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Japan should consider U.S. thinking on economic security

  • January 12, 2022
  • , Nikkei , p. 25
  • JMH Translation

By “Kogoro”


Economic security will be one of the issues discussed during the ordinary Diet session that convenes on Jan. 17. The emphasis will be on building a network to contain China together with the United States, Japan’s ally. Even though the Biden administration is generally considered to be liberal, its stance toward China is actually more hardline than that of the previous Trump administration.


President Donald Trump came into power in 2017 and took the world by storm with his “America First” policies. His administration tightened export controls under the banner of national security and enacted the Export Control Reform Act in 2018. Under the act, companies exporting products containing U.S.-manufactured parts to China and elsewhere are required to obtain the approval of the Department of Commerce. The regulation applies to products not made in America as well as those made in America if they contain parts manufactured in the United States.  


In Japan’s semiconductor-related industries, corporations that export products containing U.S. technologies are also required to apply for the Department of Commerce’s approval. According to Pictet Asset Management, Japan’s semiconductor exports to China and Hong Kong declined in 2019 and 2020 from previous years.


Some Japanese firms’ applications have been rejected by the Department of Commerce. The firms have refrained from appealing the decisions, however, fearing retaliation from the U.S. government. The impact of the U.S. law turned out be so significant that in November 2020, before China’s export control law went into effect, the Ministry of Economy, Trade and Industry issued a statement saying: “There is absolutely no need for [the corporations] to be unnecessarily discouraged from exporting products by partner nations’ export control laws.”


But the most surprising outcome of the U.S. export control law was that the United States greatly increased its share of semiconductor exports to China and Hong Kong by replacing those of Japanese corporations. U.S. companies’ exports of semiconductor memory, which Japan has expertise in, also grew significantly.


Those who are familiar with U.S. business and government practices likely recognize that this came about as a result of private and public efforts to pursue “America First” objectives by integrating the security and trade issues.


It is telling that Japan’s Kioxia, a major semiconductor manufacturer preparing to list itself on the Tokyo Stock Exchange, is reportedly having a hard time obtaining permission to export its products to China, while its U.S. rival Western Digital prepares to purchase the company.


Some Japanese politicians are passionately advocating working with the United States, Japan’s ally, to build a network designed to contain China. These politicians even call for a revival of Japan-brand semiconductors. Are they aware of what is really going on?


There is little doubt that Japan’s security is dependent on its alliance with the United States. But the administration of Kishida Fumio, the first prime minister in 30 years from the Kochi-kai faction that prides itself on being the true successor of LDP conservative wing emphasizing the economy over the military, should avoid tunnel vision and look at the big picture so it can protect Japan’s national interests by walking the narrow path between security and free trade .

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