"Economic Security" and the Review of the 2013 NSS and the Related Strategy Documents

Nobushige Takamizawa

Prioritized Security Agenda in the Kishida Cabinet

Fumio Kishida won the presidency of the ruling Liberal Democratic Party in September 2021 with his campaign commitments to formulate an "Economic Security Promotion Law" and to create a new post of minister of state for economic security. Since he took office as the Prime Minister of Japan, Kishida has been quick to implement a series of security policy measures to fulfill those pledges, among which is the convening of the Council for the Promotion of Economic Security, deliberations by the Panel of Experts on Economic Security Legislation, and the preparation of a set of economic security promotion bills for the Diet deliberations.

Specifically, the economic security promotion bill aims to achieve three goals, namely, (1) improving the autonomy of Japan's economic structure through making supply chains more resilient and ensuring the reliability of critical infrastructures; (2) ensuring the superiority and indispensability of Japanese technology through efforts to develop key technologies such as artificial intelligence and quantum technologies; and (3) maintaining and strengthening the international order based on fundamental values and rules. The government has submitted the draft bill comprising four major pillars: (1) strengthening supply chains for critical goods and raw materials; (2) ensuring the safety and reliability of critical infrastructure functions; (3) establishing a framework for fostering and supporting key technologies through the cooperation of public and private sectors; and (4) preventing the outflow of sensitive inventions by non-disclosure of patents as appropriate.

In parallel with these efforts, Prime Minister Kishida announced his policy of drastically strengthening Japan's defense capabilities with a sense of urgency, and instructed the government to review the National Security Strategy (2013 NSS), the National Defense Program Guidelines (2018 NDPG) and the Midterm (2019-2023) Defense Buildup Program which were formulated under the Abe Cabinet. New strategy documents will be issued by the end of 2022. Instructions were given by the Prime Minister to take a realistic look at all available options including possessing active defense capabilities. Factors to be given priority in the review process listed in his speech are the emergence of new domains such as cyberspace and outer space, significant improvements in missile technology, and the defense of remote islands. The aspects of economic security are also highlighted in this context.

These policy initiatives have been driven by the fact that security and the economy are increasingly fused and intertwined, and that the countries in the world, particularly the United States and China are competing on all fronts to secure strategic materials and critical technologies. This paper will discuss what kind of measures are required to make future development and implementation of Japan's security and defense policies more effective. The focus will be on building mechanisms and strengthening coordination functions within diversified government planning processes, not limited to the issue of economic security legislation.

Different and Changing Contexts Where and When "Economic Security" was Highlighted

The term "economic security" (経済安全保障) was first used in Japan's Diet debates in the mid-1970s. In relation to the recent debate on economic security legislation, Mr. Hagiuda, METI Minister stated on December 15, 2021, there is "no clear definition of economic security in current domestic laws and regulations." The term "economic security" has been used in considerably different contexts due to changes over time and to the differences in national and international circumstances. Initially, the Japanese Diet members discussed economic security as a challenge for resource-scarce Japan from the standpoint of ensuring a stable supply of oil and other energy resources, learning lessons from the oil crisis and, in particular, acknowledging the vulnerability of dependence on overseas resources. Measures to be taken included diversifying import sources, stockpiling scarce resources and securing maritime transportation capacity, including the issue of flag of convenience shipping and the importance of ships of Japanese registry. At that time, these issues were debated based on the understanding "stable energy supply measures are the core of economic security." After that, these policy measures, except for the issue of flag of convenience shipping, have no longer been discussed under the name of economic security.

In the 1990s, with the end of the Cold War, the perception of "the era of economic security rather than military security" prevailed; Japan's economic power was believed to become a threat to US economic security. The Structural Impediments Initiative (US-Japan Framework Talks on bilateral trade) and other forms of Japan-US "cooperation" were promoted. In this context, the U.S. highlighted economic security in the context of upholding its economic and technological strength and the prosperity of its people. On the other hand, Prime Minister Obuchi stated then that economic security is "how to protect the country and the people from threats posed by non-military factors and how to promote national prosperity." (December 1, 1999) In those days, the opposition Liberal Party also articulated three different levels of security: citizen security, economic security, and national security as its policy agenda.

In contrast, the recent debate over economic security has incorporated multiple elements. The Trump administration's National Security Strategy (December 2017) identified strategic competition with China and Russia, global and regional revisionist powers, as a particularly important issue. Peter Navarro, who compiled a report on strengthening the foundation of the defense industry, gave a speech titled "Economic Security as National Security" at a debate held at the US think tank CSIS (November 2018), stressing the importance of strengthening the foundation of the defense industry by mobilizing all means, and that economic security is the core of national security. The "Interim National Security Strategic Guidance" (March 2021) issued by the Biden administration also states that economic security is national security in today's world and that domestic industries and the American people should be placed at the center of the US national security strategy.

