Japan hosts Ukraine reconstruction meeting, pledges new tax treaty

Japan hosted Ukrainian Prime Minister Denys Shmyhal on Monday in Tokyo to discuss the reconstruction of Ukraine, pledging a new bilateral tax treaty and other support for Japanese businesses as the Ukraine war rages on.

"Japan has stood with and continues to stand with Ukraine," Japan's Prime Minister Fumio Kishida said in a speech opening the talks, during which he announced a new bilateral tax treaty and the start of negotiations for an investment treaty without giving details.

As Russia's invasion of Ukraine enters its third year, Japan has pledged more than $10 billion worth of financial aid, as it seeks to show solidarity with Kyiv's war effort. It cannot provide direct military support because the export of lethal weapons is forbidden.

Japan partially eased its arms export rules in December, the first such overhaul in almost a decade, but still has restrictions on shipping weapons to countries at war.

Shmyhal said through a translator that the meeting heralds a new chapter in Japan-Ukraine relations, adding that Ukrainians will never forget Japan's support.

He said that he hoped to see major carmakers, including Toyota 7203.T, create production facilities in Ukraine.

The meeting follows months of wrangling in the United States over a $95.34 billion military aid package for Ukraine and others, with President Joe Biden pushing for its passage amid opposition from Republican hardliners.

"We managed quite well despite that the only partners which were with us was Japan," Serhii Marchenko, Ukraine's Minister of Finance, said at the news conference, referring to Ukraine's current budget situation.

At the reconstruction meeting, Kishida said Japan would support venture capital companies in Ukraine, pledged an easing of visa controls, and said government agency JETRO would open a new office in Kyiv.

About 50 Japanese companies signed deals with Ukrainian counterparts at the conference, in areas including agriculture, energy, and infrastructure. The total value of the deals was not disclosed.

Kishida and Shmyhal "confirmed the importance to consolidate the international support for Ukraine" by highlighting the deliverables of the meeting, in preparation for the Ukraine Recovery Conference in Germany in June, according to a joint communique issued after the meeting.