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NSC economic division should protect and develop Japanese technology: ex-gov’t official

  • May 20, 2020
  • , Yomiuri , p. 4
  • JMH Translation

[The following is an interview with Doshisha University Visiting Professor Nobukatsu Kanehara, who served as assistant chief cabinet secretary in charge of foreign policy in the second Abe cabinet and deputy secretary-general of the National Security Secretariat until 2019.]


Q: What led to the creation of an economic division at the National Security Secretariat (NSS)?


Kanehara: Two years ago when I was deputy secretary-general of the NSS, the administrative arm of the National Security Council (NSC), a senior official of the Ministry of Economy, Trade and Industry came to me and impressed upon me the need for Japan to follow the U.S. in tightening export controls on cutting-edge technologies.


METI’s trade control division was sensitive to the actions taken by the U.S. because of the 1987 violation of export restrictions imposed by the Coordinating Committee for Multilateral Export Controls (CoCom) involving Toshiba Machine.


Q: Did the creation of the economic division go smoothly?


Kanehara: First, METI proposed toughening investment regulations in the Foreign Exchange and Foreign Trade Law (forex law). This was because it was legally possible for any foreign firm, including Chinese ones, to gain access to Japan’s sensitive technologies through corporate buyouts. The Ministry of Finance oversees matters pertaining to investment controls, but it had no internal division responsible for assessing which technologies were of critical importance to national security if they were owned by entities not under its jurisdiction.


We sought the cooperation of the Ministry of Internal Affairs and Communications, which oversees telecommunication networks; the Ministry of Health, Labor and Welfare, which oversees pharmaceuticals; and other relevant ministries and agencies. But since there was no central control tower, no one was in the position to take responsibility.


Back then relevant ministries and agencies were informed in advance about foreign entities’ acquisition of ownership stakes of 10% or more in Japanese firms. Other than METI, though, none of them were examining whether the technologies held by industries under their jurisdiction were of critical importance to national security. I thought that even if the forex law were revised to toughen the ownership restriction to 1%, the change would not function if no action were taken.


The NSC was not adequately equipped to address this challenge as it did not have enough staff from economic agencies. For this reason, I asked the office of the assistant chief cabinet secretaries, which is also part of the Cabinet Secretariat, for cooperation in examining [technologies important to national security] with people from economic agencies. Through this process, there was much talk of the need to create an economic division at the NSC capable of overseeing economic policies from the perspective of national security.


Q: What role do you expect the economic division to play?


Kanehara: In the U.S., the Committee on Foreign Investment in the United States (CFIUS) reviews information from various ministries and agencies to assess whether foreign investments into American firms endanger national security. The process also involves intelligence units.


The economic division inside Japan’s NSC is also staffed by personnel from the National Police Agency. Cooperation from all ministries, including intelligence departments, is essential to protect technologies that are of economic importance to national security.


In addition to the protection of technologies, the economic division should also be involved in “developing” technologies. Japan’s academic communities are granted 4 trillion yen from national budget allocated for science and technology research, but such institutes as the Science Council of Japan are not very interested in taking developed technologies and putting them into practical use. Since the research is funded by taxpayer money, it needs to serve the public interest. It is very important to build a mechanism to direct research money into national defense, disaster prevention, epidemic control, and other areas that the government finds essential.


Defense technologies are important as they protect the lives of Self-Defense Forces personnel in times of contingency. Companies are not enthusiastic about developing them due to concern that the business may “tarnish their corporate image.” Japan’s defense technological capability will not be strengthened if Japan does not export more defense equipment. Cooperation between government, industry, and academia should be enhanced further.


Q: How should Japan deal with the struggle between the U.S. and China for hegemony in technology?


Kanehara: Since the end of the Obama administration, momentum has accelerated toward the decoupling of U.S.-China relations. The U.S. business community was initially pro-China, but it has become skeptical of China’s handling of intellectual property protection. Now that the U.S. trade deficit with China is growing, the American business community is toughening its stance against China.


Meanwhile, the Japanese business community is opposed to the harsher investment controls in the revised forex law. If U.S.-China tensions intensify down the road, Japanese businesses will be forced to choose U.S. or China. During the Cold War era, Japanese industry did not need to consider Japan-Soviet economic ties. With the arrival of a new cold war between the U.S. and China, however, it will have to make a decision on balancing national security and their businesses.


Former U.S. Vice President Joe Biden is a strategist. Even if President Trump were to lose the November presidential election and Biden became the next president, the U.S. will not revert to the pro-China course that it advocated a decade ago.

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