free essay

At the current moment the United Arab Emirates and Japan have strong and long-lasting diplomatic relationships. Notwithstanding the fact that the countries are separated by the sea and land territories, there are numerous economic and social spheres in which they perform joint business conducting. In the majority of cases it is represented by the financial support and implementation of Japanese modern technologies and knowledge, and providing of resources by the UAE. The governments of two countries try to render the assistance to each other according to their possibilities in various extra-ordinary situations, such as lowering of the crude oil prices and management of disaster on the Fukushima nuclear power plant.

The economic and diplomatic relationships between the United Arab Emirates and Japan have long lasting history. It is notable that four years before the formation of the United Arab Emirates, Japanese companies took part in the international tender performed by Abu Dhabi (Gulf Business, 2014). Such event formed the background to the further cooperation between the two countries.

The independence of the UAE was recognized by Japanese government in 1971 (Ministry of Foreign Affairs of Japan, 2014). The seven emirates formed the independent federation under the name of the United Arab Emirates (Youtube, 2013). Three years later both countries opened the embassies on the territories of their diplomatic partners. The first visit of Japanese leader to the territory of the United Arab Emirates took place only in 1990 (Ministry of Foreign Affairs of Japan, 2014). Since that time, political leaders and governmental officials (like ministers of various spheres of economy) often arrange their visits to the UAE for strengthening of diplomatic and trade relationships between the two countries. The example of the diplomatic relationships development can be represented by singing the "Memorandum of Cooperation on Higher Education and Scientific Research" in 2004 between ministers of education of both countries (Ministry of Foreign Affairs of Japan, 2014). The other agreements between the governments the countries will be provided below.

At the current moment, Japan is considered to be one of the biggest UAE's trade partners (Kassem, 2015). The economic relationships between the United Arab Emirates and Japan are rather strong. As per official information, export between Japan and the UAE was USD 9 billion, while import amounted of USD 44 million (Ministry of Foreign Affairs of Japan, 2014). The major part of commodities exported from the United Arab Emirates to Japan are represented by LNG, petroleum and aluminum, when the major import commodities to the Emirates are machinery, automobiles, and electric products (Ministry of Foreign Affairs of Japan, 2014).

The additional emphasis should be made on the trade relationships concerning the supply of oil and the development of the oil production industry. The United Arab Emirates are the second largest provider of crude oil to Japan (Al-Asoomi, 2014). At the same time, Japan is considered to be one of the major investors in the Arabian oil production enterprises (especially into the hydrocarbon sector). As per official statistics, the country invested more than USD 3 billion till the end of 2011 (Dubai Trade, 2013).

One of the major investments was made through the Japan Oil Development Company. It was "acquired as a part of the concession of ADMA-OPCO in 1973" (Smith, 2010). The Japanese company signed a joint-development agreement of oil fields five years later after the acquisition (Smith, 2010). At the current moment, the company became one of the major offshore operators on the territory of the UAE. One more company with Japanese investments - Abu Dhabi Oil Company - received a concession in 1968 for the production of crude oil of 3 fields located in offshore (Smith, 2010). The additional emphasis should be paid to the fact that the part of the exclusive producer of LNG in the Emirates - the company ADGAS -is also represented by the equity of the Japanese company (Smith, 2010). Such close cooperation between the companies of two countries in the most important sectors of their economies grants the stability of such relationships and their further development.

 

However, as it was mentioned above, at the current moment, the considerable lowering of the price of gaseous hydrocarbons and crude oils leads to the slow decline of the trade between the UAE and Japan (Times of Oman, 2015). In the end of August of the current year the price of crude oil lowered by approximately 47.2 % compared to the similar time of the previous year; when the price of petroleum gasses decreased by 19.2 % (Times of Oman, 2015). It is a relevant issue, as the import of such resources from the UAE comprises approximately 72 % of the total trade relationships (Times of Oman, 2015). At the current moment, the UAE is the second biggest provider of crude oil to Japan with the share of 33 %; and the fifth biggest supplier of petroleum gases with the market share of 7.2 % (Times of Oman, 2015). Hence, any fluctuations in this field have the considerable influence on the amount of trade value. However, they do not have negative impact on the relationships between countries. Japanese financial institutions are ready to render assistance to the UAE's crude oil producers for helping them to overcome the world economic crisis. Such help can be provided in terms of the existing agreements between two institutions owned by the governments of two countries: the Abu Dhabi National Oil Company and Japan Bank for International Cooperation (Masaki, 2007). Such cooperation can insure the stable supply of crude oil to Japan and decrease the possibility of crisis in the Japanese economy.

