Nakagawa： Trust in the WTO, an organization which until now has been held in high esteem by Japanese companies, is wavering, and there are signs of instability in the free trade system. There are challenges within the WTO, such as the process of decision-making by consensus, the increasing influence of emerging countries, and the dysfunction of the Appellate Body. However, for Japanese companies, utilizing overseas markets is crucial. Therefore, continued commitment to the WTO and efforts to rebuild the free trade system remain essential for Japan's trade policy, and there are expectations for a continuation of such policies from Japanese companies.

Takasaki： Information on the actual trade policies and measures taken by each member country, and having access to a way of assessing their future outlooks, are important for companies to participate in overseas markets. If there are measures that put Japanese companies at a competitive disadvantage, it is important to be able to strategically utilize international rules centered on the WTO, by examining whether such measures are consistent with the WTO rules and by taking actions to address any issues that are identified.

Nakagawa： Recently, there has also been an increasing consideration of national security in trade issues. One major factor causing such a change is the growing distrust, especially from the United States, towards China's increasing dominance and military power. In particular, there is an intensifying confrontation over advanced technologies, with strengthened export controls on semiconductors, AI, and other advanced technology fields, as well as increased regulations on investments in these areas.

Takasaki： An increasing number of unilateral measures have been taken that raise tariffs or require the use of local contents, allegedly justified as economic security measures. In some cases, measures taken by one country often lead to reciprocal measures being taken by other countries, and third countries may even join in and take similar measures in response. When considering the impact this can have on Japanese companies and when considering how to respond, in order to analyze the situation properly, it is necessary to examine the measures taken by each country comprehensively.

Fujita： Regarding foreign direct investment regulations, there is a continued trend that sees countries strengthening their regulations, especially in fields that feature important technologies and data. In Europe and the United States, there are actual cases where the regulatory authorities have prohibited certain acquisitions.

Nakagawa： Regarding the US-China relations, human right issues are also a point of contention. The Uyghur Forced Labor Prevention Act, and how it is applied, has also had specific impacts on Japanese companies.

Yokoi： In practice, clients are often concerned about how to certify the non-use of any products produced in Uyghur in the composition of their own products. When obtaining a written pledge from a trading partner, it is also necessary to check whether there would be any issues related to China's anti-foreign sanctions law. Companies may in this way be caught in between US-China tensions. Companies may also be caught up in the US- China tensions with respect to issues related to economic sanctions and export controls. In this regard, in the context of M&A projects, we have conducted so-called 'economic security due diligences' which investigate the compliance status of target companies of the economic sanctions and export control regulations, as well as the policies of the target companies themselves, for dealing with the technical and information security aspects of sensitive investments and transactions. While an economic security due diligence is not necessarily required in all cases, it should be conducted in sensitive industries.

Fujita： With respect to economic sanctions and export controls, the most significant impact in practice comes from the actions of the United States. Since Russia's invasion of Ukraine, the number of entities subject to U.S. sanctions has significantly increased. When non-U.S. companies engage in transactions with sanctioned entities, there is a so-called 'secondary sanctions risk' where such non-U.S. companies may also be designated as sanctioned entities. Recently, entities from countries such as China, Switzerland, and Turkey have also been subject to sanctions, putting Japanese companies in a situation where they cannot ignore the issue. There is also an increasing number of requests for consultations regarding violations of both domestic and foreign export regulations. Companies need to continuously collect information on the trends and details of relevant economic sanctions and export regulations, undertake due diligence depending on the types of risks in their supply chain, and establish appropriate internal systems to comply with relevant laws and regulations.

Takasaki： The diversification of supply chains has become a key point in the economic security policies of various countries. For companies, having an overview of their own supply chains is useful not only for dealing with economic sanctions, but also for other purposes. For example, there are measures requiring information on procurement sources and the availability of alternatives in order to meet the requirements for subsidies, and such information can also be required for reporting to other domestic authorities.

Nakagawa： Under the current situation, it is expected that considerations of economic security will continue to be at the forefront in international trade matters. Issues such as Russia's invasion of Ukraine, the war between Israel and Gaza, tensions on the Korean Peninsula, relations with Taiwan, and rising tensions in the South China Sea, all of these issues will affect international trade. Regardless of the scale of the enterprise, there is an increasing need for companies to respond to economic security risks.

Yokoi： For example, to address the economic security risks related to a Taiwanese contingency, companies will also need to address the risks of provoking a deterioration of Japan-China relations due to the possibility of Japan's participating in economic sanctions against China. Accordingly, companies with business ties to China will also need to be prepared for such a Taiwanese contingency. It is also important to consider what to do with the company's assets and businesses in Taiwan and China, including by preparing contracts while keeping in mind this issues, and by modeling when and how to downsize or withdraw its businesses in these areas.

Yokoi： Recently, the concept of "Economic Intelligence" has been attracting more attention and is often referred to in connection with issues of international trade and economic security. Thanks to its extensive international network, AMT has been embedded in the matrix of international trade relationships as these have been evolving over the course of the last 70 years. Our professionals, located throughout Asia and Europe, are able to respond quickly to complex matters that demand a deep knowledge of international trade and economic security. By way of example, two members of our team of experts, Mr. Nakagawa and Ms. Takasaki, both of whom are participating in today's discussion, have many years of practice in this field, the former within academia, and the latter within a Japanese governmental agency.

Fujita： The situation surrounding international trade and economic security is rapidly changing, and there are many jurisdictions and countless legal regimes the interaction of which must be taken into account when addressing these issues. In this context, for international trade and economic security matters, we believe it is essential to accumulate sound economic intelligence so that we can continue to provide broad, in-depth advice to our clients.