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Kishida’s plans for economic security break from tradition

Prime Minister Fumio Kishida’s proposed legislation on economic security will focus on securing stable supplies of important parts and materials, guarding against undue dependence on foreign products and preventing leaks concerning Japanese technological innovations.

 

But changing the traditional thinking of government bureaucrats will be among the toughest tasks facing the prime minister in getting the legislation passed.

 

The Kishida Cabinet hopes to submit the bills in the ordinary Diet session to be convened early next year.

 

A meeting of relevant ministers will be held on Nov. 19 to begin discussing the legislation. A new section will be set up in the Cabinet Secretariat that will bring together bureaucrats from a range of ministries to hammer out details of the proposal.

 

A broad outline of the proposal includes four main areas: the supply chain; key infrastructure; technological foundation; and not disclosing patents for sensitive technological areas.

 

The legislation will include a subsidy program to strengthen domestic production of designated items to ensure steady supplies of important materials, such as rare earth metals, and parts, including semiconductors and large-capacity batteries.

 

A Cabinet order will later be issued to define what materials and parts are considered important enough to be covered by the law.

 

The second broad area of protecting key infrastructure will cover, for example, communications networks and energy facilities.

 

Sources said a major element of that proposal is that the government will assess whether products and equipment from nations considered a national security threat can be included in plans for such new infrastructure.

 

China would be among the nations targeted.

 

Among the companies to be covered by those provisions are major electric power companies, megabanks, airlines and large mobile phone carriers.

 

The proposal will also include financial support from the government for research and development in areas deemed important advanced technology fields.

 

Companies involved in such work will also be given access to pertinent information held by the government.

 

The provision regarding patent applications is intended to prevent leaks of sensitive information that could affect national security.

 

Such information would not be disclosed after a patent application is submitted.

 

Other provisions would secure the status of the patent holder and establish a system to compensate those who lose benefits because sensitive information has been leaked.

 

Kishida, who considers economic security a key policy area for his administration, picked Takayuki Kobayashi for the newly established post of state minister in charge of economic security.

 

But the concept of economic security applied to the global arena is a relatively new idea for a number of government officials.

 

For example, under free economic principles, it is highly unusual for the government to designate specific materials and parts as important and provide subsidies to help produce them.

 

Similarly, not revealing sensitive information contained in patent applications goes against traditional practice.

 

According to sources in the government and ruling coalition, officials with the Cabinet Legislation Bureau have asked for an explanation on why the proposed legislation is needed.

 

“The legislation will contain concepts never seen before, so there will be a need to seek understanding in a careful manner,” a high-ranking official in the prime minister’s office said.

 

Concerns have already been raised from the business sector, especially among companies with close ties to China.

 

One government source admitted that the proposed legislation could be used as a tool to decouple the economy from China.

 

China is Japan’s largest trading partner and accounted for about 25 percent of Japan’s imports in 2020.

 

Masakazu Tokura, chairman of Keidanren (Japan Business Federation), and Koichi Hagiuda, the economy minister, discussed economic security on Nov. 15.

 

After the meeting, Tokura met with reporters and while he admitted that sensitive technological information had leaked from Japan in recent years, he also said that “(the legislation) should not greatly restrict economic activity in the private sector.”

 

(This article was compiled from reports by Ryo Aibara, Taro Ono and Hiroki Ito.)

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