Business / Economy

Free trade, energy diversity and 'real' big data vital to Japan's survival, says METI chief Hiroshige Seko

by Shusuke Murai

Staff Writer

As a resource-poor nation, Japan’s prosperity relies on free trade. Under worldwide protectionism, it can’t survive.

That’s the message Economy, Trade and Industry Minister Hiroshige Seko wants to send as the emergence of protectionism across the globe becomes a worsening headache for export-reliant Japan.

“If free trade collapsed, Japan would lose its base to stand on,” he said in an exclusive interview with The Japan Times earlier this month.

“We have to keep in mind the basic fact that what underpins resource-poor Japan’s current wealth is free trade.”

Over the past year or so, the global economic environment has changed — negatively, especially for Japan — with U.S. President Donald Trump withdrawing from the Trans-Pacific Partnership agreement and imposing tariffs on steel and aluminum, while Britain is set to exit the European Union.

But for Japan, three major free trade agreements remain major pillars — the TPP minus the U.S., the economic trade pact with the EU, and the Regional Comprehensive Economic Partnership accord with Southeast Asia, Seko said.

After the Trump administration left the original TPP, the remaining 11 nations signed a new pact, dubbed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with Japan spearheading the negotiations.

Since then Trump has touched on the possibility of rejoining the pact, but only if the deal becomes “substantially better” than the original deal negotiated by former President Barack Obama. The return of the world’s largest economy would enable the pact to cover nearly 40 percent of global economic output and would carry significance for security, countering China’s rising influence.

The 11 countries have maintained that the door remains open for others, in particular the U.S., to join later. But Seko denied the possibility of renegotiating the pact, saying the agreement stands upon the basis of delicate negotiations among member countries.

“Each country is now working on to their domestic processes (to ratify the pact). I don’t think we can change the contents of the agreement,” he said.

Dealing another blow to Japan was Trump’s imposition of tariffs on imported steel and aluminum. Despite being a key ally, Japan did not make the exemptions list.

Trump has often accused Japan of “unfair” trade practices with the U.S., citing the trade deficit in goods with Japan.

“It’s regrettable,” Seko said.

Although the U.S. claims the tariffs are for the sake of national security, Seko says there is no way Japan’s exports of steel and aluminum would be a threat to the U.S.

“Japan’s steel and aluminum products are also used in the U.S. to produce high-quality products and are making great contributions to American export and jobs.”

But unlike China, which immediately retaliated by imposing tariffs on U.S. goods, Japan will not take retaliatory action. Instead, it may bring its opposition to the U.S. tariffs to the World Trade Organization if needed, Seko said.

“Escalation of counter measures will not serve any country’s interest,” he said.

Energy policy

For a nation with an energy self-sufficiency rate of 8.4 percent, one of the lowest among 35 OECD countries, securing stable sources of energy is also crucial.

Seko said Japan should retain all options — including nuclear power — rather than shifting toward one particular power source.

Calls to abandon or reduce Japan’s dependence on nuclear power have grown among the public after the reactor meltdowns at the Fukushima No. 1 plant in 2011. Atomic power is no longer deemed such an attractive option due to increasing costs for safety measures and mounting public opposition.

Seko acknowledged that Japan needs to continue making efforts to lower its dependency on nuclear power generation. But he added that Japan should not completely part ways with nuclear power, because “it’s extremely difficult to retrieve technologies once lost.”

“If Japan gave up nuclear technology completely and at the same time it became difficult to meet the entire electricity demand with renewables, we would lose ways to realize a noncarbon electricity system.” he said.

“I think we should maintain nuclear power as one option for our multiple-track, flexible-scenario (on energy policy),” Seko said.

Japan’s strength lies in having technologies to draw on various power sources, including “top-tier” thermal power plants that emit very little carbon dioxide, nuclear energy, renewables and hydrogen power, he said, enabling Japan to shift from one energy source to another.

