• Kyodo

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Japanese and U.S. business leaders on Thursday agreed that supply chains for critical products need more diversification among like-minded nations as the coronavirus pandemic exposed vulnerabilities.

After two days of talks, the business councils of both countries said cooperation among allies, as well as between the public and private sectors, is required to build “resilient and trusted” supply chains and mitigate risks to businesses.

The pandemic has laid bare the vulnerabilities of supply chains for a range of products from semiconductors to vaccines against COVID-19. The global chip crunch and shortages of parts due to factory shutdowns in Southeast Asia have clouded the outlook for a sustained economic recovery led by manufacturers.

The councils said in a joint statement that “onshoring,” or bringing production back home, is “neither realistic nor desirable,” adding that the key to building robust supply chains is their diversification among different nations, especially like-minded ones.

The leaders also called for the governments of Japan and the United States to support efforts made by companies to address human rights abuses, including forced labor, in global supply chains, an issue that has gained attention amid concerns over human rights conditions in the Uyghur Muslim minority in China’s far-western region of Xinjiang.

The Japanese and U.S. governments seek to deepen cooperation to strengthen supply chains for critical products such as computer chips and batteries. The move comes amid an intensifying rivalry between the United States and China as they vie for technological superiority.

The business leaders urged their governments to promote and join “high-standard” trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

China and Taiwan are both seeking to join the free trade pact that came into force in 2018 without the United States, which pulled out as then President Donald Trump prioritized bilateral deals. Japan is a member of the 11-nation framework.

Around 60 corporate executives from Japan and the United States discussed various topics, including coping with the impact of the pandemic to attaining decarbonization during the virtual meeting organized by the Japan-U.S. Business Council and the U.S.-Japan Business Council.

They said vaccine certificates are key to an early resumption of cross-border travel and urged both nations to create a road map for “step-by-step” lifting of entry restrictions.

“We encourage governments to remove obstacles to private-sector collaboration by facilitating a globally consistent regulatory framework for international travel that establishes common standards and science-based reciprocal easing of entry restrictions, such as recognizing accepted vaccination documentation issued in the other country,” the statement said.

On decarbonization, a key theme that would affect businesses in coming years, the councils welcomed both commitments made by their governments to attaining carbon neutrality.

Climate goals set by the governments should be “achievable, durable” and developed in close coordination with the private sector, the statement said.

The business leaders called for clarifying policies to attain their desired energy mix so companies can boost investments in innovative technologies.

Both Japan and the United States aim to reduce carbon dioxide emissions — which are blamed for global warming — and attain carbon neutrality by 2050.

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