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Economy & Tech

US and Japan Focus On Supply Chain Coordination 

The United States and Japan held their second Economic 2+2 meeting while continuing to evaluate technology-related supply chain cooperation amid challenges.

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METI Minister Yasutoshi Nishimura, Foreign Minister Yoko Kamikawa, Secretary of State Antony Blinken and Secretary of Commerce Gina Raimundo anchored the Japan-US Economic 2+2 meeting in San Francisco on November 14. (Photo provided by the Ministry of Foreign Affairs)

Throughout November, senior Japanese officials from the Ministry of Foreign Affairs and Ministry of Economy, Trade and Industry (METI) met with their American counterparts from the Department of State and Department of Commerce to discuss emerging technology and semiconductor supply chain issues. 

Importantly, officials met in the United States for the Second Japan-US Economic Policy Consultative Committee (EPCC). Their meeting took place on the sidelines of the leader-level meeting on Asia-Pacific Economic Co-Operation (APEC) in San Francisco. They addressed these issues and identified potential opportunities for longer-term cooperation between Tokyo and Washington.

United States-Japan Economic Policy Consultative Committee Reconvenes 

Japanese Prime Minister Fumio Kishida visited the United States to Meet with President Joe Biden in May 2022. Shortly thereafter, Japan and the US established the ministerial-level Japan-United States Economic Policy Consultative Committee (EPCC). Its purpose was to help guide Japanese and American coordination efforts on emerging technology and leading-edge supply chain issues. 

Now commonly known as the "Economic 2+2" dialogue, the EPCC serves as one of the key coordinators for broader efforts between Japan and the US. Among them are Japan-based 2-nanometer chip facilities. On November 14, US Secretary of State Antony Blinken and Secretary of Commerce Gina Raimondo met with Japan's Minister for Foreign Affairs Yoko Kamikawa and Minister of Economy, Trade and Industry Yasutoshi Nishimura for the second meeting of the ministerial-level EPCC. That meeting took place on the sidelines of the APEC meeting in San Francisco, California. 

METI Minister Yasutoshi Nishimura, Foreign Minister Yoko Kamikawa, and others attending the Japan-US "Economic 2+2" ministerial meeting with their US counterparts on November 14. (Photo provided by the Ministry of Foreign Affairs)

Delving Into Substance

According to official readouts of the meeting, the American and Japanese ministers discussed several important US-Japan technology and supply chain topics. These included but were not limited to, cooperation to enhance supply chain resilience, address economic coercion, and coordinate promotion of various critical and emerging technologies. 

Both sides also discussed their efforts to use the Biden administration's Indo-Pacific Economic Framework for Prosperity (IPEF) to drive regional coordination on these issues. IPEF has been criticized as a "watered down" agreement by those supporting more global free trade agreements. It has also faced increasing domestic opposition in the United States from both Republicans including former President Donald Trump and Congressional Democrats. There are concerns about the negative impacts it may have on American workers and industry, similar to the failed Trans-Pacific Partnership (TPP). 

The Biden administration suspended negotiations on digital trade aspects of IPEF before the APEC summit. It will likely encounter more opposition as the 2024 presidential election draws near. 

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Building housing Nidec's Semiconductor Solution Center in Kawasaki City. (© Sankei)

Specific Economic 2+2 Efforts

The official Joint Statement from November's EPCC recognized that building resilient and sustainable supply chains to promote reliable and strategic goods is a key priority for broader US-Japan relations. It also addressed the critical nature of personal data protection and privacy issues. 

Furthermore, it committed to working on these issues through the Japan-US Commercial and Industrial Partnership (JUCIP). That is a ministerial-level dialogue between the US Department of Commerce and METI. As expected, economic resilience and the production of critical and emerging technologies shaped much of these discussions. 

