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As the international order becomes more fluid, Japanese companies are facing an increasing number of uncertainties in their overseas operations. It is important for the government to exercise its diplomatic power to actively support companies.
Foreign Minister Yoko Kamikawa recently announced that the government intends to strengthen the structure of Japanese embassies and consulates general, as well as other overseas diplomatic establishments. “We will identify the needs of the business community and organically link them to our economic diplomacy strategy,” Kamikawa said in a speech at the Japan Business Federation (Keidanren).
Specifically, core diplomatic establishments in Asia and Europe will have the new post of an officer in charge of interregional economic matters. Officers in this envisaged post will respond to consultations from Japanese companies engaged in business in multiple countries about possible investments in third countries and provide them with various information.
Japanese diplomatic establishments abroad have had officers in charge of economic affairs, but it has been difficult for them to engage in consultations on economic activities across regions.
For example, major automaker Suzuki Motor Corp. exports vehicles manufactured at its production base in India to Africa and other regions. The new post will be responsible for communicating with diplomatic establishments in export destinations and providing necessary information.
When expanding their business into other regions, it will certainly be reassuring for companies if they can rely on diplomatic establishment staff familiar with the local situation and legal system. Utilizing embassies and other networks is also expected to be effective in building personal connections with governments and firms in third countries.
If jobs are created locally, it will contribute to the economy of the partner country. Doing so would also help enhance Japan’s diplomatic power.
To counter economic coercion in which a country uses its economic strength to put pressure on other nations, Kamikawa has also made it clear that Japanese diplomatic establishments can handle consultations from companies on any relevant cases. Her remarks are believed to have been made with China in mind as Beijing restricts trade whenever a political issue arises.
In 2010, China limited exports of rare earths following a collision involving a Chinese fishing boat off the Senkaku Islands. In 2020, it imposed import restrictions on Australian wine and other products over an investigation into the source of the COVID-19 outbreak.
To halt economic coercion, it is important to gather information on the precise nature of the on-site situation and the impact it is having. If China is clearly at fault, the matter should be rectified in accordance with international procedures.
In addition to the Foreign Ministry, Japanese diplomatic establishments overseas have staff on loan from entities including the Economy, Trade and Industry Ministry and the Agriculture, Forestry and Fisheries Ministry. However, it has been said that there are adverse effects as a result of administrative sectionalism.
From the perspective of economic security, it has become increasingly necessary in recent years for the government and companies to work together to strengthen supply chains and secure critical minerals. It is hoped that ministries and agencies will share information and implement measures that stretch across the boundaries between them.
