Minister to take the helm in realizing, promoting free flow of data

At the upcoming G20 summit, Japan will champion a model of global economic growth through the promotion of free trade and innovation. As host country, Japan will also call for rule-making in the digital field, as well as policy coordination in the areas of climate change and energy.

In facing a world with mounting challenges that have become increasingly complex, how should Japan, as the G20 presidency, seek to raise awareness of various issues toward finding common ground?

The Ministry of Economy, Trade and Industry serves as a co-organizer of the G20 ministerial meeting on trade and digital economy in Tsukuba, Ibaraki Prefecture, on June 8 and 9, and the G20 ministerial meeting on energy transitions and global environment for sustainable growth in Karuizawa, Nagano Prefecture, on June 15 and 16.

The METI Journal asked METI Minister Hiroshige Seko for his thoughts before the ministerial meetings. (This is the first half of the interview; the second half will be carried in the next installment.)

Question: How do you view the current global situation and issues surrounding trade?

Seko: While the internet connects the world and economic activities go global, certain disparities can be created and worsened. This in turn can lead to a backlash against digitalization and globalization. With political populism on the rise, the world has seen the emergence and expansion of protectionism.

In particular, restrictive trade measures that the world’s two biggest economies have implemented have created a sense of uncertainty for the global economy, the growth of which has, in fact, slowed. In addition to such protectionist moves, distorted industrial structures, which have seen the advent of such issues as steel excess capacity, have also negatively affected the global economy. As a flag-bearer of free trade, Japan needs to do everything it can to ensure stability amid unstable times.

Question: What role do you think Japan should play when the confrontation between the U.S. and China becomes a global risk?

Seko: Japan has been highly evaluated globally as the country took leading roles in coordinating both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the economic partnership agreement between Japan and the European Union.

With that background, it is extremely important that Japan makes efforts to retain and develop free, fair and rule-based international trade frameworks. Protectionist moves won’t eradicate the root cause of trade friction. I believe the road to resolve issues is one paved by fair and competitive conditions through abolishing industrial subsidies that can distort markets.

Meanwhile, innovation has been rapidly advancing thanks to the “Fourth Industrial Revolution.” An important source of innovation these days is data. The whole process of collection and flow of data becomes a wellspring for innovation.

In that sense, data flow has increased explosively. At the same time, privacy and security concerns have grown, and there is a need to address these issues appropriately. On the other hand, some may seek to contain data or disallow data flow. Since these new issues have arisen in trade, I’ll take the lead to promote active discussion at the G20 ministerial meeting on trade and digital economy as chair.

Promoting WTO reform

Question: Some people are concerned about the decline in the function of the World Trade Organization that plays a central role in the multilateral trading system. What is your view?

Seko: If the WTO is not functioning properly, it would be one of the biggest issues that needs to be addressed.

It is important for Japan as a flag-bearer of free trade to commit to WTO reform. It is also important to have a firm commitment from the rest of the world. Unfortunately, however, some members seem to prefer solving issues through bilateral channels.

The Japanese government attaches great importance to the trilateral meeting of the trade ministers of the United States, Japan and the European Union, a forum in which all ministers have been actively participating. We have conducted this meeting five times and discussed topics including rule-making with regard to industrial subsidies, forced technology transfers and the digital economy.

In an extension of these discussions, the U.S. has shown its willingness, to a certain degree, to let this trilateral group take the lead in reforming the WTO. For example, the U.S., Japan and the European Union jointly presented a proposal on compliance of notification obligations such as industrial subsidies. Utilizing the opportunity of the G20 ministerial meeting, we will strive to gain support from other countries on WTO reform.

Question: What is the current situation on efforts regarding electronic commerce within the framework of the WTO?

Seko: We need to create trade rules that can address digitalization. So, Japan, Australia and Singapore became co-chairs to launch a joint statement initiative at the WTO ministerial conference in December 2017. At the World Economic Forum annual meeting in January, volunteer countries issued a joint statement to confirm the intention to commence WTO negotiations to that end, and 77 countries, including the U.S. and China, have signed it.

There is a growing momentum for creating trade rules related to digitalization and e-commerce within the WTO framework.

In his speech at this year’s Davos conference, Prime Minister Shinzo Abe declared his intention to launch the Osaka Track on the occasion of the upcoming G20 summit in Osaka toward international rule-making for digital trade. At the ministerial meeting preceding the summit, we’d like to support the negotiations on e-commerce in the WTO.