by site students in Australian institutions. visits in Ulsan, Pohang and Busan. The ROK’s major exports to Australia The bilateral relationship are refined petroleum ($4.9 billion in The Department of Foreign Affairs and 2014-15), passenger motor vehicles Trade states that Australia and the ($1.9 billion) and heating and cooling Republic of Korea (ROK, also referred equipment ($714 million). to here as South Korea) are strong economic, political and strategic The investment relationship is partners with common values and relatively modest but has grown interests.25 significantly from a low base and has diversified. The total stock of ROK The relationship is underpinned by investment in Australia was $22.8 substantial economic, people-to- billion in 2014 and Australian people, political and strategic links. investment in ROK was $15.4 billion. Full diplomatic relations were Significant investments include established between Australia and the POSCO’s 15 per cent equity share in ROK in 1961. Hancock Prospecting’s Roy Hill iron ore project in Western Australia. Australia and the ROK have evolved a highly complementary trade The ROK has signed three major LNG relationship. The ROK is a key market contracts to source gas from Australia for Australian minerals and energy - with Santos (Gladstone LNG), Total resources and education services, and INPEX (Ichthys) and Shell while Australia is a major market for (Prelude). Once these projects are Korean passenger vehicles, petroleum producing, it is expected that Australia and electronic goods. will supply some 25 per cent of ROK’s LNG. The ROK is Australia’s fourth-largest trading partner, with two-way On 8 April 2014 the ROK and Australia merchandise trade worth $32.4 billion signed the Korea-Australia Free Trade in 2014-15, six per cent of all Agreement (KAFTA) which, at the time Australia’s international trade. The of the delegation’s visit, was yet to be ROK was Australia’s third-largest ratified by the ROK National Assembly. goods export market in 2014-15, The KAFTA subsequently received worth $18.8 billion. Major Australian National Assembly approval and exports are coal (valued at $5 billion in entered into force on 12 December 2014-15), iron ore ($4 billion) and beef 2014. ($1 billion). Australia’s major services exports to Korea are education ($779

Republic of Korea

The KAFTA is said to deliver significant disaster cost the lives of more than improvements in market access and 300 people, most of whom were tariff liberalisation for merchandise school students. The repercussions of trade. the tragedy had completely paralysed Korean politics, with the National There are extensive people-to-people Assembly unable to meet for months. links between Australia and the ROK. Only in the fortnight prior to the Some 88,000 people of Korean delegation’s arrival in November had descent live in Australia. The third- agreement finally been reached on largest group of working-holiday legislation to govern the investigation makers and eighth largest market of of the disaster. inbound tourists come from the ROK. With the ROK accounting for the third- The tragedy remained the focus for largest source of international the media but the effect on the students in Australia, there is a economy was said to have been growing and important alumni marked, with many businesses presence in the ROK. The ROK became affected. Korea’s first quarter growth part of the New Colombo Plan from rate was 0.9 per cent and the second 2015. quarter was lower, at 0.5 per cent.

More than 18,000 Australian troops Korea has prospects of entering the served under United Nations so-called ‘30-50 Club’ - economies command and 340 Australians were with GDP per capita of at least killed during the 1950-53 Korean War. US$30,000 and a population of 50 million people. Only six other Korea’s political and economic countries are in this group – US, situation Germany, France, Italy, UK and Japan. The delegation commenced its President Ha explained that South program in South Korea with a highly Koreans are, however, deeply informative briefing given by Mr Tae- concerned at the prospect of so-called Hyung Ha, President and Chief ‘Japanisation’ of the Korean economy; Executive Officer of the Hyundai that is, zero inflation accompanied by Research Institute. zero economic growth.

With 150 staff, the Hyundai Research Turning to Australia-Korea relations, Institute is the largest private research President Ha stated that the economic institution in Korea. It works closely relationship is complementary but with the Korean Ministries of Finance noted the significant role that farmers and Education, has a focus on play in Korea - they want subsidies, domestic Korean economic matters particularly cattle farmers, and are and consults to local government. willing to demonstrate. On the Thursday before the delegation’s Describing the current political context arrival, the proposed free trade in Korea, President Ha explained that agreements with Australia and Canada the sinking in April 2014 of the South had obtained the approval of the Korean ferry, MV Sewol, had Foreign Affairs Committee of the profoundly affected the nation. The National Assembly, with a final vote in

Republic of Korea

the Assembly’s Plenary expected by Defence (THAAD) anti-ballistic missile 2 December. As noted above, this system is essential to protect the subsequently occurred and the Korean Peninsula, but China strongly Agreement entered into force on opposes this. China has established an 12 December 2014. Asia Infrastructure Investment Bank (AIIB), but the US opposes it and, at Attracting greater attention in Korea that time, Korea was also concerned at the time of the delegation’s visit about the size of China’s stake in the was the ROK’s proposed FTA with Bank. It was commented that the AIIB China. The agreement was prominent would undoubtedly give China greater because of the significance of that influence in developing countries, economic relationship - 26 per cent of notwithstanding that it has stated its all South Korean exports are supplied share will decline. More generally, it to China, by far the ROK’s largest was remarked that China wants to market. enhance its position in every field possible. Turning to the issue of the ROK’s relationships with neighbouring President Ha explained that the countries, President Ha explained that Kaesong Industrial Park, which is a Korea had been occupied by Japan collaborative economic development from 1910 to 1945 and the issue of an zone between the Democratic apology from Japan remained a vexed People’s Republic of Korea (DPRK or issue. It was suggested that Japan North Korea) with South Korea, is cannot make a clear and attractive to industry because the straightforward apology because the monthly wage per worker is US$150. country’s leadership cannot be seen to Of this, the North Korean government be blaming the Emperor. Japan is able keeps most and pays the workers 10 to offer financial compensation, per cent; that is, $15 per month. With generally through private wages pressure in the South, intermediaries, but cannot make a companies would welcome having meaningful apology. President Park additional economic zones established Geun-hye has sought to normalise with North Korea. However, it was relations with Japan and is under explained that President Park is considerable pressure from the US to reluctant to provide funds to North do so because, with the FTA Korea because of the regime’s intent negotiations in play and her strong to build nuclear weapons and the US personal connection with President Xi has indicated that it wants a pause. In Jinping, Korea is seen as too close to February 2016, the South Korean China. Government announced it would halt operations at the Kaesong Industrial For Korea, maintaining a balance Park following a rocket launch by the between the vital economic DPRK. relationship with China and the military and security relationship with North Korea was said to be totally the US is difficult. As an example, the dependent on China. If China withheld US argues that deployment in Korea of aid from North Korea for just three its Terminal High Altitude Area months, the country would collapse.

