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Trade

Revisiting Japan’s comprehensive security strategy

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Japan's Prime Minister Fumio Kishida, who is also ruling Liberal Democratic Party President, holds up a placard reading ‘Corona disease countermeasures, New Capitalism. Diplomacy and security’ at a debate session with other leaders of Japan's main political parties, Tokyo, Japan, 18 October 2021 (Photo: Reuters/Issei Kato/Pool).

Author: Tomohiko Satake, NIDS

Economic security, or keizai anpo, dominates the current Japanese strategic debate. Since 2019, the Japanese government has rapidly put in place new positions, organisations and bills related to economic security. According to Takayuki Kobayashi, Japan’s newly appointed minister for economic security, the term refers to securing ‘the Japanese state and national interest through economic measures’.

To achieve this objective, the Japanese parliament passed the Economic Security Promotion Act in 2022 to strengthen supply chain resilience, protect critical infrastructure, develop emerging technologies and prevent technology outflow. Japan’s new national security strategy — to be published by the end of 2022 — will likely incorporate these elements.

It is not the first time that Japan has recognised the economy as an integral part of its security. In the mid-1970s, Japanese politicians, intellectuals and businesspeople began to discuss the need for ‘comprehensive security’ (sogo anzen hosho) that included economic, food and energy security.

A 1980 report published by an advisory board to the Masayoshi Ohira government (the Ohira Report) advocated a ‘comprehensive security strategy’ that promoted Japanese security by various measures in multiple domains. While the report never underestimated the importance of military roles, it acknowledged the importance of other areas — such as economic, food and energy security — and recommended that Japan should enhance its security by coordinating policies across different areas and means.

The report reflected dynamic changes occurring in the international security environment after the early 1970s. The 1973 and 1978 oil shocks and high inflation led Tokyo to recognise that security could be jeopardised by non-military threats. To secure energy resources, it became imperative to review Japan’s overdependence on the Middle East and diversify its energy supply chains.

The Ohira Report also addressed the decline of US primacy and Japan’s growing desire for autonomous economic growth. With ‘the termination of clear American supremacy in both military and economic spheres,’ the report argued the world would enter an era of ‘peace maintained by shared responsibilities’. In such an environment, Japan should enhance its self-help efforts and contribute to the strengthening and the maintenance of the system.

The evolution of comprehensive security also reflects deeper changes in the nature of power politics during the 1970s. As Hiroshi Nakanishi points out, ‘the diversification and the complication of power politics’ promoted the multi-polarisation of international relations. As demonstrated by the US defeat in the Vietnam War, economic relations and psychological factors came to play an important role in power politics alongside military capability.

According to Nakanishi, these diversified and complex power politics also blurred the boundaries between ‘high politics’ associated with ideology, governance and military strategy, and ‘low politics’ concerned with the economy, energy supply and social affairs. In an environment characterised by what Joseph Nye and Robert Keohane termed ‘complex interdependence’, Japan was forced to adopt a more autonomous and comprehensive foreign security posture that could deal with a broader range of challenges.

The conditions identified above — Japan’s energy crisis, the decline of US primacy and the complication and diversification of power politics — have become even more prominent in today’s security environment.

During the 1970s and 1980s, the Soviet Union’s GDP was less than 25 per cent of US GDP. In 2022, China’s GDP amounts to nearly 75 per cent of US GDP. After the 1972 Sino–US Rapprochement, Washington was able to exploit the Sino–Soviet conflict and maintain a pivotal position. Today, however, China is increasingly aligned with Russia, challenging the US-led order.

The rise of the emerging states, the development of military and information technology and the promotion of interdependence has created a highly diversified and more complex security environment compared to with the 1970s. Russia’s invasion of Ukraine and its nuclear brinkmanship has revealed that traditional power politics have not become a thing of the past. At the same time, Ukraine’s surprising resistance against Russia suggests how non-military or non-kinetic factors, such as national morale, information warfare and cyber defence, play an increasingly important role in…

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Fixing fragmentation in the settlement of international trade disputes

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Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.

Fragmentation in Global Trade

Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.

Challenges with WTO Dispute Settlement

The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.

The Path Forward for Global Trade

Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.

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WTO ministerial trading in low expectations and high stakes

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The WTO’s 13th Ministerial Conference is set to focus on e-commerce transparency, investment facilitation, and admitting new members. However, progress may be hindered by disputes, especially regarding fisheries subsidies.

The World Trade Organisation’s 13th Ministerial Conference

The World Trade Organisation’s (WTO) 13th Ministerial Conference is set to take place in Abu Dhabi on 26–29 February, with expectations of deals on electronic commerce transparency, investment facilitation for development, and the admission of Timor Leste and the Comoros as WTO members. Despite these positive developments, the expectations are relatively modest compared to promises made at the 12th Ministerial Conference, which included addressing fisheries subsidies and restoring a fully functioning dispute settlement mechanism by 2024.

Challenges in Dispute Settlement and Agricultural Trade Reform

However, challenges remain, especially in the deadlock of dispute settlement since December 2019 due to a US veto on the appointment of Appellate Body judges. Progress in restoring the dispute settlement mechanism has stalled, and discord continues regarding India’s grain stockholding policy as a potential illegal subsidy. Restoring a fully functioning dispute settlement mechanism hinges on addressing US concerns about perceived bias against trade remedies in relation to China’s state subsidies.

Geopolitical Tensions and the Future of Trade Relations

The likelihood of reaching agreements amid geopolitical tensions between Western democracies and China appears slim, with issues surrounding subsidies and global supply chains causing rifts in trade relations. As nations focus on self-reliance within the global value chain, opportunities for trading face obstacles. Advocacy for open markets and addressing protectionist sentiments remains crucial for fostering resilience to external shocks and promoting economic growth.

Source : WTO ministerial trading in low expectations and high stakes

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Getting Vietnam’s economic growth back on track

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Vietnam’s economy grew 8% in 2022 but slowed in 2023 due to falling exports and delays in public investments. The economy’s future depends on structural reforms and reducing dependency on foreign investment.

Vietnam’s Economic Roller Coaster

After emerging from COVID-19 with an 8 per cent annual growth rate, Vietnam’s economy took a downturn in the first half of 2023. The drop was attributed to falling exports due to monetary tightening in developed countries and a slow post-pandemic recovery in China.

Trade Performance and Monetary Policy

Exports were down 12 per cent on-year, with the industrial production index showing negative growth early in 2023 but ended with an increase of approximately 1 per cent for the year. Monetary policy was loosened throughout the year, with bank credit growing by 13.5 per cent overall and 1.7 per cent in the last 20 days of 2023.

Challenges and Prospects

Vietnam’s economy suffered from delayed public investments, electricity shortages, and a declining domestic private sector in the last two years. Looking ahead to 2024, economic growth is expected to be in the range of 5.5–6 per cent, but the country faces uncertainties due to geopolitical tensions and global economic conditions.

Source : Getting Vietnam’s economic growth back on track

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