Press Conference by Minister Muto (Excerpt)

*Note: This is a provisional translation for reference purposes only.

11:08 to 11:21 a.m.
Tuesday, January 21, 2025
Press Conference Room, METI Main Building

Opening Remarks

I would like to mention two points.

Visit to Kumamoto

On January 23, the day after tomorrow, I will travel to Kumamoto Prefecture and visit Japan Advanced Semiconductor Manufacturing, Inc. (JASM), which was established by Taiwan Semiconductor Manufacturing Company Limited (TSMC). METI has been providing support for the construction of Factories No. 1 and 2. As I heard that Factory No. 1 has entered the mass production stage last month, I will confirm the progress and then exchange views with the executives of the TSMC headquarters.

In addition, I will hold a roundtable to exchange views with representatives of municipalities, industrial players, and universities and visit SMEs in the region. I will listen to opinions from stakeholders in the region about the impact of TSMC’s business development on the regional economy.

List of companies engaging in price pass-through and overview of future measures for enhancing fair trade

Secondly, I would like to explain two points about price pass-through and fair-trade enhancement.

First, we published a list of companies as an outcome of the Price Negotiation Promotion Month campaign last September. This list contains the government and municipalities for the first time as order-placing organizations as well as 211 private order-placing companies.

The competent minister for thebusiness will give instructions and advice to the top management of order-placing companies that were given unfavorable assessments. We would like these companies to take the assessments from their order-receiving companies seriously and improve their trade policies.

Second, I participated in a small group talk held at the Prime Minister’s Office last week. As Prime Minister Ishiba gave instructions to the ministers about price pass-through, I would like to provide a brief explanation on the overview of the future measures for enhancing fair trade, taking advantage of this opportunity.

Please look at the screen. I would like to provide an explanation using these three slides.

Look at the first slide. We will take measures tailored to the challenges found in each step of transactions. First, regarding price pass-through, please look at the central part of the first slide. We will hold discussions on the amendment of the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors to newly prohibit price setting with no consultations and then we will encourage further negotiations and price pass-through.

Next, look at the left part of the slide.
It is important to disseminate the price pass-through in a manner that ensures that next-tier counterparts are taken into account, such as passing on prices from a top-tier company to a next-tier counterpart and then to a next, deeper-tier counterpart. This is an issue that various companies pointed out in our past surveys. In addition to the ongoing publication of company names, we would like to advance further efforts, including revising the Act on the Promotion of Subcontracting Small and Medium-sized Enterprises, issuing a request from the competent minister for the business, and strengthening administrative guidance.

Finally, look at the far-right part of the slide. Regarding the pass-through of prices to order-receiving companies involved in the transactions at deeper tiers of supply chains, we will address this by expanding the scope of target companies under the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors and the Act on the Promotion of Subcontracting Small and Medium-sized Enterprises as well as by strengthening administrative guidance.

Let’s move on to the next slide. As you can see in the upper part, we have been addressing priority issues other than price pass-through, specifically, payment.

Next, I will explain the left part of the slide. During the next Price Negotiation Promotion Month campaign, METI will conduct a survey to uncover the actual state of discount burden that order-receiving companies bear, in particular relating to negotiable instruments, and we will strive to encourage order-placing companies to pay quickly, even for transactions not falling under the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors.

Next, I will talk about the central part of the slide. The Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors prohibits payment using negotiable instruments in the transactions falling under the Act. We will strive to not only accelerate order-placing companies’ payment but also expand the scope of prohibited negotiable instruments.

As you can see on the third slide, we will also address challenges seen throughout industries, including business practices. The competent ministers for the business, including me, will directly request the industries under their jurisdiction to sweep away deeply-rooted wrong business practices, including discounting, which is a practice of deducting a certain percentage from payment.

Comprehensively taking these measures, METI will encourage SMEs to structurally increase wages. For detailed information, please ask the administrative staff later. I will end my remarks here.

Question-and-Answer Session

President Trump’s policy of strengthening tariffs

Q: I would like to ask you regarding Mr. Trump’s inauguration as the U.S. president.
In his inauguration address, Mr. Trump spoke of the imposition of tariffs on products from overseas as an effort to enrich U.S. citizens and reiterated his policy of strengthening tariffs. As some media reported a moment ago, Mr. Trump stated that he will consider imposing a 25% tariff on products from Canada and Mexico from February 1. Could you offer your view on the strengthening of tariffs and the impact of this on the Japanese economy?

