The Market is not Enough

Japan remains firmly committed to the principles of a free and open economy. However, as the international landscape becomes increasingly complex and socio-economic conditions evolve rapidly, it is essential to identify potential risks and take proactive measures. For certain aspects of economic security, government intervention – whether through support or regulation – is essential, as market mechanisms alone cannot address all challenges. In the current geopolitical climate, cooperation between Japan and Germany within a framework of economic security is essential to ensure a free and fair international economic order.

Technological advances, digitalisation and globalisation have profoundly changed socio-economic structures and added an economic dimension to the concept of security. Emerging threats, including supply chain vulnerabilities, cyber attacks on critical infrastructure, and the race for technological dominance, have become central to national security concerns. Left unaddressed, these challenges threaten to destabilise countries and undermine the security of their populations.

In response, Japan enacted the Economic Security Promotion Act in May 2022, which focuses on four strategic priorities. First, ensuring the supply of critical products. Japan needs to ensure a stable supply of essential products such as semiconductors and batteries. To this end, the government has established a subsidy fund of over ¥2 trillion to support private sector initiatives in these areas.

Second, the protection of critical infrastructure. We must ensure that the equipment and services we use do not threaten the stability of our critical systems. Third, promoting the development of key technologies. Japan is actively promoting research and development in security-related technology fields through a special funding mechanism and a public-private cooperation body. Fourth, restricting the publication of patent applications that could jeopardise national security.

Building on these efforts, Japan passed the „Critical Economic Security Information Protection and Utilisation Act“ in May 2024. This legislation aims to improve the protection and secure exchange of sensitive economic information, especially with allies and like-minded nations such as Germany. As Minister for Economic Security, my goal is to establish robust operational standards and promote information security awareness among foreign governments and companies, thereby deepening cooperation with our international partners.

In recent years, we have seen increasing attempts by states to influence political decisions in other countries through export restrictions and economic pressure.

A notable example occurred in September 2010, when a Chinese fishing vessel operating illegally in Japanese territorial waters near the Senkaku Islands collided with a Japanese Coast Guard patrol vessel. The captain was arrested. While China denied any connection, China subsequently delayed customs clearance for rare earth exports. In March 2012, Japan, the US and the EU jointly filed a complaint with the WTO over China’s gradual reduction of rare earth export quotas since 2006. The WTO Appellate Body ruled in 2014 that China’s export restrictions violated WTO rules. These incidents underscore the need to work closely with allies and like-minded nations to enable economic security.

I am committed to using my extensive diplomatic experience with Germany to strengthen and expand our cooperation on economic security.