Economic security bill to focus on supply chains, infrastructure, patents, tech

An economic security bill the government plans to submit to the Diet session next year will have four key points, sources told The Yomiuri Shimbun.

The four pillars are: making supply chains more resilient, maintaining the functionality of key infrastructure, protecting patents and bolstering the country’s technology base.

As the United States and China battle for supremacy in the economic and technology spheres, the bill will promote the development of domestic systems for economic security, including mechanisms to secure semiconductors, protect confidential information and prevent the outflow of technology overseas.

According to sources in the government and ruling parties, the bill is expected to specify a support system to strengthen the domestic production of semiconductors and other products in a bid to strengthen the supply network.

To avoid disruptions to the domestic supply of semiconductors and other products, the government will provide subsidies for constructing factories to attract foreign companies and encourage Japanese firms to bring production back home.

Semiconductors are indispensable for many products including personal computers and automobiles, but Japan relies on imports from Taiwan, China and other countries for over 60% of domestic demand.

The coronavirus pandemic has caused a shortage of semiconductors due to disruptions in the supply chain, and Japan’s automakers have been forced to reduce production.

To maintain the functionality of core infrastructure, the government is planning to institute a system in which businesses in the telecommunications, energy and financial sectors will be required to have critical equipment prescreened by the government to ensure firms do not introduce foreign products or systems that could pose a security threat.

The government has its eye on eliminating products made in China that could affect the stable operation of infrastructure.

According to a senior official at the Economy, Trade and Industry Ministry, the existing laws regulating each industry are insufficient for eliminating security threats.

Strengthening patent protections is aimed at preventing the outflow of advanced technology that can be used for developing next-generation weapons. In Japan’s current patent system, applications are made public after a certain period of time. The government is considering not making the contents of some applications public in the future and establishing a mechanism to pay compensation to such patent applicants.

To bolster the technology base, the government will consider establishing a framework to provide information and funding for research and development of advanced technologies, such as artificial intelligence.

The government is also hoping that technology developed in the private sector will be used for defense purposes in the future.

The government is scheduled to hold the first meeting of a ministerial council on economic security affairs on Friday, headed by Prime Minister Fumio Kishida. The prime minister is also considering establishing an expert panel to accelerate work on the bill.