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Japanese gov’t to conduct detailed examination of economic security risks

The government will start in FY2022 a detailed examination to identify vulnerabilities in supply chains for important items in such areas as advanced technology and healthcare. Items in the Ministry of Finance’s  trade statistics will be subdivided and analyzed for their degree of dependence on foreign countries. The purpose of the examination is to identify areas that depend on imports from specific countries to enable discussions of countermeasures. The government is being pressed to determine the status of important items that are difficult to find substitutes for in order to reduce economic security risks.

 

Hearings with companies to confirm the status of their supply networks will be necessary for goods not currently classified in trade statistics. The Ministry of Economy, Trade and Industry is conducting hearings with companies to identify items that rely on imports from Russia in response to the tense situation in Ukraine.

 

It is possible to determine the import status of essential goods in real time by setting detailed classifications in trade statistics. The World Customs Organization (WCO) defines the common classification of trade statistics for each country, and each country can subdivide it independently. In Japan, subdivisions can be added by a Ministry of Finance notification. According to the ministry, there are more than 5,000 items common to all countries, and about 4,000 items unique to Japan.

 

“Strengthening supply chains” is one of the key pillars of the government’s economic security promotion bill to be approved in the Diet. The bill will create a mechanism to support the production of items designated as “specified important goods” for which support is needed to ensure a stable supply. Although the bill assumes that such items as semiconductors, pharmaceuticals, high-capacity batteries will be designated, and rare earths, a detailed analysis of the situation will be necessary. (Abridged)

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