A: I think you are asking about the signing by the president a series of executive orders. The U.S. has not announced specific tariff measures, and I am not aware of the exact details. Also, as a variety of information has been circulating in a variety of forms, we should carefully examine the impact of these measures on Japanese companies based on the details of the tariff measures. I believe that the impact of these measures will depend on whether or not Japan can appropriately address such measures. Accordingly, we will firmly address such measures bearing in mind its importance.

In any case, we should endeavor to maintain close communication with the U.S. administration in order to advance and develop the economic ties between Japan and the U.S. in a way that contributes to the national interests of Japan.

President Trump’s announcement of the U.S. withdrawal from the Paris Agreement

Q: Mr. Trump also announced that the U.S. will withdraw from the Paris Agreement. As some raise concerns, this withdrawal may become a trigger that decreases the momentum for global warming countermeasures worldwide. Could you offer your view on this as a minister?

A: I recognize that President Trump announced the U.S. withdrawal from the Paris Agreement. Climate change is a pressing common challenge that people face, and, still, efforts by all countries remain important. Even if any specific country changes its policies, the efforts for global decarbonization need to steadily be advanced. Japan, should continue to firmly contribute to these efforts through the Asia Zero Emission Community (AZEC) .

Impact of President Trump’s inauguration on the semiconductor policy

Q: Regarding the question mentioned now, some raise concerns that President Trump may intensify protectionism in the semiconductor policy going forward. In this regard, could you comment on how the Government of Japan will address the Trump administration?

A: Japan and the U.S. have been cooperating in the semiconductor policy for a long time. To address some concerns that have arisen about the imposition of tariffs, the governments of Japan and the U.S. have been supporting Japanese and U.S. companies in mutual investment and advancing Japan-U.S. collaboration, such as Rapidus and IBM, and other research and development projects. I think that Japan-U.S. collaboration in the semiconductor policy will continue to hold a very important position in the world. I hope that Japan will continue to cooperate and collaborate with the U.S. while maintaining close communication with the new administration.

President Trump’s policy of increasing LNG production

Q: In his inaugural address, President Trump declared a national energy emergency concerning the energy policy and indicated his intention to increase the production and export of fossil fuels.
He previously indicated a policy of resuming the review of new plans, in particular for LNG thermal power generation, which was paused by the Biden administration. In the latest Strategic Energy Plan, the Government of Japan has positioned LNG as an important energy source during the transition period, and some industrial players have expressed their hopes that this may lead to the diversification of LNG import sources and cost reductions. Could you comment on this as the Government of Japan?

A: I recognize that President Trump indicated the future direction, stating that the U.S. will lift the measures for pausing new LNG export licenses. As you mentioned, I am also aware that some press coverage reports that he is promoting the idea of drilling for more and more LNG. Still, as this lift is not officially decided, we will have to pay close attention to the situation.

If the U.S. indeed lifts the measures, I recognize that the lift may have an impact on the global LNG market, where the supply-demand balance has been structurally tightening, increase supply volumes and contribute to stabilizing the market. I also believe that this may help Japan to enhance its predictability in LNG procurement. In any case, from the viewpoint of securing the stable supply of LNG to Japan, we will have to continue to pay close attention to the future direction of the LNG policy shown by the new U.S. administration.

Additional economic sanctions of the U.S. against Russia

Q: On January 10, the U.S. announced additional economic sanctions against Russia. As part of the sanctions, 100 or more oil tankers known as a shadow fleet were newly added to the list of sanction targets. Looking at Japan, some raise concerns related to the sanction that this may cause an impact on the Sakhalin II project. Could you offer the government’s view on this?

A: The Sakhalin II project is considered extremely important for Japan’s energy security. We have confirmed with the U.S. government that these U.S. sanctions will not affect the operation of the project, and, accordingly, we recognize that there will be no impact on the operation of the project. As the new administration has now been established, Japan should continue to further enrich the collaboration with the U.S. government, working with the new administration. At the same time, also concerning the project, we should do our utmost to ensure that no interruptions occur in the stable supply of energy to Japan, and this is the role that we should play.