In 2014, the governments of the UAE and Japan agreed to increase Japanese strategic crude oil supply in two times (Yee, 2014). After the increase it had to reach one million kiloliters (Yee, 2014). It is necessary for the coverage of the growing demand of the Japanese companies and industries caused by the rapid economic growth and the accident on Fukushima nuclear power station (Yee, 2014). It is notable that the agreement was accompanied by the negotiation of officials between two countries concerning the Japanese investments into the economy of the UAE for the further development of the renewable technologies. The current matter will be more thoroughly discussed below. Moreover, it should be noted that at present Japanese companies proceed to make investments into the UAE's economy and purchase the crude oil resources. For example, in the April of the current, year one of the biggest Japanese producers INPEX Corporation "signed a contract for the acquisition of a 5 % participating interest" of one of the biggest deposits of crude oil resource in the world (Ministry of Economy, Trade and Industry, 2015). It is known under the name of ADCO Onshore Concession (Ministry of Economy, Trade and Industry, 2015). According to the official information, the deposit produces more than 1.6 million of barrels every day and the figure tends to increase each year (Ministry of Economy, Trade and Industry, 2015). Such acquisition is considered to be the most large-scale participation of the Japanese corporation in the production of crude oil in the UAE since 2009 (Ministry of Economy, Trade and Industry, 2015). The great significance of this event is reflected by the fact that after acquisition the Japan increased the amount of the resource under its independent control by approximately 15 % (Ministry of Economy, Trade and Industry, 2015). Moreover, the acquisition provides the greater stability of supply, because the crude oil from this location should not be transported through the Straits of Hormuz (Ministry of Economy, Trade and Industry, 2015).

Additionally, it should be noted that at the current moment one of the main field of trades between the United Arab Emirates and Japan is export of aluminum. The countries started developing such trade relationships intensively only in 2010 (Masaki, 2007). Before 2015, the major Japanese suppliers of aluminum were Russian companies. However, the sharpening of the trade relationships between Russia and Japan due to the disruption in shipments caused the shifting of Japanese interest to the UAE (Masaki, 2007). Such interest is based on the several reasons. The United Arab Emirates is recognized by Japan as the reliable and trustful partner. Moreover, there are numerous long-term economic and diplomatic relationships between two countries. However, the major argument for choosing the UAE as the supplier of aluminum was the access of the country to inexpensive fuel that grants cheap production (Masaki, 2007). Hence, such situation leads to the establishment of the long-term relationships concerning the trade of aluminum between the countries. Such relationships are influenced by the global fluctuations of prices on the commodity. Regardless of the increase of prices on aluminum by approximately 11 per cent that lead to the increase of the import volume on more than USD 370 million, such mark is lower than the price on aluminum in the previous year (Times of Oman, 2015). However, such fact does not have negative influence on the relationships between the countries.

It is notable, that in the current year the amount of export of aluminum increased by approximately 41 per cent (Kassem, 2015). At the same time, the trade between two courtiers increased by approximately 0.54 % and reached USD 51.29 million in 2014 (Kassem, 2015). The additional attention should be paid to the fact that such considerable raise is stipulated by the increase of purchasing of aluminum from the UAE on approximately USD 213.9 million. The raise of the metal trade represents the efforts of the Arabian government to diversify the economy of the country to decrease its reliance on hydrocarbons and from the world oil prices.

STEP 1 You order custom writing service
STEP 2 Professional writers develop your paper
STEP 3 We check the paper on plagiarism
STEP 4 We send the paper to you
STEP 5 Editors checks paper again
STEP 6 We send your revised paper

The major part of the Japanese exports to the United Arab Emirates is represented by the general and electric machinery (for example, passenger motor cars and motor trucks) (Times of Oman, 2015). The overall decline of the trade value is connected to the depreciation of the national currency of Japan by more than 16 % in the first half of the 2015, but not with the worsening of the relationships between countries (Times of Oman, 2015). As per official statistics, the current Japan's export to the Emirates lowered on USD 432 million (9 %) compared to the similar period of the previous year (Times of Oman, 2015). Moreover, in the recent years, Japan imported a great variety of other goods from the Emirates, including precious stones, copper scraps, non-alcoholic beverages, and metals (Times of Oman, 2015).

The considerable development of trade is closely connected with the fact that the governments of both countries signed international agreements for the transportation stipulation (for air services on 1998), trade (avoidance of double taxation in 2004), and development of nuclear energy (in 2014) (Ministry of Foreign Affairs of Japan, 2014). In 2013, the representatives of the governments and semi-governmental agencies of two countries signed the agreements concerning the further development of relationships in such fields as health, energy, education, and investments in the UAE (Gulf Business, 2014). Moreover, the UAE and Japan made a decision to establish the Abu Dhabi-Japan Economic Council (AJEC) for the stipulation of the economic cooperation between them (UAE Interact, 2011). Such establishment will enhance the coordination of business strategies of both countries for enabling them to rich economic prosperity. The additional emphasis will be made on introduction of new spheres of cooperation, including interrelations between small and medium businesses. It is necessary for helping more than three hundred of Japanese companies that are presented on the territory of Emirates to conduct business and increase their investing in the UAE (UAE Interact, 2011).

In the 21st century, Dubai has become one of the major regional headquarters of the great amount of Japanese manufacturers who intend to expend their business in Africa and the Middle East. Such companies are represented by car makers, construction corporations, electronic manufacturers (like Toshiba, Panasonic, Sharp and Sony), and health care equipment (like medical imaging machines produced by Fuji) (Gulf Business, 2014).