Republic of Korea

However, China views North Korea as have access to the higher Foreign a valuable buffer zone. Investment Review Board screening threshold. This is expected to help Korea-Australia Free Trade diversify and grow investment from Agreement Korea into Australia. The delegation received a comprehensive briefing from The delegation had the welcome Ms Wendy Haydon, the Austrade opportunity to explore the potential Trade Commissioner in the ROK on the benefits and opportunities presented status of Korea-Australia trade by the Agreement with relations and the potential benefits of representatives of SPC Group, Korea the KAFTA. It was noted that, to date, Botany, Treasury Wine Estates and Australia’s trade with the ROK has Lotte Chilsung Beverage Co. been dominated by resources exports, notably from Western Australia and Parliamentary engagements Queensland, and there is potential for The delegation was honoured to meet significant growth both in agricultural Representative Ui Hwa Chung, products and in services exports. Speaker of the National Assembly of the Republic of Korea, and to hold a Once the Agreement enters into force, meeting with members of the Korea- 84 per cent of Australia’s goods Australia Parliamentary Friendship exports (by value) would enter Korea Group, led by the Group’s Chairman duty free; by full implementation, Representative Yoo-Chul Won (now tariffs on 99.8 per cent of Australia’s the leader of the Saenuri Party in the exports to Korea will be eliminated. National Assembly following the April 2016 general election27). KAFTA is said to put Australia’s agricultural exports ‘back in the game’ The Speaker spoke enthusiastically with, for example, elimination of about the proposed KAFTA, stating tariffs over time on cheese, butter and that its passage means a great deal to other dairy products. Tariffs on wine both countries and promises greater will be eliminated on entry into force, prosperity. The Speaker noted that as will tariffs on fruits, nuts, seafood Korea and Australia have and vegetables. Tariffs on automotive complementary economies and are parts would be eliminated on entry also counter seasonal. He expressed into force, as will tariffs on natural gas. strong confidence that the KAFTA would not encounter difficulties in the Importantly, it was explained that National Assembly. He informed the KAFTA opens new markets in Korea for delegation that the Agreement would Australia’s services sector and will be considered in the Plenary session provide the best treatment for which would take place from 2 to 9 services that Korea has agreed with December. any trading partner. Legal, financial and accountancy services are The Speaker made particular mention expected to benefit. KAFTA also of Australia’s participation in the guarantees access in a range of other Korean War and remarked that this sectors including education. Korea will continues to be deeply appreciated in

Republic of Korea

South Korea. It was said that an historic development in economic Australian’s have ‘good hearts’ and relations between the two countries are always willing to contribute to and will strengthen the partnership humanity and the cause of peace, for between Korea and Australia. example, with peacekeeping efforts. The delegation expressed the hope The Speaker explained that an urgent that with the removal of tariffs under issue for South Koreans is to achieve the KAFTA, Australia’s premium wine reunification between North and will be consumed in Korea and South. To do this, the Republic of Australian wine makers will be able to Korea needs Australia’s support, engage with local distributors. including for the denuclearisation of the Korean Peninsula. On the prospects for the passage of the KAFTA through the National The MIKTA grouping of countries, Assembly, Representative Won stated comprised of Mexico, Indonesia, the that the KAFTA is likely to proceed Republic of Korea, Turkey and quickly as Korea would like to increase Australia, was said to be a very its share of the Australian car market. promising initiative. The Speaker However, other members of the indicated that he attaches great Friendship Group pointed out that importance to such middle-power Korean famers are concerned that diplomacy and expressed the hope their markets will be damaged that there would be a gatherings of because of imports of Australian the Presiding Officers of the five agricultural products. nations on a regular basis, both to advance peace and prosperity, but The delegation enquired why the also as a counterbalance to nations Koreans were insistent on the that might seek hegemony. inclusion of investor state dispute resolution (ISDS) procedures in the Speaking on behalf of the Korea- KAFTA. It was responded that these Australia Parliamentary Friendship safeguards are also in the agreement Group, which hosted the delegation to Korea has with the US and are needed a very pleasant lunch, Representative because of unforeseen issues. It was Won also recalled with gratitude explained that Korea has had cases in Australia’s contribution in the Korean the past and the inclusion of ISDS War and the countries’ shared provisions are a safety net. adherence to liberal democracy and a market economy. Representative Won The Friendship Group were stated that the KAFTA will deepen the complimentary about the stance taken trade relationship and expressed the by then Prime Minister Abbott on the hope that the friendship between Russian military incursion in Ukraine, Korea and Australia will grow. and commended his remarks concerning President Putin which they The KAFTA and its consideration by considered brave. the National Assembly figured prominently in discussions. It was In addition, the delegation was noted that the Agreement represents pleased to meet Representative

Republic of Korea

Moon-Jong Hong, Chairman of the Among the guests present at the Science, ICT, Future Planning, alumni reception, the delegation Broadcasting and Communications learned about the work of the Centre Committee of the National Assembly. for Australian Studies (CAS) at Yonsei Representative Hong observed that University. The Director of the CAS, reform of the National Assembly, Professor Heejin Lee, explained that including the possibility of introducing the Centre opened in 2008 and has an upper house, is being considered. the mission of ‘connecting Australia There is a view among the South and Korea through research, Korean public that, with some 300 education and networking.’ The CAS is Representatives, the National said to be the hub of Australian Assembly is too large and should be studies in Korea. The motivation for reduced in size. the Centre’s establishment was a perceived lack of knowledge about Representative Hong felt that the Australia in Korea and there was no KAFTA would not destroy Korean centre for Australian studies. farming but observed that farmers in Korea are ageing and their union is The Centre aims to cultivate very strong. The fine quality of exchanges in various areas and Australian wine, cheese and honey enhance awareness and trust between were mentioned. Korea and Australia. Among its activities, the Centre prepared a Asked how South Korea had achieved remarkable Australia and Korea: The such fast internet speeds, 120 Years of History publication and Representative Hong remarked that hosts seminars and conferences. The intense competition between delegation also met Professor telecommunication companies had Matthew Richards of Deakin driven down prices and stimulated University, who was then the innovation. Australian visiting lecturer at the Centre. Representative Hong commented on the education linkages between South Korean Demilitarized Zone Korea and Australia. For instance, Escorted by Captain Brett Dowsing, some 15,000 Korean students are RAN, Australia’s Defence Attaché in studying in Queensland. However, the ROK, the delegation had the study in Australia was said to be opportunity to visit the Korean relatively expensive. The delegation Demilitarized Zone (DMZ) in the Joint was asked if work and study programs Security Area, Panmunjeom and to for Korean students in Australia could learn more about the Korean War and be expanded. the status of the Armistice. The tour included visits to: the Mount Dora Australian alumni Observatory, which looks across the It was a particular pleasure for the DMZ into North Korea; the Conference delegation to meet a group of Korean Row buildings which straddle the alumni of Australian universities who Military Demarcation Line, including had fond memories of their time spent the UN Military Armistice Commission in Australia. conference room; the facilities of the

