Photo/Illutration Prime Minister Fumio Kishida, center, and Takayuki Kobayashi, left, the state minister in charge of economic security, install a sign in November for the government section preparing economic security legislation. (Asahi Shimbun file photo)

A panel of experts formed by the Cabinet to draft proposals for new economic security legislation has made its recommendations to the government, which plans to submit the bill to the Diet as early as this month.

The legislation is said to tackle four key challenges: making supply chains more resilient; securing the safety and reliability of infrastructure; promoting technological cooperation between the public and private sectors; and safeguarding sensitive technological information contained in patent applications. 

The panel’s recommendations outline target areas and specific regulatory measures to be taken for each of the four pillars.

The legislation would allow the government to intervene in the private sector economy through regulations and funding. The government would also issue orders and require businesses to protect secrets, depending on the circumstances. In some cases, penalties would be imposed for noncompliance.

Asahi Shimbun editorials have sounded the alarm about the proposed legislation’s possible impact on international cooperation and economic activities while acknowledging the need for certain policy efforts to tackle economic security challenges.

The editorials have argued the government should limit the scope of regulatory restrictions to a minimum in recognition of the importance of transparency and democratic decision making. 

The panel’s recommendations called for limiting target areas and regulatory measures to a certain extent and keeping restrictions to the minimum required. They also said provisions should be consistent with international law.

The planned legislation still raises a host of concerns, however.

First, it is by no means clear whether these proposals will be effectively coded into law.

There would be no effective safeguard against unreasonable regulatory actions if the government is given broad discretion over target areas and the scope of measures that can be taken on the grounds that security and technological landscapes could change.

Especially troubling is the possible government intervention in supply chains.

The panel of experts said intervention should be limited to products and materials whose supply disruptions could cause dire consequences.

But the criteria include not only those “essential for the survival of the people” but also those “people’s lives and economic activities broadly depend on.”

If those areas cover a wide range of products and materials, restrictions could distort the economy. In particular, it is apparently beyond the government’s power to ensure there will be no disruption in supplies of the latter category of products and materials.

The government should never be allowed to use the legislation to reintroduce industrial policies that repeatedly failed in the past in a new disguise.

As for technological cooperation between the public and private sectors, the panel cited “cutting-edge vital technologies in such areas as space, ocean, quantum technology, artificial intelligence and bioscience” as targets.

A new public-private council would be established with funding and information provided by the government.

The panel also refers to examples of strict confidentiality measures implemented in similar policy efforts in the United States, including penalties for information leaks.

But research and development efforts are often improved both in quality and quantity through international exchanges. A high level of confidentiality requirements could lead to losses as well as gains.

Strict controls could undermine the independence of researchers, weaken the vigor of research and development and impede technological advances. Cautious and discreet judgment is needed.

Claims of national security needs could be used as a justification for not demanding rigorous examinations of policy actions. The government should be keenly aware of the risk of this approach harming both the nation’s economy and security.

--The Asahi Shimbun, Feb. 5

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