Japan: As Japan Joins US Chip Restrictions in China, Some in Tokyo Feel Uncomfortable
Starting this week, Japan is imposing restrictions on 23 types of equipment, ranging from machines that apply films to silicon wafers to devices that etch microscopic chip circuits that could be used for military purposes.
But while the US mentioned China 20 times in its October statement targeting Chinese companies, Japan has opted for broad control of equipment without specifically targeting its larger neighbor.
“We feel strangely uncomfortable with the way the US is doing it. There is no need to specify the country, all you need to do is control the goods, ”a spokesman for the Japanese Ministry of Industry told Reuters. The source added that Japan cannot apply sanctions to countries if they are not involved in the conflict.
Japan’s trade and industry minister told reporters when announcing Japan’s measures in March that China is just one of 160 countries and regions that will be subject to scrutiny and that Japan’s rules are not designed to follow those of the United States.
However, China warned Japan to back off.
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Tokyo and Washington share concerns about China’s pursuit of advanced technology and agreed in May with other G7 industrial democracies to “reduce the risk” of potential economic coercion from China. However, differences in the control of chip manufacturing equipment can test this unity, or gain a competitive advantage over the other by allowing the other to block exports.
“Each country is responsible for its own licensing policy, and in addition, each country must enforce its licensing decisions,” said Emily Benson, project director for trade and technology at the bipartisan, nonprofit Center for Strategic and International Studies in Washington.
Japan does not apply the US presumption of refusal standard and will allow exports whenever possible, a second Japanese government official said. Japanese government sources asked to remain anonymous due to the sensitivity of the matter.
There may also be hidden tensions because, unlike Japan and the Netherlands, which will introduce controls from September, the US does not limit restrictions to specific tools.
“U.S. regulations continue to restrict other goods and services that others don’t,” said Washington-based trade lawyer Kevin Wolf.
Reuters contacted six chip processing tool manufacturers in Japan. Two of them, sputtering equipment maker Kokusai Electric and leading Japanese chip tool maker Tokyo Electron, said they expect Japanese control to have a limited impact on business.
Chip testing firm Advantest Corp said none of its products were affected.
Lithographic machine makers Nikon Corp and Canon Inc, as well as plate cleaner maker Screen Holdings, did not respond.
Coordination
Aligning Japanese control with that of the US and the Netherlands will require close coordination.
“The question in all of these things is what you can safely let go and what you need to block. Everyone draws the line a little differently,” said Jim Lewis, a former State and Commerce Department official and researcher at the Center for Strategic and International Studies (CSIS). He has met with Japanese trade officials and believes that Tokyo is committed to restricting the export of certain goods.
Tokyo, Amsterdam and Washington said they would like the chips to be added to the list of weapons, dual-use goods and technology controlled by the 42 countries that are members of the post-Cold War Wassenaar Arrangement.
However, it is unlikely that they will garner the necessary unanimous support from their members.
“The Wassenaar Arrangement is practically hopeless because Russia is a member,” Lewis said. “You never start by reaching a consensus. So pick guys who care and make them work together.”
The alternative is to form a closer group with the US and the Netherlands to oversee chip-making tools, which could eventually include other countries, said a Japanese industry ministry spokesman.
The US Department of Commerce and the Dutch government declined to comment. The White house did not respond to a request for comment.
Wider restrictions
Meanwhile, the administration of US President Joe Biden is expected to update its October rules, in part to bring them in line with a broader list of Japanese instruments.
It could also go further than the Netherlands in limiting what Dutch lithography maker ASML can supply to certain Chinese factories, Reuters reported exclusively last month. The US can regulate ASML directly as their equipment includes US parts. At the time, sources expected an update in July, but this is now unlikely.
“One of the reasons this is taking so long is because the US is still negotiating with Japan. They need to make sure that if they block something, they also block it in Japan,” said a source familiar with the discussion.
Tokyo remains concerned that an attack on China will provoke devastating retaliatory measures such as a ban on Japanese electric vehicles, a third Japanese industry official said.
“What’s the use of making someone lose face if that’s not your goal.”