Republic of Korea

Neutral Nations Supervisory of an indigenous Optimized Power Commission (NNSC); and the Third Reactor (OPR) 1,000 MW design. In (North Korean) Infiltration Tunnel, the 2000s, ROK moved into its fourth which was discovered in October 1978 and current phase with the and runs beneath the DMZ to the development of a third-generation southern side. Advanced Power Reactor (APR) 1,400 MW design. Presently, Korea is The delegation received focussing on exporting nuclear power comprehensive briefings on the plants, discussed below, and United Nations Command, Military advancements on the APR (APR+) Armistice Commission (UNCMAC) design. which was established at the end of the Korean War in 1953 to supervise At the time of the delegation’s visit, the Armistice Agreement. The there were 23 nuclear reactors in delegation was also briefed on the operation in ROK, with installed role of the NNSC by Colonel Christian generation capacity of 20,716 MW Jörgensen, representing the Swiss (20.7 GW), producing 27 per cent (or Delegation, and Major Peter Forsberg, 138,783 GWh) of Korea’s electricity representing the Swedish delegation, supply. Other power sources are: coal, and appreciated their generous which generates 38.8 per cent; gas hospitality. generates 24.6 per cent; oil generates 5.8 per cent; and renewables (hydro) Nuclear power in Korea generate 1.7 per cent. The delegation was briefed on the Korean Government’s policies for Another five nuclear units are nuclear power by Mr Keun-Oh Park, currently being constructed, which will Senior Deputy Director with the add 6.6 GW capacity. A further six Nuclear Power Plant Cooperation units, which will have 8.6 GW capacity, Division in the Ministry of Trade, are planned. All nuclear reactors are Industry and Energy (MOTIE). operated by Korea Hydro and Nuclear Power Co (KHNP), which is a subsidiary Nuclear power generation in Korea of Korea Electric Power Corporation has gone through four phases. The (KEPCO) in which the Korean first phase began in 1974 with a Government has a 51 per cent share. Korea-US Atomic Energy Agreement which enabled the transfer of nuclear The ROK’s 28 reactors either operating power technology to ROK, but banned or under construction are located at South Korea from enriching uranium just four sites: Hanul (8 units); or reprocessing used fuel. Nuclear Wolsong (6 units); Hanbit (6 units) and power plants were introduced, on a Kori (8 units). turn-key basis. This was followed by a second phase in the 1980s which saw Korea’s National Basic Energy Plan is the establishment of a ‘localisation set every five years and operates for and technology accumulation’ plan. In the following 20 year period. Under the 1990s, Korea moved into a third the 2nd National Basic Energy Plan, phase of greater technological self- issued in January 2014, nuclear’s reliance which saw the development target share of electricity supply is 29

Republic of Korea

per cent by 2035. This was reduced decompression equipment, higher from a 41 per cent target under the coastal barriers and so on. Korea is previous (2008) plan. Renewables are also investing in safety improvements planned to supply 11 per cent by in its reactor designs. 2035, the same share as identified in the 2008 Plan. To build public acceptance of nuclear power, MOTIE advised that it is With similarities to the Japanese carrying out promotional and approach, the ROK’s Basic Energy Plan educational activities which emphasise includes elements such as enhancing nuclear energy’s safety and economic energy security, establishing a range performance. In addition, MOTIE is of power sources and enhancing increasing public participation and safety. The reasons given for ongoing external monitoring. Assistance is also use of nuclear power are industrial being provided to communities competitiveness, energy security and adjoining nuclear plants with funds carbon dioxide emissions mitigation. contributed per kilowatt-hour of power produced for facilities and With 27.3 GW of nuclear capacity community programs. currently operating or under construction and a further 8.6 GW Electricity prices are regulated in ROK planned, this means that an additional and prices to households are 7 GW of nuclear capacity will be subsidised. The delegation was needed to meet the new national informed that the price of electricity target of 43 GW from nuclear by 2035. by generation source in Korean Republic Won per kilowatt-hour In July 2015, MOTIE issued a 7th Basic (KRW/kWh) in 2013 was: nuclear 39.1, Long-Term Power Development Plan coal 58.9, hydro 170.9 and LNG 215.3. of Electricity Supply and Demand which increased the planned 12 new Noting that nuclear power is reactors in operation by 2029, with significantly cheaper than other power the Kori 1 unit closed by then. This is sources, the delegation enquired why two more units than planned for in the Korea was utilising LNG and National Basic Energy Plan issued in renewables. Mr Park responded that 2014 and would see 35 reactors the costs of nuclear power are operating in 2029.28 expected to rise because of social acceptance issues and there are limits Notwithstanding the strong on the extent to which nuclear can be performance of nuclear power in expanded. For instance, an attempt to Korea, evidenced by its unit capability site a new reactor at the city of factor and unplanned capability loss Samcheok was opposed by the local factor, there has been increased people and municipal government. For anxiety and distrust among the Korean this reason, MOTIE cannot be sure public following the Fukushima that the Government will be able to accident in Japan. Safety build the additional plants required to enhancements have been applied to meet the national goal. all reactors, such as passive hydrogen removal systems, exhaust and

Republic of Korea

As to nuclear waste management, a Nuclear Power Site, described facility for the disposal of low and below.29 intermediate level radioactive waste is now under construction in Gyeongju Asked how Korea had succeeded in its city, which was selected in 2005. Most bid for the UAE program (against rival waste is currently stored on site at the bids from a French consortium, led by plants. Due to the constraints imposed Areva, and a US-Japanese joint by the Korea-US Atomic Energy venture General Electric-Hitachi), Agreement, Korea may not enrich MOTIE advised that what uranium or reprocess used fuel. Korea distinguished Korea’s bid was the price would welcome offers from other (which was said to be less than half countries willing to take its nuclear that of the French option) and the waste. Russia was said to be promising shorter construction period. It also to take back waste from plants that assisted that Russia did not submit a they build, but Korea cannot offer this bid for the program. Russia is seen as service. A Public Engagement a competitor to Korean reactor Commission on Spent Nuclear Fuel exports. Management (PECOS) has been established to engage public opinion MOTIE is actively marketing Korean on spent fuel disposal. reactor technology to a range of countries in the Middle East, Eastern Notwithstanding the two pressing Europe, South East Asia and South issues of reactor life extensions and America. In 2015, KEPCO announced a used fuel management, MOTIE target of exporting six reactors, emphasised that the ‘nuclear industry beyond the Barakah plant, by 2020.30 for Korea is compulsory, not optional’. At the time of the delegation’s visit, A Korean consortium was successful in Korea was seeking to have its 1974 its bid to build four reactors in agreement with the US amended to Barakah in the United Arab Emirates, better facilitate its capacity to export based on its APR1400 reactor. When and to reprocess used fuel. In April complete, the units will have a total 2015 a 20-year extension to the capacity of 5.6 GW. The project, which agreement was signed which appears will be completed by 2020, will earn to allow ROK more freedom. The US$20.4 billion for South Korea. It was Korean Government believes it has commented that it is a point of great achieved several goals, including the pride for Koreans that the country right to manage nuclear fuel and to succeeded in winning the UAE project. promote export of nuclear power plants.31 All four units are now under construction, with the first unit The ROK Parliamentarians that the expected to come on line in 2017. As delegation held discussions with were part of the contract with the UAE, consistent in their view that while some 200 engineers from the UAE are nuclear power is a sensitive subject gaining experience at Korean nuclear and the Korean public are concerned plants and the delegation met some of about safety and the disposal of these staff during its visit to the Kori nuclear waste, nuclear energy must

