The Japanese government is currently attempting to collaborate with the United States and Europe to establish common standards for subsidies in the semiconductor and electric vehicle (EV) industries, with discussions set to begin in 2023. Additionally, the Japanese government plans to introduce new measures to strengthen supply chains for semiconductors, carbon neutrality, and other areas within the next 2-3 years.
According to Nikkei, Japan's Minister of Economy, Trade, and Industry, Yasutoshi Nishimura, stated that Japan intends to work together with the United States and Europe to establish common subsidy standards for industries such as semiconductors and electric vehicles.
Out of considerations for economic security and carbon neutrality, various countries offer substantial subsidies for sectors such as semiconductors and EVs, driven by national interests. However, such actions may potentially harm free trade. Therefore, Japan hopes to collaborate with the United States and Europe to create a mechanism for fair competition with like-minded partners, thus preventing protectionism.
Regarding subsidy issues, Japan can use diplomatic and ministerial-level "2+2" meetings between Japan and the United States and high-level dialogues with Europe to address these concerns. Japan intends to establish a working group to coordinate the details, touching on the subsidies being discussed in the United States, Europe, and Japan, as well as government procurement conditions.
Both Japan and the United States, as well as Europe, heavily subsidize the semiconductor and carbon neutrality-related industries and have set their respective subsidy conditions. For instance, the United States' Inflation Reduction Act sets conditions for the proportion of critical minerals in EV battery materials sourced from the United States and its allies, as well as the share of EV battery assembly production in North America.
Nishimura revealed that the Japanese government is considering investing JPY 20 trillion (approximately US$134 billion) in Green Transformation (GX) over the next ten years. Subsidy conditions for EVs are expected to encompass environmental benefits associated with electric vehicles.
Furthermore, as reported by NHK, Japanese Prime Minister Fumio Kishida mentioned on October 23, 2023 during his speech in the Japanese parliament that the primary focus of current economic policies is to strengthen supply chains. Japan is planning significant investments in areas related to security, including semiconductors and carbon neutrality, especially over the next 2-3 years when policies aimed at enhancing supply chains will be introduced and support measures will be implemented to drive the transition.
Kishida also indicated that the Japanese government will provide support for new expansions and innovations, such as AI, autonomous driving, space, and the overseas market expansion of small and medium-sized enterprises.