Integration of Economic and Other Policy Aspects in the Planning Process of the NSS and the NDPG

Current efforts to introduce the economic security promotion bill have been driven by the US security strategy and development of new policies as well as China's comprehensive security policies including military-civil fusion strategy. The draft bill submitted to the Diet, however, covers only four areas and can be deemed to be small package of individual, long overdue economic and industrial policies, debated and unrealized for years. It is very different from the U.S. and China which put an emphasis on the use of economic means to deal with issues related to defense industrial base, diplomacy, and national defense in their national security strategies, and national defense plans and programs.

This is because Japan's security planning system has almost failed to take into account issues such as the integration of economic power in security policies and the strengthening of the defense industrial base. Japan's 2013 National Security Strategy takes strategic approaches that Japan should promote for its national security, focusing on foreign and defense policies, including reference to economic aspects. In addition, the NSS as the basic policy of national security holds the status of providing guidelines to policies in areas related to national security, such as maritime, space, cyber, ODA, and energy. Such a clear planning linkage between a security strategy and relevant individual policies had not been built or formalized until then.

On the other hand, Japan's vulnerability due to dependence on imports of resources and energy was treated as an individual policy issue separate from traditional security. Therefore, Japan dealt with the US initiative of strengthening defense industrial base and eliminating vulnerability, not in the context of a comprehensive strategy but by placing focus on individual economic and technological frictions over semiconductors.

The common feature that can be seen, consistently if not evenly, in the four NPDGs, from the first 1976 NDPG to the 2010 NDPG is the keynote perception of the international situation as one in which interdependence between nations would maintain the stability of their relations. In addition, based on the recognition that the economy is outside or above the scope of security and defense, priority has been given to consideration of the financial situations as well as ensuring harmonization or consonance between defense policy and other national policies. The established principle of developing a modest defense capability is deeply related to the idea, "defense without causing trouble to the economy" on the assumption that economic development would bring about Japan's peace and prosperity amid the growing interdependence among nations.

In 2013, when the NSS was formulated, the assessment of interdependence among the major powers remained not much different and highlighted the importance of efforts to make the most of the strength of interdependence. It somewhat changed from the previous ones and demonstrated an awareness of an increasing number of elements of concern. Specifically, the NSS included references to: rapid changes in the power balances and the growing presence of China, the loss of strong leadership in the overall governance structure of the international community, changes in the relative influence between states and non-state actors, and the negative aspects of globalization and technological innovation.

Based on this recognition, the NSS states that "enhancing Japan's resilience in national security, through reinforcing its diplomatic power and defense force, as well as bolstering its economic strengths and technological capabilities, contributes to peace and stability in the Asia-Pacific region and the international community at large. This belief forms the core of the strategic approaches in the Strategy." Regarding the relationship of national security and other government policies, the NSS states that the government should take into account the national security perspective so that diplomatic and defense capabilities can function fully and smoothly as a whole in implementing those policies. In other words, the NSS articulates the shift from "defense without causing trouble to the economy" to "economic and other policy making in consideration of national security aspects."

Strengthening the Resilience of Defense Industrial Base in the 2018 NDPG at the Backdrop of the US-China Competition

The 2013 NSS articulates national objectives and interests, stating that "the policy of ‘Proactive Contribution to Peace' based on the principle of international cooperation" is the basic principle of Japan's national security. Among Japan's national interests that the document cites in relation to the economy are: "achieve the prosperity of Japan and its nationals through economic development, thereby consolidating its peace and security"; strengthen, as a maritime state, "the free trade regime for accomplishing economic development through free trade and competition"; realize "an international environment that offers stability, transparency and predictability"; maintain and protect "international order based on rules and universal values."

Although the 2013 NSS was not revised in the process of making the 2018 NPDG as well as new five year defense program, the increasingly severe international security environment was quite evident to all. The 2018 NDPG has made a clear shift from former strategy documents by citing its perceptions of the international situations with an emphasis on the superpower competition between the United States and China instead of interdependence. Specifically, it pointed out accelerating changes in the balance of power due to the further growth of the national power of China and other countries; the increasing uncertainty surrounding the existing order; and the emergence of inter-state competitions on political, economic, and military realms. It also cited the 2017 US National Security Strategy, saying, "…with inter-state competitions in a range of areas prominently emerging, …particularly important challenge is strategic competition with China and Russia who attempt to alter global and regional order."

Most significantly, under the pillar of "priorities in strengthening core elements of defense capability," the 2018 NDPG refers not only to the reinforcement of technological base --- "bearing on defense equipment through whole-of-government approach" --- but also highlights, for the first time, the need to make the defense industrial base more resilient. This demonstrates a shift from old thinking in which importance of defense production and technological base is lightly touched upon, lacks details and falls under one of "foundations underpinning the defense force", as in the case of the 2013 NDPG.

The 2018 NDPG enumerates efforts to be made by the MOD and the SDF: (1) "reform the existing contract system including affording incentives to companies" toward the creation of a competitive environment for companies"; (2) "enhance supply-chain risk management; (3) "expand Japanese defense industry's participation in maintenance work of imported equipment"; and (4) "strengthen intellectual property management, technology management, and information security in order to prevent drain of important defense equipment-related technologies".