The improvement of the diplomatic relationships is also reflected in the constant mitigation of people transportation procedures between two countries that facilitates the establishment and further development of business relationships. It is reflected in the increase of the amount of flights and opening of new routes (for example, between Haneda and Abu-Dhabi). In 2013, Japan simplified visa policies for the UAE residents and nationals. Hence, at the current moment, people can obtain a multiple visa to the country for 3 years (Gulf Business, 2014).

It should be noted that Japan, being the third biggest producer of the nuclear power in the world, has numerous innovative solutions and technologies in this sphere (Stott, 2009). The negotiations concerning the development of the nuclear power capacities in the UAE with the help of Japanese scientists and technologies started in 2008 (Stott, 2009). The agreement concerning the peaceful cooperation in this sphere was signed by the representatives of two countries a year later (Stott, 2009). According to the terms of the agreement, Japanese scientists will provide the education to the workers of the United Arab Emirates who will be employed on the facilities where the nuclear power would be used. In 2013, the officials of both countries signed the agreement of nuclear cooperation (Gulf Business, 2014). According to the agreement, nuclear reactors located in the Western Region of the United Arab Emirates will be built with the use of Japanese technologies (Gulf Business, 2014). The strengthening of the relationships between the UAE and Japan is also based on the fact that both countries hold the course of the "nuclear disarmament and non-proliferation" (Gulf Business, 2014). It means that the developed nuclear technologies should be used only in peaceful purposes for the civilian goals.

Moreover, the diplomatic relationships between two countries are reflected in the close cooperation of Japan and the UAE in various means of protection. The security of the property and citizens of the states are granted by the joint actions in such fields as safety of sea lanes, disaster relief, anti-terrorist actions, and actions against pirates (Croucher, 2014). Such measures are strengthened by the exchange of the information concerning defense measures by the officials of the countries.

The further development of the diplomatic and economic relationships between the countries is closely connected with the technologies of renewable sources of energy developed by Japanese scientists. As per information on the official cite of the Emirates Center for Strategic Studies and Research (2015), such trend is considered to be the most important for the UAE in the next several years. Christopher Davidson (2010) in his book stated the idea that the further strengthening of the links between the countries could be based on establishment of "heavy, non-hydrocarbon related export industries" (Davidson, 2010). As it was mentioned above, the negotiations concerning the close cooperation between two countries on the development of technologies, which work on the renewable sources of energy, emerged after the disaster on the Fukushima nuclear power plant. The accident caused the situation when Japan's demand on source of energy (crude oil provided by the UAE) dramatically increased, as the country lost an ability to obtain necessary amount of power from the plant and required additional resources for the reconstruction after the earthquake and tsunami. That is why, the government of Japan came forward to the UAE with the initiative to finance the projects related to the use of the renewable sources of energy by the Japan Bank for International Cooperation (Yee, 2014). Such proposition was attractive to the government of the UAE, as it is recognized the necessity of the environment friendly technologies development and promotion of the cooperation with one of its biggest partners. Additionally, such proposition provided several advantages to Japan. According its terms, both countries agreed to double Japanese strategic crude stockpile. Moreover, friendly technologies will lower the consumption of the crude oil by the citizens and companies of the UAE. Hence, more oil could be exported for the needs of Japan.

Limited time offer 15% OFF your first order

Moreover, Japan financed other environment friendly initiatives in the UAE. At present moment, Japanese scientists are working on the "state-of-art technologies" in such areas as capture and storage of carbon emissions and generation of photovoltaic power (Smith, 2010). The current solutions can be used for the improvement of the oil recovery effectiveness. Hence, the Arabian oil producers are very interested in them. The example of such projects is the development and building of the photovoltaic generation power station by Abu Dhabi Oil Refining Company with the support of Japanese enterprises in 2012 (Showsa Schell, 2012). The project is based on the cooperation between scientists of two countries and the interchange of technological knowledge and solutions. Japanese government took part in this project as it is interested in the increasing of the production capacity of the UAE and growth of the export from the country (Showsa Schell, 2012). Such solution will help decrease the domestic use of the crude oil by the United Arab Emirates, because innovative solar panels would generate the power more effectively. Moreover, both Japanese and Arabian companies studied the possibility to install such batteries on the refinery plants (Showsa Schell, 2012).

However, the major stimulus of the further development of the relationships between two countries is the negotiations concerning the development of a free-trade agreement between Japan and the United Arab Emirates (Smith, 2010). It is expected that such agreement would enhance the trade in various economic sectors of the countries and promote the joint foreign direct investments.

In conclusion, it should be noted that the current work provides the overview of the diplomatic and economic relationships between the UAE and Japan. They started from the official recognition of the independence of the Emirates and developed through close trade between the countries. The Japan is interested in purchasing of LNG, aluminum and petroleum from Emirates, while the UAE needs Japanese machinery, automobiles, and electric products. The trade is stipulated by signing of numerous agreements, which help avoid double taxation and improve business cooperation. Moreover, the Japanese government provides the scientific and financial support to the UAE for the development of technologies which use renewable sources of energy and improvement of the crude oil production efficiency. The further development of the relationships can be directed on the development of free-trade zone.

Contact Us