Japan passes economic security bill to guard sensitive technology

Empty seats are seen as lawmakers practice social distancing, during Japan’s Prime Minister Yoshihide Suga’s policy speech at the opening of the Lower House parliamentary session in Tokyo, Japan January 18, 2021. REUTERS/Issei Kato

TOKYO, May 11 (Reuters) – Japan’s parliament on Wednesday passed an economic security bill aimed at guarding technology and reinforcing critical supply chains, while also imposing tighter oversight of Japanese firms working in sensitive sectors or in critical infrastructure.

Measures in the legislation, which is primarily aimed at China, will be implemented over two years once it is enacted, according to the bill. It comes after United States imposed restriction on technology imports, such as semiconductors, amid growing tension Beijing. read more

The new law also arrives as the Russia’s invasion of Ukraine – Moscow calls its actions “a special operation” – adds pressure on Japan to do more to protect supply chains and infrastructure from hacking and cyberattacks, and ensure that technology critical to national security is not stolen.

It will give Japan’s government the power to order companies to notify it of software updates and vet some equipment procurement in 14 industries, including energy, water supply, information technology, finance and transportation.

The legislation also provides subsidies for companies to help them strengthen supply chains against disruption such as shortages of components shipped from overseas. It further establishes a system for government officials to make on-site inspections at firms.

The new security mechanism it sets out promises government money for research and development into key technologies deemed important for economic security.

It also establishes a system of secret patents kept in Japan to ensure technological breakthroughs are not used by other countries to development nuclear weapons or other military equipment.

Reporting by Kaori Kaneko and Tim Kelly; Editing by Kenneth Maxwell

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