What’s on the agenda of the Japan-US 2+2 economic meeting? – Diplomat

Tokyo Report | Economy | East Asia

The new forum, which expands Allied strategic coordination on economic issues, will hold its first high-level meeting this week.

US and Japanese government leaders measure July 29 Washington, DC Summit New Bilateral Policy Coordination Forum dubbed Economic Policy Advisory Committee (or “Economic 2+2”). This first-ever 2+2 economic ministerial meeting is taking place against the backdrop of an extensive combat on Capitol Hill to pass legislation that will subsidize investment in semiconductor manufacturing in the United States, along with other provisions to protect US economic security and improve competitiveness. Japan already passed a similar law this year, and such efforts by both countries include measures to diversify supply chains, control technology exports and support scientific research to keep up with China.

These are precisely the complexities of today, combining technology, national security, economic viability and foreign policy, for which this new 2+2 economic mechanism was created. Coordinating their policies and even pooling resources from time to time can benefit both nations, but the political sensitivity involved in these matters and the novelty of this forum requires modest expectations at first. Improving the effectiveness of the Japanese-American 2+2 economic scheme in the long run is more important than any immediate results.

US President Joe Biden and Japanese Prime Minister Kishida Fumio announced Economic 2+2 in January and various preparatory meetings were held ahead of the first ministerial meeting on Friday. US Secretary of State Anthony Blinken and Commerce Secretary Gina Raimondo will welcome their Japanese counterparts (Foreign Secretary Hayashi Yoshimasa and Economics, Trade and Industry Secretary Hagiuda Koichi) to the State Department.

The agenda is an eclectic mix that includes promoting the domestic production of critical technologies, building reliable energy supply chains, and countering China’s attempts to steal technology or use its economic leverage to gain strategic advantage at the expense of others. Allies can also discuss guidelines for investing in overseas infrastructure and guaranteeing human rights in supply chains. Such a diverse agenda requires an unprecedented amount of collective effort from government agencies unaccustomed to shared leadership. Close collaboration with the private sector is also needed.

Economic 2+2 gets its way nickname due to its similarity to the original 2+2 alliance process, which brings together the heads of the Japanese foreign and defense ministries with the heads of the US Department of State and Defense. For decades, this Security Advisory Committee dealt primarily with political and logistical issues related to US military bases in Japan. However, as global threats intensified in the 2000s and Allied interests increasingly overlapped, they used the Committee to coordinate foreign policy strategy for new challenges with North Korea or the Middle East. Today, the Security Advisory Committee is vital to coordinating policies to help Ukraine repel a brutal Russian invasion. The Allies realized that simply coordinating a foreign policy strategy was no longer enough, and the original 2+2 scheme helped them back up their diplomatic strategy with military power.

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Similar dynamics are being observed today on the economic front. In recent years, the foreign policy landscape has become more complex, as the development of trade and technology directly affects national security. This is partly because supply chains are more concentrated and can be easily disrupted, digital transformation makes critical infrastructure more vulnerable to cyberattacks, and new technological advances in one country can seriously tip the balance of power. Addressing these problems effectively requires cooperation with like-minded nations, but in this case, the combination of diplomatic strategy with commercial and technological authorities is most useful.

However, the successful launch of the 2+2 economic scheme will be difficult because the number of relevant political institutions and stakeholders is much larger than this simple 2+2 equation suggests. In Washington, for example, the office of the US Trade Representative believes that it should play a leading role in any new bilateral framework concerning regional trade issues. The Departments of Energy, Treasury and Homeland Security are also interested in the 2+2 economic program. They will, of course, be asked to contribute to these bilateral meetings, but will they be included in the process as true partners, or instead be seen as merely playing a supporting role? Many of these offices are not accustomed to using their powers in a coordinated multilateral manner.

There are also large sums of money at stake. Congress vote this week on possible subsidies of $50 billion for domestic semiconductor manufacturing, as well as $100 billion over five years for the National Science Foundation. Japan selection the same resources, and both countries spend more on telecommunications infrastructure research and other future technologies, including quantum computing. While it is natural for politicians to prioritize domestic interests when spending taxpayer money, this situation highlights the opportunities for both parties to share information and coordinate policies that can help them get even better returns on their investments.

Today, the alliance needs a strong and cohesive Economic Policy Advisory Committee to address emerging issues in the 21st century. Economic security, semiconductors, energy stability, pandemic preparedness and other issues require a new political partnership and cooperation between the public and private sectors. As with the original 2+2 format, participants will need time to appreciate the benefits of close interagency cooperation. When bureaucrats, politicians, and even business leaders begin to view the 2+2 Economic Forum as an outstanding forum to help them collectively address their own priorities, then the new committee will realize its potential.