Another risk for the nation is its heavy reliance on thermal power, using fossil fuels such as coal, petroleum and liquefied natural gas imported from Australia and the Middle East.

According to the trade ministry, 89 percent of all electricity was generated by thermal power in fiscal 2016, making Japan vulnerable in terms of energy security.

Unlike those in Europe the country cannot rely on importing electricity from neighboring nations for geopolitical reasons, and relying on one particular energy source poses a high risk, Seko said.

“I have been seriously studying the energy situation overseas and the policies behind them. As I’ve learned more, I realize each of them differs greatly based on factors such as available natural resources and accessibility to gain energy from other countries,” he said.

Despite rising support for renewable energy, especially after the 2011 meltdowns, Japan has been lagging behind other leading countries in such energy usage.

Promoting low-emission sources is essential for the country to achieve its goal to cut 80 percent of greenhouse gas emissions from 2013 levels by 2050 under the 2015 Paris climate change agreement.

Earlier this month, a government panel of experts on energy policy compiled a report calling renewable energy, including solar and wind power, “a major source of electricity” for achieving a carbon-free society toward 2050. But the report did not specify the percentage of their share in the nation’s future energy mix.

The report also listed nuclear energy as “an option” to achieve a low-carbon society and called for continuing efforts to regain public trust toward nuclear technology.

But that’s easier said than done.

“We have to consider what to do when there is not enough sunlight or wind. In Europe, they can import electricity from other countries. But Japan cannot do that,” Seko said.

Hydrogen energy

Another key engine for Japan’s pursuit of a low-emission society is hydrogen energy — the area Seko said he will “put substantial efforts” into so the nation can lead the world.

“Japan already has elemental technologies surrounding hydrogen. And Japanese automakers are the leaders in developing fuel cell vehicles. It is unavoidable — we must take advantage of this,” he said.

The industry ministry aims to build 160 hydrogen stations in the nation by fiscal 2020 and increase the number to 900 by fiscal 2030. It also plans to have 40,000 hydrogen-powered fuel cell vehicles (FCVs) on its roads by 2020, and to increase that figure twentyfold to 800,000 by 2030.

In tandem with the ministry’s initiative, major automobile and energy firms in March formed a consortium called Japan H2 Mobility (JHyM) as part of an “all-Japan” effort to make the nation a global leader in hydrogen energy and zero-emission fuel cell vehicle technology.

Hydrogen energy is often referred to as the ultimate zero-emission technology, as it only emits water vapor as a byproduct of electricity. But high production costs and a lack of hydrogen charging stations have hampered the spread of hydrogen-powered vehicles.

Globally, however, it’s electric vehicles, and not FCVs, that are gaining the spotlight as the next-generation low emission cars.

But there is a “huge misunderstanding” over the clean image of EVs, Seko said.

It is perceived that EVs don’t emit carbon dioxide. But the big question is, where does that electricity come from?” he said.

EVs could be really effective for countries like France, where 70 percent of electricity is generated at nuclear plants, and Scandinavian countries, where a large part of electricity comes from hydropower plants, Seko said.

But EVs are not as effective in Japan, especially with most nuclear power plants having stopped operations following the 2011 meltdowns, he said.

“EVs can be less green than hybrid cars in a country where dependence on thermal power is high. This all depends on the energy mix of the country,” he said. “The world now is starting to look toward hydrogen technology. This proves Japan’s approach was right.”

Digital competitiveness

Japan has been lagging behind in global competition over IT services, but Seko is confident the nation can still catch up in the digital race on what the ministry dubs “real data.”

Real data are a vast amount of data obtained from physical sensors that track the activities of people and machines at places such as medical facilities, manufacturing plants and autonomous driving test sites.

This contrasts with “virtual data,” the sets of data obtained from people’s online activities on social media that are dominated by U.S.-based IT giants such as Google, Apple, Facebook and Amazon.

