Disclaimer: This post reflects solely the opinion of the authors and should not be taken to represent the general views of IPPR’s management/ editorial team or those of fellow authors
For the last several years, the world has experienced harsh economic disruptions attributedlargely to the COVID-19 pandemic, the Russian invasion of Ukraine, and the US-China trade
war. Tackling such uncertainties – for example, semiconductor shortage; vaccine procurement;
and soaring oil prices – world leaders started to recognize ‘economic security’ as one of the
priority agendas for policymaking.
Japan and Economic SecurityJapan is one of the advancing states in terms of the construction of systems to address economicsecurity issues. In October 2021, Prime Minister Kishida newly created a ministerial post whichis specifically dedicated to economic security issues. By most accounts, this initiative madeJapan the first country to have such a specialized position in the world. The very first Minister ofEconomic Security, Takayuki Kobayashi concisely explained in the interview hosted by IISS(International Institute for Strategic Studies) that the concept of ‘economic security’ (oftenreferred to as ‘(economic) resilience’ or ‘economic statecraft’) is about “how we can ensure thenational interests from the economic perspective.” He described national interests as sovereign
independence; protection of lives of national citizens; and fundamental values and rules.
On 11 th May this year, Japan’s Diet passed the Economic Security Promotion Bill to safeguardtechnologies and beef up critical supply chains. In doing so, it is expected to enhance its abilityto navigate the increasing geopolitical concerns in the Indo-Pacific region and beyond. The newmechanism set out four pillars – two supporting and the two regulatory measures – that are (1)resilient supply chains; (2) research and development of technology; (3) safe and reliable
infrastructure; and (4) an undisclosed patent system.
Minister Kobayashi underlined in the said interview his three priorities, namely, autonomy,
superiority, and essentiality. It is to say, to ensure autonomy by recognizing its own
vulnerabilities, to gain superiority over other states by overcoming those weaknesses, and then tobecome essential to the international community. He is firmly convinced that such efforts would
eventually enhance Japan’s presence and ownership in forming international orders and rules.
The enactment was only the first step toward achieving economic resilience. The Governmentintends to draw up a series of concrete policies and rules within the next two years. For the timebeing, the major concerns often discussed are related to the scope of the critical commodities,
and the burden on the private sector.
Critical CommoditiesThe new Economic Security Act outlines that the Government is to designate specific goods thatare either essential or lives of citizens are heavily dependent on. The list will supposedly includecommodities such as semiconductors , medicine, battery, mineral resources, hydrogen, and cloud
edge computing. However, the whole picture is yet to be revealed.
One of the key industries might be aerospace and defense (A&D). Japan’s PM’s officerecognizes the cyber and outer space as emerging domains of warfare, and pledges to thoroughlystrengthen its capabilities to respond to the threats in these areas. Although aviation is consideredas one of the fourteen fundamental infrastructures specified in the Bill, the demarcation of spaceand defense industries are still vague. On the other hand, as seen in the series of crises that theworld has been witnessing for the last several years, basic medical supplies (face masks, personal
protective equipment (PPE)) and food can become unexpectedly scarce. It is important that the
Government reviews frequently and amends flexibly the list of critical commodities when
needed.
The burden on the Private SectorTighter governmental intervention in companies’ economic activities can cause limitations andloss in their business. It is not always simple to balance between national security and economicprosperity. In this context, experts urge the Government to pursue diversification of investment,supply chains, and imports of crucial goods. Furthermore, public and private partnerships (PPPs)in research and development is expected to create economic growth. The Government shouldelaborate robust support measures to facilitate the private sector’s activities while minimizing the
adverse effects.
International CooperationIncreasing economic resilience is not always about reshoring in order to be immune to externalshocks. It is rather a question of balance between domestic production; value-oriented ally-shoring; and production in other countries. The protectionist approach to remove all the
production lines abroad and/or cut off the international partnership does not seem realistic.
During the US President Biden’s official visit to Japan between 22 and 24 May, he had abilateral meeting with PM Kishida as well as the Quad (Quadrilateral Security Dialogue)Summit, which comprises of Australia, India, Japan, and the US. The joint statement releasedfollowing the US-Japan conference sees economic security as one of the pivotal agendas. In the
dedicated section titled “Achieving More Resilient, Sustainable and Inclusive Economic
Growth,” the two leaders agreed to seek for further cooperation to bolster economic securitywhile mentioning the Japanese Economic Security Promotion Bill. On the other hand, accordingto the Quad Joint Statement, the four countries’ cooperation is specifically targeting supply
chains of semiconductors and other critical technologies.
Concluding RemarksTo maintain its enforceability, violation of the Economic Security Promotion Bill such asleakage of information on undisclosed patent is subject to punishment. Similarly, an increase ofgovernment control over economic activities can pose daunting challenges to the private sector.The Japanese Government will need to strive to alleviate such concerns of the private sector andoffer ample support to incentivize their collaboration. It is also important to seek possibilities of
extended cooperation with partners abroad.
By Ayumi Koide,
Ayumi is currently studying MSc Security Studies of Department of Political Science at University College London (UCL). She is interested in politics, IR, and international security.
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