Republic of Korea

nevertheless continue to be used in on the Kori site to ten. When South Korea. completed, Kori will be the largest nuclear power plant site in the world. For instance, Representative Hong put the view that with so few domestic Kori is referred to as the ‘cradle’ of energy resources, the ROK has to use Korean nuclear power generation. The nuclear energy as there are no first Kori unit (Kori 1) commenced cheaper sources available. He operating in 1978. This was the first remarked that the community is nuclear power plant in Korea and was concerned about safety, particularly a built on a turnkey contract with following the Fukushima accident and Westinghouse, as were the hence the focus is now on ensuring subsequent two ROK reactors. the safety of nuclear plants because without nuclear power the price of The Shin-Kori 1 and 2 units, using electricity in South Korea would South Korea’s OPR-1000 design, increase dramatically. commenced operating in 2011 and 2012 respectively. Shin-Kori units 3 Underscoring the contentious nature and 4 were almost completed at the of nuclear power in South Korea, the time of the delegation’s visit and fuel delegation was told that local loading was expected to commence in governments in South Jeolla Province January 2015. These units, using the had opposed the construction of the newer APR-1400 technology, are also Low and Intermediate-Level the reference plant for the UAE Radioactive Waste Disposal Centre in project. Features of the APR-1400 the Province. However, the city of include: a design life of 60 years; an Gyeongju in North Gyeongsang average construction period of 4 Province subsequently approved the years; built to withstand earthquakes Centre being constructed in that city. of magnitude 7.0; and have a frequency of radiation leakage of once Following discussions about the role of in one million years. nuclear energy in Seoul, the delegation visited the Kori Nuclear Shin-Kori unit 3 became operable on Power Site in Busan. Operated by 29 December 2015, the first Korean- KHNP, the Kori Site is comprised of six designed APR-1400 to start. This operating nuclear reactors with two brought the total number of reactors under construction (a map of the site operating in Korea to 25.32 appears on page 47). The total capacity of the reactors operating and The new Shin-Kori 5 and 6 units are in under construction at the site is 8 GW, the planning stage and construction or 9 per cent of Korea’s total. was expected to commence in 2015. The delegation saw the cleared land As explained to the delegation by where these reactors would be Mr Seong-Jin Yeo, a Senior Manager located. with KHNP, a further two reactors (Shin-Kori 5 and 6) are expected to In terms of support provided to the commence construction in 2015. This neighbouring communities, it was will bring the total number of reactors explained that Kori funds several local

Republic of Korea

programs with a total value of Cherenkov radiation. The pool approximately $780 million. The Kori appeared to be video monitored by site employs a total of 4,500 staff, of the International Atomic Energy which 1,400 are local residents. The Agency, which indicates the Plant was site has contracts with 309 local under safeguards. The delegation also companies, representing 43 per cent observed a main control room in of all contracts, and these were worth operation. $38.5 million in 2013. Kori also pays a range of local taxes. The delegation was informed that while carbon dioxide is produced The basic operations of the Kori during the construction phase of the reactors were explained. The reactors reactors, none is emitted while the at Kori are Pressurised Light Water plants are generating power. Reactors (PWR), as are most of South Radiation monitoring is undertaken via Korea’s reactors, whereas the 20 radiation dose real-time detectors Fukushima plant used Boiling Water located around the site and these Reactors (BWR). The PWR design was indicate that the radiation dose at Kori said to be inherently safer than the is equivalent to natural background BWR, in which the reactor itself levels. generates steam. The core of the APR- 1400 consists of 241 fuel assemblies. Asked about the design life for the Each fuel assembly has 236 fuel rods Kori reactors, Kori 1 had a lifespan of in a 16 x 16 array. The fuel assemblies 30 years which expired in 2008 but are replaced every 18 months. this was extended another ten years. In 2016, the plant operators may seek Mr Yeo explained that the Korean a further ten year extension. Kori 2 Government has not yet settled on a had an initial design life of 40 years. policy for the final disposal of used Kori 3 and 4 have an initial design life fuel, which is accumulating in spent of 60 years. At the end of the design fuel pools at reactor sites. The matter life, components such as the steam has been under examination since generators would require replacing. 2009, public consultations have commenced and a Korea Radioactive In terms of the process for Waste Agency has been established. decommissioning the reactors, it was However, there was said to be some explained that while this would entail urgency about this issue as the storage decisions for Government, the pools at reactor sites are now over 70 expectation is that the reactor would per cent full. A priority issue for be allowed to sit for four to five years reactor operators is therefore to allow the used fuel to cool. The permanent disposal of high-level reactor would then be allowed to sit waste. for a further five to ten years before phased dismantling commenced. The The delegation toured a spent fuel Kori 1 and 2 units are linked and hence storage pool at one of the Kori the operators would need to wait until reactors. The pool contained the used after unit 2 ceases operation before fuel assemblies from the reactor and decommissioning both. had the distinctive blue/green glow of

Republic of Korea

Asked about safety measures, it was project, operated by Shell, are being explained that all of Korea’s reactors constructed by Samsung. had been systematically inspected following the Fukushima accident in HHI has seven divisions which, in Japan and $1.2 billion had been addition to Shipbuilding, include invested in safety improvements Offshore Engineering, Construction across the ROK reactor fleet. Some 56 Equipment, Industrial Plant and countermeasures have been installed Engineering, and Electro Electric at the Kori reactors following Systems. Fukushima. These include: raising the coastal barrier to ten metres in height; The Offshore and Engineering Division installing hydrogen removal systems manufactures a range of oil and gas which can be started without electrical industry products such as floating LNG current; portable diesel generators plants, semisubmersible rigs, fixed and batteries; and securing emergency platforms, jack-up drilling rigs, subsea battery power from flooding. pipelines, marine terminals and jetties, and provides a range of Australian resources and associated services. relationships with Korean industry The delegation visited Hyundai Heavy HHI was awarded the contract to Industries (HHI) in Ulsan and was fabricate the LNG Plant for Chevron’s briefed on the fabrication of the Gorgon Project and the delegation Gorgon Project’s LNG Plant by observed the construction of the Mr Kwang-Jeh Woo, Project Manager Plant’s modules by the company’s for the Project’s Barrow Island LNG Offshore and Engineering Division. Plant, and Mr Les Scott, the Chevron Site Manager. As explained to the delegation, the Greater Gorgon Area is located 200km HHI was established by celebrated offshore of the northwest coast of South Korean businessman Mr ‘Asan’ Western Australia and contains in Chung Ju-yung, the founder of the excess of 40 trillion cubic feet of Hyundai Motor Company, in 1972. In recoverable gas. A 45 mile pipeline what was then seen as a highly from the Gorgon field, at a depth of speculative move, as the Hyundai 700 feet, brings the gas onshore at company had no shipbuilding Barrow Island. The LNG Plant, located experience or technology, HHI on the Island, cleans and liquefies the nevertheless succeeded and is today gas ready for transport. the world’s largest shipbuilder. The company has annual sales of $28 The Gorgon Project involves billion and employs 26,000 staff. construction of three LNG processing trains (a liquefaction and purification HHI is one of the ‘big three’ Korean facility), each of which will have shipbuilding corporations; the others capacity of 5 million tonnes per year, a being DSME (Daewoo Shipbuilding and domestic gas plant to supply gas to Marine Engineering) and Samsung. the mainland for domestic use, and a The modules for the Prelude LNG carbon dioxide injection facility.

