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The Role Of The Rising Sun
Japan is in the news again, this time because of a U.S. submarine accident, but the Asian nation has never stopped making news within the information technology sector. The Japanese economy, the world's second largest, is vital to U.S. growth, and in that economy, information technology is a critical component.
It is worthwhile, then, to examine Japan's IT policy and what the Bush administration is doing to take advantage of it. Japan may have taken a back seat to China for U.S. policymakers in the past year or so, but observers say it should not be overlooked.
Japan's per-capita gross domestic product (GDP) rivals or surpasses that of the United States. And despite a slow economy in Japan, IT investments there are rising. The country's IT equipment and services market is second only to the United States and is expected to rise 20 percent annually, to $1.2 trillion by 2010, according to U.S. Commerce Department.
Is Japan A Priority For Bush?
Opinions are somewhat divided on how actively the Bush administration and Congress will address the U.S.-Japanese relationship. But Japan's economy could be critical to helping the United States forestall an economic downturn.
Some critics believe Japan and technology policy are not on the Bush team's radar. They note that the Bush team did not include any mention of Japan in a policy document circulated at a January meeting with high-tech leaders in Austin but did mention many other top trading partners. Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans also do not have strong track records with Japan. Any renewed U.S. policy emphasis on Japan, critics say, will be more oriented toward security than trade.
A Japanese official said in an interview last week that his government's impression is that "Japan is not a priority" for the Bush administration. They have tried unsuccessfully to engage U.S. officials, he said. "We can say no news is good news, but we are a little concerned about the growing frustrations and disappointments with the Japanese economic recovery."
Meanwhile, observers such as Jim Lewis, director of information technology, at the Center for Strategic and International Studies (CSIS), and William Breer, CSIS' Japanese chair, predict that Japan will be at the heart of the U.S.-Asia relationship for the Bush team. Lewis said Japan will be a high priority because it is the United States' closest treaty partner and ally in Asia and because the nation's economies are deeply intertwined.
Breer looked to several Bush appointments, most notably last week's nomination of Richard Armitage to be deputy secretary of state, as evidence. Last fall, Armitage spearheaded the compilation of a report that is a guide for the Bush administration's Japan policy.
The report, heavy on security and intelligence suggestions but complete with economic instructions as well, urged a strong renewal of bilateral ties. The report was notable for its call for a more conciliatory U.S. tone toward Japan, which often has been criticized for contributing to the U.S. trade deficit.
Breer also noted that Paul Wolfowitz, deputy secretary of defense, previously was assistant secretary of state for East Asia and specifically was in charge of Japanese policy. Other Bush administration nominees also have Japanese expertise. The next U.S. ambassador to Tokyo will be important figure in determining U.S. policy toward that nation. Current Ambassador Tom Foley is rumored to be returning to the United States in March.
Proof That 'Japan Still Matters'
Regardless of whether the Bush administration makes policy toward Japan a priority, the nation seems destined to continue getting the attention of U.S. policymakers. In an article entitled "Japan Still Matters — A Lot," Montana Sen. Max Baucus, D, this month emphasized the Asian nation's importance.
Baucus and other U.S. government officials, for instance, applaud Japan's efforts to privatize the nation's dominant telecommunications carrier, Nippon Telegraph and Telephone (NTT). But they want Japan to create an independent telecommunications regulator and stronger antitrust enforcement. A major reorganization of the government effective last month might foster such changes, Baucus noted.
A look at the numbers indicates why Japan may become increasingly important within the technology community. More than 27 million Japanese citizens, or one in five, use the Internet, an increase of 10 million since 1998. More than one-third of users access the Internet via mobile phones, the highest rate in the world. Demand for hardware and software is on the rise as well.
The e-commerce market in Japan lags several years behind the United States, with the most growth occurring in the business-to-business sector. But business-to-consumer e-commerce is expected to explode in the next few years, as security and dispute concerns are resolved.
Japanese credit-card use is slow but growing. The Japanese government is taking steps to encourage e-commerce growth, such as passage of a law recognizing digital signatures. That law takes effect April 1.
Internet start-ups also are becoming more common in Japan, a noteworthy development in a country of little entrepreneurship. "There is clearly a new mood" in Japan, where individualism is being fired by the Internet, said Alan Westin, president of the Center for Privacy and American Business.
Becoming A Global Tech Player
Japan could become a key global player on several technology fronts. The CSIS' Lewis, for instance, said Japan has tended to follow the e-commerce lead of the United States and the European Union. But in a worst-case scenario, the lack of a global e-commerce approach could lead Japan to craft a different standard than U.S. or EU officials, he said.
By forging ahead with an e-commerce directive and other Internet regulations, the Europeans "are becoming the de facto standards setters," Lewis said. The United States negotiated a safe harbor to an EU data-privacy directive, but it has "gotten less traction than expected," with only a handful of U.S. companies signing up. Japan, which has approached Europe to discuss a safe harbor of its own, likely will "find some way" to be in conformance with the European standards, he noted.
The Japanese Parliament this year is expected to consider and pass comprehensive data-protection legislation that would differ from the stricter European law by not creating a separate data-protection agency, according to Westin. Rather, it will have a complaint mechanism channeled through the newly named Ministry of Economy, Trade and Industry (METI).
Japan favors a self-regulatory approach to data protection, according to Shuhei Kishimoto of METI. The United States and Japan have a mutual privacy-seal program that will make the Japanese Information Processing Development Center's mark and the U.S. Better Business Bureau's seal exchangeable on Web sites.
Japan, meanwhile, is ahead of the United States in wireless communications and delivery of services. NTT DoCoMo, its leading provider of wireless services, may enter the U.S market this spring. But the wireless Internet popular in Japan is a pared-down format that "may look kind of cheesy" to U.S. consumers used to fancier visuals, Lewis noted.
On cyber security, Japan still lacks needed laws, Lewis said. Westin said Japan and the United States "are moving along very similar paths" in striking a balance between regulating the Internet and allowing self-regulation.
Japan is increasing its focus on Internet crime and chasing hackers. Japan, like the United States, participating in negotiations for an international cyber-crime treaty at the Council of Europe. "[The treaty] is a good thing because it will get all of the countries of the world singing on the same song sheet, even though they may not like the notes on the sheet," Lewis said.
 | - by William New |
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