Guidelines drafted on designated critical materials ‘essential for people’s survival’

The Yomiuri Shimbun

6:00 JST, July 15, 2022

The government has drafted basic guidelines with a view toward ensuring the stable supply of designated critical materials such as semiconductors.

The draft unveiled Wednesday sets four requirements for materials to be designated as critical.

The first criteria is that the material is “essential for the survival of the people.” The others are that its supply is dominated by a specific country, making it overly dependent on external sources; supply disruptions are possible due to suspension of exports and other reasons; and supply of the material is deemed particularly necessary given past supply disruptions.

The economic security promotion law stipulates that the government has the right to inspect the inventories of companies responsible for the supply of designated critical materials. Because penalties will be imposed on companies if they do not comply with the inspection, only materials that meet all four requirements will be subject to inspection.

The draft is meant to include semiconductors, pharmaceuticals and rare earths. It states the designation will be promptly canceled in the event that an item no longer meets all requirements.

The government also unveiled Wednesday a basic policy for promoting economic security.

In the draft, compatibility between government measures and free economic activities is regarded as necessary. At times, it states, the government must become more involved in both support and regulation, rather than leaving matters overly to the market and competition.

The “establishment and strengthening of a system for comprehensive and effective promotion” of economic security under the direction of the National Security Council is also included in the draft.