Republic of Korea

In total, the LNG Plant involved Steelwork’s output is now exported to fabrication of 51 separate modules 60 countries. with a total weight of 200,000 tonnes. Fabrication commenced in November The delegation toured the iron and 2010 and was completed at the end of steel making facilities and saw the 2015. The modules were shipped to plant’s six coal silos, each of which Barrow Island, a journey which took contain 60,000 tonnes of coal, and 20 days from Ulsan. In total, 3,000 silos for iron ore. Some 46 per cent of staff were employed fabricating the the Steelworks’ coal and 70 per cent modules, with a peak of 5,900. of its iron ore is sourced from Australia. As at March 2016, the Gorgon Project had shipped its first LNG cargo to The delegation observed the range of Japan and all train 2 and 3 modules processes for iron making, steel were on Barrow Island and being making, casting and rolling. The erected. Gorgon was said to be the company’s FINEX technology, which largest single-resource development in has significantly lower operating costs Australia’s history.33 and produces less emissions than a blast furnace process, was described. In addition to seeing several of the Gorgon Project modules being Busan Cooperative Fish Market fabricated, the delegation toured The southern port of Busan is the HHI’s 1,600 acre shipyard and centre of South Korea’s fisheries, observed the largest container ship in which provide an increasingly the world, CSCL Globe, under important source of protein for the construction. The ship is 400 metres in Korean people. length, has a beam of 59 metres and will have a maximum capacity of over In a fascinating cultural experience, 19,000 containers for a gross tonnage the delegation visited the Busan of 190,000. Cooperative Fish Market and observed catch being unloaded from vessels, The delegation visited POSCO sorted, auctioned and boxed ready for Steelworks in Pohang. POSCO was transport. This was followed by a established as Pohang Iron and Steel pleasant meal enjoying fresh-caught Co in 1968, taking its current name in fish with the Cooperative’s President, 2002. POSCO has played a major role Mr Ju-Hak Lee, and Mr Yeong-Jin Choi, in South Korea’s development a Member of the Busan Metropolitan following the Korean War and is now Council. The Market, opened in 1963, one of the largest steel makers in the now accounts for 30 per cent of the world, producing approximately 48 ROK’s fish production and is the million tonnes of crude steel per year. country’s largest fish market. The company employs 8,600 workers and produces 11 main products, United Nations Memorial Cemetery including hot rolled steel, steel plate, The delegation concluded its program wire rod, cold rolled steel, galvanised with a deeply moving visit to the steel, stainless steel and automotive serene and well-kept United Nations materials. Some 40 per cent of the

Republic of Korea

Memorial Cemetery, Korea (UNMCK) Accompanied by Mr Léo G Demay located in Busan. from the Office of the UNMCK and Australia’s Defence Attaché, Captain Busan itself, located on the coast of Brett Dowsing RAN, delegation the Korean Peninsula to the southeast members paid their respects at the of Seoul, was almost overrun as North graves of the 281 Australian Korean forces attacked UN troops in servicemen and were honoured to lay the Battle of Pusan Perimeter, which a wreath at the Australian Monument took place in August and September for the 340 Australians who were 1950. killed during the War.

The Memorial Cemetery honours the United Nations soldiers from 16 countries who were killed in battle during the Korean War, which was fought from 1950 to 1953.

The delegation laying a wreath at the Australian Monument in the United Nations Memorial Cemetery, Korea in Busan. The delegation is accompanied by Captain Brett Dowsing, RAN, Australia’s Defence Attaché to the Republic of Korea.

Republic of Korea

The delegation with Representative Ui Hwa Chung, Speaker of the National Assembly of the Republic of Korea (centre). Also present is Representative Yoo-Chul Won, Chairman of the Australia-Korea Parliamentary Friendship Group (fourth from right).

The delegation meeting Representative Moon-Jong Hong, Chairman of the Science, ICT, Future Planning, Broadcasting and Communications Committee of the Korean National Assembly.

Republic of Korea

The delegation visiting the Kori Nuclear Power Site, Busan.

Overview of the Kori Nuclear Power Site, showing the location of the reactors currently operating, under construction and planned. Source: Korea Hydro & Nuclear Power Co., Ltd.

Republic of Korea

The delegation meeting Mr Kwang-Jeh Woo, Project Manager for the Gorgon Project’s Barrow Island LNG Plant and Mr Les Scott, Chevron Site Manager, at Hyundai Heavy Industries Co, Ulsan.

The delegation visiting Conference Row at the Joint Security Area, Panmunjeom in the Korean Demilitarized Zone. In the background is the Panmungak building in North Korea.

48 Republic of Korea

The delegation, standing with a South Korean soldier, inside the United Nations Command, Military Armistice Commission conference building, Joint Security Area, Panmunjeom in the Korean Demilitarized Zone.

The ‘Bridge of No Return’ between South and North Korea, guarded at the Southern end by South Korean troops. Visible to the left is one of the signs marking the location of the Military Demarcation Line.