While these policies in the 2018 NPDG are consistent with the direction of the economic security promotion bill, the following three points should be noted.

First. The 2013 NSS refers only to defense production and technology infrastructure and lacks detailed guiding principles. If a new NSS is going to include comprehensive policy guidelines, including at least on "strengthening technical capabilities directly linked to security" and "strengthening the resiliency of the industrial base", that should be welcome. One question here is if that is compatible with principles that are articulated in the 2013 NSS or requires some adjustments to take robust measures in the context of US - China competition.

Second. It is assumed that introduction of the economic security promotion bill, centering economic and industrial policies will set a good institutional precedent and contribute to strengthening the resiliency of the industrial base. Given the differences of focus and scope, a separate legislation package will be needed to meet the requirement unique to sensitivity of national security policy.

Third. It is essential to gain understanding among the public of why it is important and necessary to take robust measures to strengthen technological capabilities and enhance the resiliency of industrial bases, and that both of which are coming to constitute a core element of security. It is also important to institutionalize effective coordination mechanisms among various budgets and policy planning, and present specific policies to realize these goals.

Strengthening and Institutionalizing Collaboration between the NSS, NDPG and Economic-Related Plans

As we have seen above, the 2013 NSS states that the government will implement national security policies in a more strategic and structured manner through a whole of government approach with strong political leadership and the functioning of the NSC as the control tower. It should also be appreciated that the NSS stresses the importance of collaboration among security related policy planning, there remain not a few challenges ahead to realize effective integration.

First, how do we understand the "areas related to security", which the NSS needs to articulate for the basic policies and guidelines for planning purposes. Maritime, outer-space, cyberspace, ODA, and energy are specified and included, but such areas and items as important technologies, important materials and raw materials, infrastructure, and information and communication are also becoming increasingly important. From this point of view, these areas need to be appropriately identified to incorporate into the planning and coordination framework in the coming new NSS. These plans may include the Basic Plan for Ocean Policy, the Basic Plan for Space, Cybersecurity Strategy, the Development Cooperation Charter, the Basic Energy Plan, the Basic Plan for Science, Technology and Innovation and the Integrated Innovation Strategy, the World's Most Advanced Digital State Creation Declaration and the Basic Plan for Promoting Public-Private Data Utilization, Basic Plan for National Resilience and Basic Plan for Promoting Geospatial Information Utilization

In order to promote collaboration and cooperation among diversified areas, it is necessary to establish a legal framework and institutionalize coordination mechanisms. In addition, it is vital to deepen relations at each stage of the whole planning process to include formulation, implementation and validation of the results and lessons learned. To this end, it is important for stakeholders to have interests in each plan and share opportunities and knowledge through regular meetings between the secretariats, information sharing, people-to-people exchanges, and holding expert meetings and industry-academia-government collaboration meetings that enable cross-sectional plans related to security. Furthermore, by introducing a mechanism that can more effectively build a common database, we will visualize the plan and flexibly review the entire process by means of acceleration, adaptation, cancellation and additional funding as appropriate. It would be more effective if resources were to be incorporated into related plans.

In order to effectively achieve such integration, it is important to expand the security clearance system and establish a qualification system that serves as an incentive to promote and utilize the system. This system will be extremely important not only for appropriately managing information and technology and preventing leakage, but also for flexibly placing and appointing core utility personnel, establishing task forces, effectively utilizing data including sensitive ones, utilizing human resources including seniors, revitalizing local communities, and promoting international cooperation.

Sustain Efforts and Integrate Different Elements of Economic Security

The measures that have been considered and promoted under the name of economic security are wide-ranging with diverse backgrounds and contexts. On the other hand, the growing interest in the aspects of economic security or the emerging link between economy and security can provide good opportunities to raise the priority of these policies either closely related or dealt with individually. In addition, we can take a fresh look at those policy measures already established in a different environment, such as maritime or energy security. In doing so, it is important to clarify the context, to integrate and fuse the various endeavors, identify people and organizations working on the ground and interact with each other. In reviewing the national security strategy and the NPDG this year, it is necessary to proceed with this point in mind, and it is considered that Japan should take necessary security measures beyond the scope of economic security legislation.

As we have seen in the flow of the formulation of the plans and programs, what has particular importance is how to ensure the resiliency of the industrial base by taking a whole of government approach to strengthen the technological base that will lead to the improvement of defense equipment. At the same time, given recent qualitative changes in the international security environment, there is an increasing need to promote integration and collaboration among different policy and program planning in such areas as economy, health and environment including climate change. In this sense, in reviewing the National Security Strategy and the National Defense Program Guidelines, it is needed to study, examine and incorporate various security-related plans and programs on a much broader basis without drawing a demarcation line among different areas, and institutionalize coordinating frameworks in the each phase of planning, implementation, validation and taking further action.

(Visiting Professor, the University of Tokyo)

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