The document spells out how the ministry plans to upgrade Japan’s international competitiveness by carrying out an industrial policy that aims to achieve and secure economic growth and solve issues facing our society at the same time. This article outlines the priority policy areas METI will focus on and their aims.

The first focus under this theme is measures to address the COVID-19 pandemic.

The world situation has changed dramatically, and the time is ripe for changing our industrial policy to one that can ensure economic growth and solve the issues facing Japanese society. Environmental issues and digitalization are common themes that countries throughout the world are facing. The question for Japan is whether it can win the competition. METI must proceed with this policy with intense focus.

First and foremost, it aims to squarely address the immediate situation and steadily carry out measures to ensure businesses that have fallen into difficulty, including restaurants and tourism companies, can stay afloat. The ministry also aims to actively work on a business restructuring support program to help companies that are trying to start a new business or shift their business format in response to the pandemic. In addition, a business continuation support program and a business optimization program are in the works to prevent subcontractors from being victimized.

The second focus is on developing a growth strategy for the post-pandemic economy.

This aims to shift, once the pandemic is over, the country’s industrial structure into one that can generate new added value over the medium- to long-term using a mission-oriented approach and maintain growth. Specifically, the strategy targets the environment, economic security, distribution, health and digitalization as the key areas.

In the environmental domain, for example, METI aims to work out a budget, taxation system and regulations for a “green growth strategy” that will help make Japan carbon neutral and promote Japan’s strategic energy plan. The ministry will also work on developing certain aspects of carbon pricing — an economic system in which carbon is priced and the behaviors of those who emit it are transformed — that contribute to economic growth.

It is not possible to make the world carbon neutral without taking developing economies on board along with advanced nations. For that, the key is to reduce the costs of environmental technologies that can contribute to achieving carbon neutrality and help developing economies introduce them. As Japan has advanced technologies for power generation using hydrogen and ammonia, it is expected to play an important role in disseminating them to the rest of the world. Initiatives to introduce environmental technologies will include an industrial policy, an environmental policy and a growth strategy. Achieving carbon neutrality is not an easy challenge to overcome, but METI aims to lead the way by promoting a virtuous cycle combining the economy and the environment.

Now, how does the ministry plan to address the issue of ensuring Japan’s economic security?

Digitalizing trade

One of the companies is Trade Waltz Inc., which aims to digitalize paperwork for international trade around the world, starting in Asia.

Paperwork remains an essential part of trade, which involves not just private-sector companies, such as trading houses, manufacturers, logistics firms, banks and insurers, but also governmental bodies, including customs authorities. Computerization has been on the rise in recent years, but companies need to manually input the information carried in the documents they receive into their systems. This process, which is like a game of telephone on a grand scale but using written documents, takes an enormous amount of time. Trade Waltz’ namesake system takes over the processing of international trade paperwork by making use of blockchain technology.

METI supports the company’s efforts in a variety of ways, and in May 2021 an initiative to connect Japan’s customs-processing systems with those of Singapore, Thailand, Australia and New Zealand was announced during official multilateral talks.

Countries in Asia, including Japan, typically have similar issues and an environment where they can adapt existing programs. On the other hand, high-tech has remained unexplored territory for these countries, which fortunately means it offers “the best stage where (countries) can work together to launch new businesses on an equal footing and bring about open innovation,” said Satoru Someya, director and head of the CEO’s office at Trade Waltz.

Since the region’s systems remain underdeveloped and have few examples to build on, the ideas and sensibilities of young people who can think outside the box are required, which means there are plenty of opportunities for them, according to Someya.

High-quality health care

Another company is Medring Co., which aims to make affordable health care available to all people in Asia.

In Vietnam, access to health care is unevenly distributed. This situation is attributed to the uneven quality of medical services, which has led to distrust of regional clinics. This, in turn, prompts many patients to go to large hospitals. This just makes the situation worse, with health care workers concentrated at large hospitals with many patients. Aiming to help equalize the quality of health care across regions, Medring has set up a clinic that offers high-quality medical services at low cost by combining Japan’s medical know-how with digital technologies, such as artificial intelligence.

The initiative is being supported by METI via the Asia Digital Transformation program and has been adopted by the Japan External Trade Organization (JETRO) as well. At an October 2020 signing ceremony during Prime Minister Yoshihide Suga’s visit to Vietnam, Medring, the only startup in attendance, signed an agreement memorandum with Japan Vietnam Health Bridge Co., which operates a health care business there, to support the operation of smart clinics.

Medring is collecting medical data using digital technology, including online diagnosis and electronic patient records, to develop an AI-based diagnosis service. Emerging Asian countries are often open to introducing AI and have no strict rules on the handling of diagnostic data, due in part to undeveloped health care systems. Partly because there are many growth markets in Asia, “It’s easier to create new businesses using digital technology in Asia’s emerging countries, rather than in Japan, and there’s more growth potential (in such countries),” said Kazuma Abe, director and CEO of Medring.

“Cocreation with local partners is a must” in expanding business in local markets, Abe said. “They are versed in local laws and regulations, as well as business practices, and can provide us with important know-how for expanding business in their regions.“

Government support

To support the Asia DX projects, METI is making the necessary arrangements with overseas governments, operating an online match-making service, holding webinars and supporting joint trials conducted by companies through JETRO in the emerging economies of Asia, as well as in Japan.

For more information about the Asia DX initiatives, visit the following websites:
METI Asia DX projects
https://www.meti.go.jp/policy/external_economy/adx_project/index.html
JETRO’s DX portal
https://www.jetro.go.jp/jdxportal/

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.