On semiconductor technologies, both sides pledged to continue to consult each other on semiconductor supply and demand trends. These efforts will include working off of the Joint Task Force on the Development of Next-Generation Semiconductors to cooperate on research and development roadmaps through the newly established US National Semiconductor Technology Center (NSTC) and Japan's Leading-Edge Semiconductor Technology Center (LSTC). 

The leaders of Commerce and METI also agreed to collaborate more on artificial intelligence (AI) issues with other partners in international settings. That includes the Japan-led G7 Hiroshima AI Process. These discussions come as Japan has taken a more hands-off approach to direct AI sectoral regulation

Meanwhile, the Biden Administration released a new Executive Order on Artificial Intelligence that has faced criticisms from private industry for potentially hampering innovation. Policy experts have also criticized it for moving without a clear understanding of potential use cases in agencies or assessments of AI's impact on the regulatory regime. 

American and Japanese leaders also discussed agency-level cooperation between Japan's Information-technology Promotion Agency and the National Institute of Standards and Technology (NIST). Cooperation here would include expanding the availability of cutting-edge semiconductor technologies necessary for AI development as a part of broader EPCC discussions. 

In Jakarta, Indonesia, on September 6, 2023. (©REUTERS/Willy Kurniawan/Pool)

Japan's Regional Considerations

The latest meeting between US and Japanese officials at APEC comes at a time when Japan is facing pressure to navigate a difficult regional landscape. In it, the Association of Southeast Asian Nations (ASEAN) member states and other countries are trying to navigate their economic relationships with both Japan and China. 

As a result, Japan's engagement on S&T issues is not limited to bilateral engagement with the United States. On November 17, Prime Minister Kishida met with South Korean President Yoon Suk Yeol at Stanford University. They discussed emerging technology, quantum computing, energy supply chains, and other issues in a rare meeting. The meeting is notable as Biden administration-led "Chip 4" discussions involving Japanese and South Korea have failed to materialize. 

In his remarks at the meeting, Prime Minister Kishida said that multi-layered exchange is necessary for innovation to develop on key technologies including semiconductors, quantum computing, and generative artificial intelligence. Kishida also met with Chinese President Xi Jinping on the sidelines of APEC. Official reports of that meeting say it did not focus on technology policy. It has also been criticized for a lack of tangible developments for Tokyo. 

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Following the APEC summit, Japanese, South Korean, and Chinese foreign ministers met on November 26 in Busan, South Korea. There they announced an agreement for a leader-level summit between Prime Minister Kishida, President Yoon, and President Xi. That meeting will take place at some undecided point in the near future.

Looking Ahead

As Japan's G7 Presidency comes to a close at the end of the calendar year, Japan may have less ability to shape AI policy development through international organizations. As a result, Tokyo and Washington will likely look for opportunities to stay engaged on emerging technology issues. In this bilateral context, it may be easier to accomplish targeted policy goals. 

US President Joe Biden and Prime Minister Kishida shake hands on the afternoon of May 18 in Hiroshima. (AP via Kyodo)

In November, Prime Minister Kishida revealed that President Biden invited him to the US for a state visit at some point in 2024. That would be the first since then-Prime Minister Shinzo Abe visited President Obama in 2015.

The upcoming visit may be an opportunity for Kishida and Biden to discuss S&T policy and identify collaboration opportunities. Such discussions have taken place in previous Biden-Kishida meetings. However, policy achievements will be difficult as Biden is likely to face former President Donald Trump in the November 2024 US presidential election and Kishida faces a party leadership election in September 2024.

At the working level, follow-up meetings are expected before Kishida's state visit to the US. They are likely to include the EPCC dialogue between the Department of Commerce and METI on semiconductor-related issues through JUCIP. There is also a potential meeting of the Joint-Working Level Committee on Science and Technology Cooperation (JWLC). 

If Japanese and American officials are looking for concrete progress on semiconductor-related and supply chain issues, they should rely on enhanced private sector engagement as political negotiations will become more difficult in the coming months. 

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Author: Erik M Jacobs

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