The Liberal International Order and Economic Security

The economic rise of China has made the country occupy a pivotal place in global supply chains, making Japan and the U.S. vulnerable to Chinese economic coercion in the form of sanctions and embargoes. Japan has created a new position of minister for economic security in the quest to reduce its dependence on China by diversifying supply sources for key materials and products, and augmenting stockpiles of strategic supplies. Such choices stem from the reality that China has joined the World Trade Organization (WTO) and enjoyed economic benefits from the free trade system, yet rejected its shared values and the rules of the liberal regime. The WTO mechanism is unable to identify and punish a member country’s violation of the WTO rules, making it reasonable for Japan and the U.S. to strengthen their economic security and develop industrial policies in such a way that protects their industry. These steps should be understood as essentially protectionist; however, Japan intends to play its role as the leader of the free trade system and the rules-based international order by strictly limiting protections to “strategic” goods.