49 Conclusion

Conclusion of 48 nuclear reactors, which had been supplying 32 per cent of the The delegation held fruitful nation’s electricity, were rapidly taken discussions in Japan and the ROK, and off line. concluded the trip with a better appreciation of the challenges being As a consequence, electricity prices faced by these countries and their rose by 25 per cent for households perspectives on the bilateral and 38 per cent for industry. Fossil relationship with Australia. fuel imports and fuel prices rose dramatically. The increased fuel costs The dominant impression gained by pushed Japan into trade deficit for the the delegation was the extent to first time in 31 years. which Australia is relied on as a trusted partner for Japan and the ROK Japan’s reliance on imported energy in the secure supply of energy resources was over 90 per cent at the resources, minerals and food time of the delegation’s visit. As products. The visit gave us new insight Japanese officials explained, this into the long-standing and deeply degree of energy import dependence complementary trade relationships presents a major vulnerability for between our countries. Japan. The delegation saw the clear economic imperative for Japan to It was encouraging for the delegation restart its nuclear reactors as soon as to hear from Parliamentarians we met practicable, notwithstanding the high in Japan that the relationship with level of public opposition which Australia has never been closer. In persists, and for the country to addition to our already very strong diversify its sources of energy supply. economic and people-to-people links, it was emphasised to the delegation The delegation was pleased to see that Japan would like to see the first-hand Australian energy and security and military relationship grow mineral resources being used to fuel in the years ahead. Japanese industry, notably coal, iron ore and LNG. The delegation notes The delegation visited Japan just a few Australia’s strong common interest years after the 2011 Great East Japan with Japan in seeing that high- earthquake, which claimed the lives of efficiency low-emissions coal some 18,000 people and caused technologies are widely deployed. immense damage and dislocation. The delegation expresses its admiration for The Japan-Australian Economic the determination and resilience of Partnership Agreement and the Kore- the Japanese people in recovering Australian Free Trade Agreement, from this catastrophe. which were yet to be ratified at the time of the delegation’s visit, had It is clear to the delegation that the widespread support in both countries. Fukushima nuclear accident, caused by the 2011 earthquake, had a The ROK also deeply impressed the profound and enduring effect on the delegation. The country’s economic Japanese economy. The country’s fleet development has been remarkable.

50 Conclusion

In 1953, shortly after the Korean War, remembered contribution of the ROK’s Gross Domestic Product Australian forces in the Korean War (GDP) stood at US$41 million. Income remains deeply appreciated. per capita was US$67. The country was among the poorest in the world. The invaluable people-to-people links By 2014 - just 60 years later - the forged through these connections ROK’s GDP had increased more than must continue to be fostered. The 31,000 fold and is now over $1.4 New Colombo Plan placements may trillion. Income per capita increased assist with this. 400 fold and in 2014 was over $27,000. The ROK is today the world’s The division of North and South Korea 13th largest economy, barely one place is a tragedy. The Korean War ended in behind Australia in the World Bank’s 1953 but the people of South Korea rankings. continue to face worrying provocations to this day. These also Nothing better epitomises the ROK’s harm the people of North Korea as the economic development than the fact South reacts, quite understandably, as it now exports to Australia the very it has by halting operations at the plant and equipment required to collaborative Kaesong Industrial Park, extract our natural resources, and that thereby depriving the North Korean it has commenced exporting its own workers of desperately needed indigenously developed nuclear power income. plants - both of which the delegation observed during our visit. Even from the vantage point of the Demilitarized Zone it was apparent to As with Japan, it is heartening to know the delegation that there is a gulf in that Australia has, through its trade living standards between the two relationship with South Korea, countries, as well as a vast difference contributed significantly to the in the personal freedoms that the country’s development. Australia’s peoples of each country enjoy. coal and iron ore, together with our Anything Australia can reasonably beef and education services have all contribute to achieving reunification played a part. With the KAFTA now in and lasting peace on the Korean force, there is the potential for further Peninsula we should. growth in our two-way trade. This could see an increase in Australia’s agricultural and services exports, and additional Korean investment in Australia.

Good will towards Australia is evident in both Japan and South Korea. This seems to be, at least in part, because of the experiences of many thousands Senator Alex Gallacher of Japanese and Korean people who Deputy Delegation Leader have travelled to Australia for 3 May 2016 education and holidays. The still well-

51 Appendix

Delegation Programme

JAPAN

Monday, 10 November 2014 - Tokyo 07:40 Delegation programme briefing given by: - Mr David Glass, Counsellor, Political - Mr Simon Clayton, First Secretary Venue: Imperial Hotel

10:00 Ministry of Foreign Affairs briefing on Japan’s foreign policy and Australia-Japan relations given by: - Mr Masatoshi Sugiura, Director, Policy Planning Division - Mr Yuji Tokita, Principal Deputy Director, Oceania Division Venue: Ministry of Foreign Affairs

11:00 Ministry of Foreign Affairs briefing on “Cool Japan” given by: - Mr Yusuke Arai, Director, Public Diplomacy Strategy Division - Ms Masumi Onoue, Public Diplomacy Strategy Division, Minister’s Secretariat Venue: Ministry of Foreign Affairs

12:00 Lunch meeting with Deputy Head of Mission, Mr Tom Connor, Counsellor (Trade and Economic), Ms Jane Ogge-Cowan, and Australian business representatives: - Mr Tim Barnstable, Head of Japan, Ingredient, Murray Goulburn - Mr Andrew Cox, Regional Manager-Japan Global Marketing, Meat and Livestock Australia - Mr Hidekata Yamada, Acting General Manager, Overseas Strategy Department, Maruha Nichiro Corporation, Austral Fisheries - Mr Osamu Momiyama, Director, Maruha Nichiro Corporation, Austral Fisheries - Mr Andrew Peyton, General Manager, Horitomi Commercial and Industrial Inc and Co-Chairman Food Agriculture Hospitality Committee Venue: Ambassador’s Residence, Australian Embassy

14:00 Ministry of Economy, Trade and Industry briefing on Australia-Japan trade and energy relationship given by Mr Shinichi Kihara, Director, International Affairs Division, Agency for Natural Resources and Energy Venue: Ministry of Economy, Trade and Industry

15:30 Afternoon tea with Australian New Colombo Plan students, attended by: - Ms Monica Kato, University of Adelaide - Ms Kate Bonnor, University of Melbourne - Mr Patrick Gan, University of Western Sydney - Ms Caroline Yun, University of New South Wales - Mr Jacob Shearer, University of Adelaide - Mr Wilson Chang, University of Technology, Sydney - Mr Tim Mann, University of Western Sydney Venue: Ambassador’s Residence, Australian Embassy

52 Appendix

Tuesday, 11 November 2014 – Yokohama and Tokyo 9:30 Visit to J-Power Isogo Coal-fired Thermal Power Plant with a briefing given by Dr Hiroshi Sasatsu, Director, Isogo Thermal Power Station Venue: Isogo Thermal Power Station, Yokohama City

14:00 Meeting with Japan Business Federation (Keidanren), attended by: - Mr Katsunori Nemoto, Managing Director - Mr Masami Hasegawa, Senior Manager, Environment Policy Bureau Venue: Keidanren Kaikan, Tokyo

15:00 Meeting with Mr Masaaki Yamazaki, President of the House of Councillors, The National Diet of Japan Venue: President’s Meeting Room, National Diet Building, Tokyo

16:00 Japan Foundation briefing on cultural and intellectual exchange, given by: Mr Hiroyasu Ando, President Ms Hiroko Tsuka, Administrative Vice President Mr Ben Suzuki, Director, Asia and Oceania Section, Arts and Culture Department Venue: Japan Foundation Headquarters, Tokyo

