Japan set to enact economic security law amid concerns over Russia and China

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The Lower House on Thursday passed a bill aimed at promoting economic security, putting it on track to be signed into law during the current parliamentary session as the country faces growing geopolitical risks associated with Russia and the China.

The bill calls for the strengthening of supply chains to secure stable supplies of semiconductors and other vital products and stipulates measures to prevent the leakage of information in the fields of nuclear energy and defense .

With the new law, Japan seeks to be in step with the United States and European countries, which are more advanced in promoting economic security, as the rise of China has intensified global technological competition. The security environment is also rapidly changing amid Russia’s invasion of Ukraine.

The bill was passed by the House of Representatives with the support of the ruling Liberal Democratic Party and its coalition partner, the Komeito, as well as opposition parties, including the Democratic Constitutional Party of Japan. It must now be voted on in the House of Councillors.

Under the proposed law, the government will designate goods such as chips, pharmaceuticals and rare minerals as critical items to be closely monitored and for which it will financially support suppliers to help them procure them on a stable basis. .

The government will also facilitate the development of artificial intelligence and other advanced technologies through public-private cooperation by providing information and funding.

In telecommunications and transport, the government will control the equipment that operators plan to install to mitigate vulnerability to cyberattacks and prevent the use of parts from abroad that could pose security threats.

New rules will be introduced to keep certain patents related to sensitive technologies secret.

As there are fears that excessive government involvement in the private economy will hamper business operations, the government will have to act with caution.

After the main opposition party, the CDP, raised concerns, the ruling coalition added a non-binding resolution to the bill stating that independence of business activities must be respected.

In March, the Japan Business Federation, also known as Keidanren, along with the Japan Chamber of Commerce and Industry and the Kansai Economic Federation, called on the government to reduce the burden on businesses during implementation of the proposed economic security law.

The resolution also called for the review of sanctions for companies that refuse government investigations into supply chains, mirroring a request from the opposition Nippon Ishin no Kai party.

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