The industry ministry has been pushing the “connected industries” initiative to spur innovation and improve productivity by utilizing big data from manufacturing factories, workplaces and other venues across company and industry boundaries.

The connected industries initiative echoes Germany’s “Industry 4.0” initiative, which is aimed at driving forward digitization of traditional manufacturing.

The ministry says Japan has an advantage in the quality of its real data thanks to its manufacturing prowess. But the nation’s know-how in creating high-quality products has not been fully utilized, as most knowledge is held exclusively by companies or by individuals.

“Japan has abundant, high-quality real data in the fields of the manufacturing and service sectors,” Seko said.

At a conference to introduce the initiative in October, Seko stressed the need for Japanese companies to cooperate more with each other to become more competitive in the global market rather than focusing too much on competition at home.

“What Japanese industries need to do now is to identify and expand the areas of cooperation as much as possible and analyze the big data by using artificial intelligence in order to improve the quality level of their products and services,” Seko said during the interview.

Seko admitted that, at present, overseas IT giants are winning the global race.

But at the end of the day, Seko said, information technology can’t be utilized on its own without a physical tool.

“The (field of competition) will eventually shift from virtual data to real data,” he said.

“And I believe that time is now.”


Hiroshige Seko draws on extensive public relations background in his role as key Abe aide

Deputy Chief Cabinet Secretary Hiroshige Seko (center) speaks with Prime Minister Shinzo Abe (right) during an Upper House plenary session in January 2015.
Deputy Chief Cabinet Secretary Hiroshige Seko (center) speaks with Prime Minister Shinzo Abe (right) during an Upper House plenary session in January 2015. | KYODO

A political blue-blood, a media strategy specialist and a close aide to Prime Minister Shinzo Abe — Hiroshige Seko is all of these things.

A former communications director for NTT Corp., Seko, 55, devoted 20 years in politics to serving as a point man for reforming the government’s public relations strategy. But a career as a politician was not something he wanted at the start.

In his book, Seko — who received a master’s degree from Boston University’s College of Communication in 1992 — said he had been planning to devote his career to being a public relations specialist.

“Although my parents and relatives were great people, I had built my own career without relying much on them. That was something I was proud of,” Seko wrote.

His grandfather, Koichi Seko, was a Lower House lawmaker and founder of Kindai University in Osaka, and his uncle was Masataka Seko, a Liberal Democratic Party heavyweight who served as home affairs minister. But soon after his uncle died and his seat was vacated, Seko was persuaded into politics by then-LDP Secretary-General Yoshiro Mori, who later became prime minister. And so Seko began his political career in 1998.

As an LDP politician, Seko served as the party’s public relations official thanks to his rich experience in the field.

One of the most notable positions he has held was that of Abe’s special adviser in charge of public relations strategies during the leader’s first stint as prime minister in 2006.

During Abe’s LDP presidential election campaign, Seko instructed Abe on how he should speak during TV shows and the direction in which he should face when answering questions from reporters so he would look more convincing to TV viewers, Seko said in an interview with the monthly magazine Ronza in 2006.

Seko’s close ties with Abe have continued during the latter’s second stint as prime minister, starting in 2012 when he was appointed one of Abe’s deputy chief Cabinet secretaries.

In an interview with the monthly magazine Zaikai Nippon in 2014, Seko said he intended to “support Prime Minister Abe thoroughly.”

“I want this administration to continue as long as possible. I want this administration to complete the revision of the Constitution and change this country. I believe that’s something only Prime Minister Abe can achieve,” he said.

After serving as deputy chief Cabinet secretary for almost four years — the longest term ever for the position — Seko was appointed economy, trade and industry minister in 2016.

Known as a fervent collector of digital gadgets, Seko is a close friend of Nobel Prize-winning stem-cell researcher Shinya Yamanaka, the father of iPS cell research who went to the same junior high and high school as Seko. (Shusuke Murai)