While the Japanese media were occupied by the Russian invasion of Ukraine, Japan’s economic security bill passed without strong opposition in the Diet in May 2022. Reflecting increasing concerns about China’s trade obstructionism and economic espionage, the bill outlines measures to defend Japanese supply chains, infrastructure and leading technology. But the new security policy will have uncertain effects on Japanese security and business.
Focussing on four areas of economic security — supply chains, basic infrastructure, leading technology and patent publication for sensitive technologies — the law enables the national government to intervene in Japanese companies’ dealings with foreign companies.
The law encourages Japanese companies to diversify supply chains with critical materials, while the government provides funds for diversification if companies meet certain conditions. If the procurement and supply of basic infrastructure have the potential to facilitate foreign obstruction, the government identifies the sector and orders it to provide a pre-made procurement or supply-planning plan to ensure the safety of their infrastructure. The law lists 14 sectors, including electricity, water supply and information technology, as candidates to become ‘specified social infrastructure businesses’.
For the protection and promotion of leading Japanese technology, the law requires the national government to create a technology council — composed of government officers, experts and think tanks — and to commission research to think tanks. The government can suspend the publication of a patent if the product is found to be security-sensitive technology.
While the business sector expressed concerns about the new regulation, the only clear objection came from the Japan Communist Party. Other political parties generally agreed to the bill. A nationalistic conservative group of the Liberal Democratic Party supported the bill to counter China, asserting the importance of creating strong national security institutions. Moderate conservatives also supported the bill, arguing that …continue reading