Wednesday, 12 November 2014 - Tokyo 07:30 Briefing and breakfast with the Ambassador and Embassy staff: - His Excellency Mr Bruce Miller, Ambassador to Japan - Mr Tom Connor, Deputy Head of Mission - Ms Dara Williams, Minister-Counsellor (Political) - Ms Kate Phipps, Minister-Counsellor (Treasury) - Mr Paul Ross, Minister-Counsellor (Agriculture) - Ms Carolyn Barton, Minister-Counsellor (Minerals and Energy) - Mr Simon Clayton, First Secretary Venue: Ambassador’s Residence, Australian Embassy

09:15 Meeting with Mr Takashi Uto, Parliamentary Vice-Minister for Foreign Affairs Venue: Ministry of Foreign Affairs

10:00 Site visit to the National Museum of Emerging Science and Innovation and discussion on scientific exchange with Mr Shoichiro Katayama, Executive Director Venue: Miraikan

12:30 Lunch meeting with political and foreign policy commentators, attended by: - Mr Hiroyuki Akita, Senior and Editorial Staff Writer, Nikkei - Dr Narushige Michishita, Director, Security and International Studies Program, National Graduate Institute for Policy Studies Venue: The Capitol Hotel Tokyu

14:10 Tour of the National Diet Building

15:00 Meeting with Mr Bunmei Ibuki MP, Speaker of the House of Representatives, National Diet of Japan Venue: Speaker’s Meeting Room, National Diet Building

Appendix

16:00 Meeting with the Japan-Australia Parliamentary League of Friendship, attended by: - Mr Ichiro Aisawa MP, Chairman - Mr Isamu Ueda MP, Vice Chairman - Mr Takeaki Matsumoto MP, Vice Chairman - Mr Taku Otsuka MP, Secretary General - Mr Masayuki Naoshima - Mr Takeshi Maeda - Mr Hiroshi Nakada MP - Mr Seiji Maehara MP Venue: Multipurpose Hall, House of Representatives First Diet Members’ Office Building

18:00 Dinner hosted by the Japan-Australia Parliamentary League of Friendship, attended by: - Mr Ichiro Aisawa MP, Chairman - Mr Takeaki Matsumoto MP, Deputy Chairman - Mr Arata Takebe MP, Director - Mr Hidemichi Sato MP - Mr Mitsunari Hatanaka MP - Mr Hideo Suzuki, Deputy Director-General, Ministry of Foreign Affairs Venue: Speaker’s Official Residence

Thursday, 13 November 2014 - Osaka 12:30 Lunch and briefing on Australia’s business relations with the Osaka / Kansai region with Ms Catherine Taylor, Osaka Consul-General and Senior Trade Commissioner Venue: InterContinental Hotel

13:30 Visit to Osaka Gas Co Ltd, including an inspection of the Smart Energy Network Project and meeting with: - Mr Kazuhisa Yano, Senior Executive Officer, Member of the Board, Head of Energy Resources and International Business Unit - Mr Shigeki Hirano, Executive Counsellor, and Chairman of Osaka Gas Australia Pty Ltd Venue: Head Office, Osaka Gas

15:15 Inspection of Osaka Gas Central Security Control Centre Venue: Head Office, Osaka Gas

17:00 Asia Pacific Institute of Research (APIR) briefing on economic and social issues in the Asia Pacific, hosted by Mr Yoshinobu Iwaki, Executive Director and Member of the Board. Presentations given by: - Dr Yoshihisa Inada, Director of the Centre for Quantitative Economic Analysis - Dr Toshihiko Hayashi, Director of Research - Mr James Brady, Researcher Venue: APIR, Knowledge Capital Tower C, Grand Front Osaka

Friday, 14 November 2014 - Osaka 09:30 Visit to Nippon Steel & Sumitomo Metal including inspection of rail wheels casting works and briefing by Mr Machi Nakata, Managing Executive Officer Venue: Osaka Steel Works

Appendix

14:30 Visit to Sakai LNG terminal and Sakaiko gas-fired power station, hosted by Mr Tetsu Shiota, President, Sakai LNG Corporation, and Mr Motofusa Murakami, General Manager, LNG Contracting Group, The Kansai Electric Power Co Inc Venue: Sakai LNG Terminal and Sakaiko Power Station

Saturday, 15 November 2015 - Hiroshima 10:15 Visit to Hiroshima Peace Memorial Park and Museum, including wreath laying at the Memorial Cenotaph, accompanied by Mr Noriyuki Masuda, Deputy Director, Hiroshima Peace Memorial Museum Venue: Hiroshima Peace Memorial Park

REPUBLIC OF KOREA

Monday, 17 November 2014 - Seoul 08:30 Breakfast meeting with economic commentators, attended by: - Mr Tae-Hyung Ha, President and Chief Executive Officer, Hyundai Research Institute - Professor Matthew Richards, Deakin University Venue: Grand Hyatt Hotel

10:20 Briefing by Embassy staff: - Mr Ravi Kewalram, Deputy Head of Mission - Ms Tammy Hubycz, First Secretary (Economic) - Ms Joanne Pearce, Counsellor (Agriculture) - Mr Richard Fogarty, Counsellor (Education and Science) - Captain Brett Dowsing, RAN, Defence Attaché - Ms Wendy Haydon, Trade Commissioner and Counsellor (Commercial) - Ms Stephanie Werner, Counsellor (Political) Venue: Matilda Room, Australian Embassy

12:00 Lunch with members of the Korea-Australia Parliamentary Friendship Group, attended by: - Representative Yoo-Chul Won, Chairman - Representative Woong-Rae Noh - Representative Jin-Gyu Ham - Representative Un-Ryong Lee - Representative Dong-ik Choi Venue: Touch the Sky Restaurant, 63 Building

13:45 Tour of the National Assembly Plenary Chamber

14:30 Meeting with Representative Moon-Jong Hong, Chairman of the Science, ICT, Future Planning, Broadcasting and Communications Committee, National Assembly of the Republic of Korea Venue: National Assembly Building

15:30 Meeting with Representative Eui-Hwa Chung, Speaker of the National Assembly of the Republic of Korea Venue: National Assembly Building

Appendix

19:00 Reception with prominent Korean alumni Venue: Grand Hyatt Hotel

Tuesday, 18 November 2014 – Korean Demilitarized Zone and Seoul 09:00 Visit to the Joint Security Area in the Korean Demilitarized Zone, accompanied by Captain Brett Dowsing, RAN, Defence Attaché, including: - Visit to the Dora Observatory - Visit to Conference Row buildings on the Military Demarcation Line - Briefing on the Korean Armistice Agreement and the United Nations Command Military Armistice Commission - Briefing the role of the Neutral Nations Supervisor Commission (NNSC) - Lunch hosted by the Swiss and Swedish Delegations to the NNSC - Visit to the Third (incursion) Tunnel Venue: Joint Security Area, Panmunjeom

