Japan‘s parliament has enacted the first comprehensive economic security legislation to strengthen Japan’s national security from the perspective of economic activities, focusing particularly on sensitive industrial sectors such as rare earths, semiconductors and infrastructure , as well as research and development (“R&D”) of defense and dual-use technologies.
On May 11, 2022, the Japanese parliament enacted the “Law on Promoting Economic Security through the Integrated Implementation of Economic Measures”. The framework of the legislation has been discussed since late 2021 and finally settled in the following four areas of economic security:
- Resilient supply chain for strategic resources. The government will designate certain strategic resources which are fundamental to the national economy but highly dependent on foreign sources, such as rare earths, semiconductors, batteries and pharmaceutical drugs, and it will make the basic policy and individual plans. for a resilient supply of designated resources. Resources. Designated resource providers can apply for government certification and financial assistance for stable supply. As for the most critical materials, the government will continue to build up strategic reserves.
- Critical Infrastructure Security. The government will appoint critical operators of the following infrastructure services: electricity supply, gas supply, oil and gas refining and importation, water supply, rail transport, road transport, maritime transport, air transport, operation of airports , telecommunications and broadcasting, courier services. , financing and payment card services. Designated operators will be required to make prior declarations when introducing or commissioning the maintenance of major installations affecting the security of the infrastructure, and the government can issue an order (preceded by a recommendation ) to take security measures to prevent disruption of these facilities from outside Japan. (including cancellation of planned activities).
- R&D support for advanced technologies. The government will launch public-private partnerships and funding for the R&D of advanced technologies that are of strategic importance in terms of national security (such as aerospace, navy, quantum mechanics and artificial intelligence technologies).
- Non-disclosure of sensitive patents. Patent applications for inventions relating to certain designated technologies (designation will be made to limited nuclear technologies and high-tech weapons, but not to dual-use technologies) will be subject to the national security test and may be subject to non-disclosure, including restrictions on foreign licenses and applications. Such patent applications for inventions developed in Japan must first be filed in Japan, unless government permission is given.
The law will come into force in phases from 2023 and is expected to have a substantial impact on a wide range of industrial sectors. Designation of restricted areas and detailed requirements will be prepared by forthcoming orders of relevant supervisory authorities. We will continue to monitor regulatory developments and provide timely advice to customers on what action to take.