By Ayaka Hiraki
A shifting balance of power, escalating geopolitical competition and advancements in digital technology have expanded the boundaries of national security. As cutting-edge technologies are increasingly being developed by the civilian sector rather than the military, the nexus between the private economy and national security has deepened. The competition for technological superiority has broadened to include control over civilian technologies.
China’s military–civil fusion strategy seeks to blend economic development with military modernisation. In response, Western countries, including Japan, are strengthening their export control policies to preserve their technological edge, restrict their competitors’ technological access and ensure sensitive technologies are safeguarded within a trusted alliance.
Japan’s 2022 National Security Strategy underscores this commitment by proposing enhancements to its export control framework.
Japan’s export control system includes three levels — the international export control regime, a multilateral approach where controls are independently measured with like-minded countries and domestic law. Japan’s export control system consists of the following three tiers — the international export control regime, efforts involving like-minded countries possessing technology, which complements the export control regime and export controls as defined under Japan’s Foreign Exchange and Foreign Trade Act.
International export control regimes aim to control weapons proliferation. These regimes are not enforced by international law but are agreements between countries, where members negotiate control lists of sensitive technologies. Each country enacts its own national export control laws independently, with Japan’s system governed by the Foreign Exchange and Foreign Trade Act.
One regime, the Wassenaar Arrangement (WA), faces challenges in adapting to swift technological advances. WA is special among the export control regimes — it controls not only conventional weapons but also dual-use technologies, which are used for both civilian and military purposes. As an increasing share of modern technologies fall into the dual-use category, controlling them becomes more problematic. The hurdles include differing perspectives on security risks among member states, the slow process of reaching a consensus and inconsistencies in national export licensing criteria.
The WA’s consensus-based process hampers its ability to quickly incorporate new technologies into its control lists. It can take years to reach agreement on including new items, reflecting diverse views on the security implications of emerging technologies.
Further, the WA allows individual countries to issue export licenses for controlled items. This contrasts with regimes like the Nuclear Suppliers Group, which employs a ‘no-undercut’ policy, where members notify and consult each other regarding their denials of exports licenses. In the WA, if one country denies an export, another may permit it. This complicates efforts to prevent technology leaks and ensure equitable competition.
The rising importance of non-participating states, notably China, complicates enforcement. China’s dominance in emerging technologies was highlighted by a 2023 report from the Australian Strategic Policy Institute. It showed China possesses a leading edge in 37 of 44 important technology categories such as space, robotics, energy, the environment, biotechnology, AI and advanced materials. This raises concerns about backfill transactions, where controlled items are procured from countries not participating in frameworks like the WA. This poses security risks and potentially gives non-participating exporters a competitive edge.
Given the weaknesses of existing regimes and the increasing pace of technological competition, Japan has to implement more flexible export controls. This could prevent the escalation of conflicts and inadvertent contributions to the military modernisation of rivals by civilian firms.
Due to issues with consensus building in the WA regimes, Japan and its Western allies have reacted by implementing unilateral export controls. In July 2023, Japan strengthened controls on 23 items, including cutting-edge semiconductor manufacturing equipment. This aligns with US measures from 2022 aimed at restricting the exports of advanced semiconductor technologies to China. The Netherlands similarly updated its control list with high-performance semiconductor manufacturing equipment.
These efforts represent a minilateral approach, supplementing broader international regimes. While minilateralism might be practical in certain fast-paced technological domains, it is not realistic to introduce unique regulations in all technological fields solely among a small number of countries.
A future approach should include establishing an intelligence- and information-sharing system with like-minded countries. The rapid and fragmented nature of technological change makes it increasingly challenging for regulators to assess security risks effectively. Coordinating review processes among allied nations is essential to ensuring the robustness of export controls.
It is also crucial to reassess Japan’s domestic export control laws, particularly in light of Russia’s invasion of Ukraine. Despite bans on exporting military-use technologies to Russia, Russia has still managed to obtain necessary parts through nations not enforcing sanctions.
To address this, the Japanese government should consider strengthening its catch-all controls. Catch-all controls require an export permit application for items not listed under specific regulations when exported to regions other than those participating in and strictly enforcing international export control regimes. These are referred to as ‘Group A’ countries in Japan. Even non-controlled items might face an export licensing requirements if exported to Russia, as it operates an expanding war economy.
Due to the possibility that countries of concern might procure regulated items from Group A countries, applying catch-all controls to Group A might also become necessary. This would apply particularly to countries that supply Russia’s war economy.
Strengthening export controls increases the burden on companies. If regulations are unclear, it increases procedural burdens and risks that companies become overly cautious in their activities due to excessive scrutiny by authorities.
The Japanese government aims to balance these concerns by fostering international cooperation and aiming for a ‘small yard, high fence’ approach. This would limit the range of controlled items while enforcing stricter regulations on them to minimise the impact on domestic companies. A more responsive international control regime is crucial to achieving this balance and protecting national security interests without hampering economic growth.
- About the author: Ayaka Hiraki is a Research Fellow at Deloitte in Tokyo and PhD student at Keio University in Tokyo.
- Source: This article was published by East Asia Forum