17:00 Briefing on the role of nuclear power in the Republic of Korea, given by Mr Keun- Oh Park, Senior Deputy Director, Nuclear Power Plant Cooperation Division, Ministry of Trade, Industry and Energy Venue: Australia Centre, Australian Embassy, Seoul

19:00 Dinner with industry representatives, attended by: - Mr Duck Su Kim, Chief Purchasing Officer, SPC Group - Mr Jason Shin, President, Korea Botany - Mr Brian Lee, Regional Business Manager, Treasury Wine Estates - Mr Jun-Wan Kim, Division Manager, Wine Business Division, Lotte Chilsung Beverage Co Ltd Venue: Min’s Club, Seoul

Wednesday, 19 November 2014 - Busan 13:00 Visit to the Kori Nuclear Power Site and briefing by Mr Seong-Jin Yeo, Senior Manager, Korea Hydro & Nuclear Power Co Ltd

Thursday, 20 November 2014 – Ulsan and Pohang 09:00 Visit to Hyundai Heavy Industries (HHI): - Briefing on HHI Offshore and Engineering Division given by Mr Kwang-Jeh Woo, Project Manager, Gorgon Project, Barrow Island LNG Plant, and Mr Les Scott, Site Manager, Chevron - Tour of the Ship Building Division Venue: HHI, Ulsan

14:00 Visit to POSCO Steelworks, accompanied by Mr Mal-Yong Kim, Administration and Public Relations Group, POSCO Pohang Works Venue: POSCO Steelworks, Pohang

Friday, 21 November 2014 – Busan 05:40 Visit to the Busan Cooperative Fish Market followed by breakfast with Mr Lee Ju- Hak, President of the Fish Market, and Mr Yeong-Jin Choi, Member of the Busan Metropolitan Council 11:00 Visit to the United Nations Memorial Cemetery and wreath laying, accompanied by Mr Léo G Demay, Director of International Affairs, Office of the United Nations Memorial Cemetery in Korea

Endnotes

1 Department of Foreign Affairs and Trade, Japan country brief, viewed 6 April 2016, . 2 Department of Foreign Affairs and Trade, Japan country fact sheet, viewed 6 April 2016, . 3 Department of Foreign Affairs and Trade, Japan-Australia Economic Partnership Agreement, viewed 6 April 2016, . 4 Ministry of Foreign Affairs, Japan, National Security Strategy, viewed 8 May 2016, . 5 Yusuke Fukui, ‘Japan and Australia are becoming each other’s quasi-allies’, Asahi Shimbun, 9 November 2014, p. 3. 6 Prime Minister Abe, Address to the Sixty-Ninth Session of the General Assembly of the United Nations, 25 September 2014. 7 Teruhiko Fukushima and Yasuyuki Ishida, ‘Abe’s visit to Australia: Japanese coverage’, The Strategist, 31 July 2014, Australian Strategic Policy Institute, viewed 10 April 2016, . 8 Linda Sieg, ‘Japan global PR message could misfire with focus on wartime past’, Reuters, 10 February 2015, viewed 9 April 2016, . 9 Nuclear Regulation Authority, Japan, Enforcement of the New Regulatory Requirements for Commercial Nuclear Power Reactors, 8 July 2013, viewed 12 April 2016, . 10 World Nuclear Association, Nuclear Power in Japan, 29 March 2016, viewed 12 April 2016, . 11 Ministry of Foreign Affairs, Japan, Diplomatic Bluebook 2014, April 2014, p. 8, viewed 9 April 2016, . 12 See: Agency for Natural Resources and Energy, Japan, What does liberalization of the electricity market mean?, viewed 12 April 2016, . 13 World Nuclear Association, Nuclear Power in Japan, 29 March 2016, viewed 12 April 2016, . 14 Sonal Patel, ‘Five Years after Fukushima in Five Infographics’, POWER magazine, 11 March 2016, viewed 7 April 2016, . 15 Ministry of Economy, Trade and Industry, Strategic Energy Plan, April 2014, p. 51, viewed 23 April 2016, . 16 World Nuclear Association, ‘Japan’s Nuclear Fuel Cycle’, Country Profiles, March 2016, Viewed 10 April 2016, . See also: Ministry of Economy, Trade and Industry, Japan, Strategic Energy Plan, April 2014, pp. 53-54, viewed 10 April 2016, . 17 See Nuclear Regulation Authority, loc. cit. 18 World Nuclear Association, ‘Court denies injunction against operation of Sendai units’, World Nuclear News, 6 April 2016, viewed 12 April 2016, . 19 World Nuclear Association, Nuclear Power in Japan, loc. cit. 20 Sonal Patel, ‘Japan Restarts Third Nuclear Reactor, a MOX Unit’, POWER magazine, 1 February 2016, viewed 7 April 2016, . 21 Kensuke Kanekiyo and Akira Ishimura, The Institute of Energy Economics, Japan, Japan Energy Brief, No. 17: January 2012, p. 11, viewed 11 April 2016, . See also: Yuji Matsuo, The Institute of Energy Economics, Japan, ‘Summary and Evaluation of Cost

Calculation for Nuclear Power Generation by the Cost Estimation and Review Committee’, Energy Journal, May 2012, viewed 11 April 2016, . 22 Chevron Corporation, ‘First Chevron Gorgon LNG Cargo Departs for Japan’, Press Release, 20 March 2016, BusinessWire, viewed 21 March 2016, . 23 Paul Noothout, et al., International comparison of fossil power efficiency and CO2 intensity – Update 2013, Ecofys, Utrecht, August 2013, pp. 63 and 71. 24 Keith Burnard and Sankar Bhattacharya, Power Generation from coal: Ongoing developments and outlook, OECD/International Energy Agency, Paris, 2011, p. 14. 25 Department of Foreign Affairs and Trade, Republic of Korea country brief, viewed 17 April 2016, . 26 Department of Foreign Affairs and Trade, Republic of Korea country fact sheet, viewed 25 April 2016, . 27 The Korea Herald, ‘Ruling party reeling from election rout’, 14 April 2016, viewed 30 April 2016, . 28 World Nuclear Association, Nuclear Power in South Korea, April 2016, viewed 26 April 2016 . 29 World Nuclear Association, Nuclear Power in the United Arab Emirates, April 2016, viewed 24 April 2016, . 30 World Nuclear Association, Nuclear Power in South Korea, loc. cit. 31 World Nuclear Association, Nuclear Power in South Korea, loc. cit. See also: World Nuclear Association, ‘South Korea wind revisions to nuclear treaty with USA’, World Nuclear News, 22 April 2015, viewed 26 April 2016, . 32 World Nuclear Association, ‘First criticality for Shin Kori 3’, World Nuclear News, 5 January 2016, viewed 26 April 2016, . 33 Chevron Australia, Gorgon Project, viewed 27 April 2016, .