RIETI Report March 24, 2023

Defending Open Multilateral Trade Central to Japan's G7 Economic Security Agenda

Dear Readers,
Welcome to RIETI Report.
This bi-weekly newsletter will keep you updated with the recent columns, event information and research results by RIETI fellows and other leading economists in Japan and around the world.

In this edition we present topics related to the importance of defending open multilateral trade in the region and the world. Visiting Fellow Shiro Armstrong says that it is possible to find ways to mitigate and diffuse recent trade risks by deepening engagement through strengthening and extending the rules, rather than by avoiding engagement.

We hope you will enjoy it. If you have any feedback, we would love to hear from you (news-info@rieti.go.jp).
Editors of RIETI Report (Facebook: @en.RIETI / Twitter: @RIETIenglish / URL: https://www.rieti.go.jp/en/)

This month's featured article

Defending Open Multilateral Trade Central to Japan's G7 Economic Security Agenda

ARMSTRONG, ShiroVisiting Fellow, RIETI

Economic, environmental and food security are central to Japan’s G7 agenda as prime minister Kishida hosts the leaders from the group of advanced economies in Hiroshima in May. The agenda aims to be relevant for the ‘Global South’ as global inflation, uneven recovery from the pandemic and the food and energy crises, a fallout from Russia's invasion of Ukraine, are challenges that are not unique to advanced economies.

Great power strategic competition between China and the United States and the rise of an assertive China have elevated the issue of economic coercion on Japan’s G7 agenda. China has tried to use its economic power to extract political concessions from Japan and other countries, including South Korea, the Philippines and most recently Australia.

The response to these new circumstances in Japan has seen the introduction of economic security laws that aim to protect Japanese intellectual property and critical infrastructure and make supply chains more resilient. Much of this is sound economic policy but there is also an element of protection from Chinese practices and an attempt to avoid collateral damage from US-China strategic competition. Both Beijing and Washington are forcing countries to choose sides in a competition where each sees the gain of the other as a loss to them.

Australia and India have been invited to the G7 summit as guests. Both are members of the strategic Quad grouping with Japan and the United States, and India is chairing the G20 this year and an important leader of the ‘Global South’. Australia has much to share from its experience in withstanding Chinese economic coercion since 2020.

To read the full text:

Related articles

“Chance for G20 to build on WTO progress”
Shiro ARMSTRONG (Visiting Fellow, RIETI)

“Indonesia’s G20 needs to secure open trade for recovery from crisis and conflict”
Shiro Armstrong (Visiting Fellow, RIETI)

Related events

RIETI-ANU Symposium
“Towards Comprehensive Regional Security in Asia”

“CPTPP and Beyond: Multilateralism in an era of great power strategic competition”

Related paper

“The Effects of Institutions on the Relationship between Politics and Trade”
Shiro Armstrong (Visiting Fellow, RIETI)

Our latest discussion papers

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Julian FRANKS (London Business School) / Colin MAYER (University of Oxford) / MIYAJIMA Hideaki (Faculty Fellow, RIETI) / OGAWA Ryo (Chiba University of Commerce)

“The Impact of Policy Uncertainty on Foreign Direct Investment in Services: Evidence from firm-level data and the role of regional trade agreements”
INADA Mitsuo (Miyazaki Municipal University) / JINJI Naoto (Faculty Fellow, RIETI)

“Partial Ownership, Financial Constraint, and FDI”
ITO Tadashi (Gakushin University) / Michael RYAN (Western Michigan University) / TANAKA Ayumu (Research Associate, RIETI)

“The Effects of Financial Incentives on Small and Medium-sized Enterprises' Demand for Workers with Disabilities: Evidence from changes in Japan's employment quota system”
MATSUMOTO Kodai (Fellow (Policy Economist), RIETI) / OKUMURA Yota (LITALICO Partners) / MORIMOTO Atsushi (Kobe University) / YUGAMI Kazufumi (Kobe University)

“Global Sourcing and Firm Inventory during the Pandemic”
ZHANG Hongyong (Senior Fellow, RIETI) / DOAN Thi Thanh Ha (Economic Research Institute for ASEAN and East Asia)

“The Impact of Export Controls on International Trade: Evidence from the Japan–Korea trade dispute in the semiconductor industry”
MAKIOKA Ryo (Research Associate, RIETI) / ZHANG Hongyong (Senior Fellow, RIETI)

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