JETRO Global Trade and Investment
Report 2021
ーThe world changed by COVID-19, the outlook forsustainable international business ーOver view

J a p a n E x t e r n a l Tr a d e O r g a n i z a t i o n ( J E T R O )Overseas Research Department
July 2 9 th, 2 0 2 1

Outline
I.

World and Japan’s economy and tradeII.

Global FDI and Japan’s FDI

III. Trends in global trade rule formation
IV. Digital trade and ruleV.

The world heading for green growth

Copyright © 2021 JETRO. All rights reserved.

2

I. World and Japan’s Economy and Trade

Copyright © 2021 JETRO. All rights reserved.

3

I. World and Japan’s Economy and Trade

1

Trends in the regulatory strength index
for COVID-19 prevention measures (2020)

Trends in world real GDP growth rate

80

70

70

60

40
30

-1

-2

20

-3

10

-4

0
20 (Year)

1980

85

90

95

2000

05

10

15

Note: 1)The latest data are as of 2022. 2021 and 2022 data are estimated values by IMF.
2)”Countries and regions with negative real GDP growth” is the percentage of theworld. Due to data constrains, the number of samples for each year may vary.
3)Some countries/regions are based on the fiscal year.
Source: “WEO, April 2021” (IMF)

30
20
10
(Daily)

0

12

0

40

11

Countries and regions withnegative real GDP growth rate(right axis)

10

50

1

50

9

2

8

60

7

3

80

6

4

90

5

5

World real GDP growth rate

90

4

6

(%)
100

2020/1

(%)
7

3



The world’s real GDP growth rate in 2020 was -3.3% year-on-year. It was the first negative growth since 2009(-0.1%), which was affected by the global financial crisis. More than 80% of countries and regions recorded
negative growth.
As COVID-19 spread, each country imposed containment measures. It affected economic activities.

2

World economic growth decelerated owing to COVID-19

Note: 1) Index of the strength of government/authority measures to prevent the spread of
COVID-19. 100 is the strictest.
2) Average of 184 countries/regions from which full-year data can be generated.
Source: University of Oxford
Copyright © 2021 JETRO. All rights reserved.

4

I. World and Japan’s Economy and Trade

Spending on hotels and catering and transportation dropped
sharply during the COVID-19 pandemic2

Growth rate in consumer spending in the 27 major economies in 2020, as measured by UK-based Euromonitor
International’s database, was down year on year.
“Hotels and catering” and “Transportation” decreased. Service industries involving outings and human contact
were affected.

Trends in growth rate of spending and savings rate
in major countries(%)
15

Trends in spending by goods and services in major countries(%)
20

Residents’ expenditure
growth rate: China

(%)
120

25

10

Savings rates in major18
countries (right scale)

Residents’ expenditure growthrate in major countries

5

(%)
30

16

20

100
Food and non-alcoholic beverages

15

80
60

Housing

10

40

5

0

14
Residents’ expenditure
growth rate: US

-5
2007

09

11

13

15

20

0
-5

17

19

21

23

(Year) 12
25

Note: 1)”Residents’ expenditure growth rate” is based on constant local
currency and “Saving rate (ratio of savings to disposal income)”
is based on current local currency.
2)”Major countries” are calculated using GDP (purchasing power party).
“Major countries” are 27 countries: Bangladesh, China, India, Indonesia,
Japan, Malaysia, Pakistan, Philippines, Singapore, Sri Lanka, Thailand,
Vietnam, Russia, Brazil, Mexico,
Egypt, Iran, Kenya, Nigeria, Saudi
Arabia, South Africa, UAE, US,
France, Germany, Turkey and theUnited Kingdom.
3)Data after 2021 is forecast basis.
4)Based on the data as of July 2, 2021.
Source: Euromonitor International and “WEO” (IMF)

0

Communications

Reference: Nonresident Expenditure-20(right axis)

-10

-40

-15

-60

Transport-20-80
Hotels and catering-25
2007 09

11

13

15

17

19

21

23

25

-100
(Year)

Note: 1)The growth rate in constant local currency of each 27 countries isweighted by GDP (purchasing power party.
2) Predicted value after 2021.
3) Data after 2021 is forecast basis.
Source: Euromonitor International and “WEO” (IMF)
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5

I. World and Japan’s Economy and Trade3

Efforts by major countries and regions toward economic
recovery
Each country and region has implemented economic stimulus measures that combine financial and fiscal
policies. Consequently, public debt is expected to remain high. As the pandemic progresses, the ability of acountry to adapt to the limitations of their activities also poses risks.
Major countries and regions focus on sustainable growth strategies in order to recover the economy damagedby the COVID-19 crisis.

Trends in world’s public debt andfiscal balance
IMF outlook since 2021
(Percent of GDP)

(Percent of GDP)

0

110
Fiscaldeficit-5

Main policies of major countries and regions
Country/region Main Plans(date)

Major comments and statements on climate change, green, digital, etc.

US “State of the Union Address(policy speech)(April 2021)“When I think “climate change,“ I think “jobs.” (Details omitted) We have to develop anddominate the products and technologies of the future.”

China “14th 5-Year Plan and2035 Long-Range Objectives”

It mentioned that the independence and self-reliance of science and technology should bea strategic support for national development. The acceleration of digital development andgreen development patterns are also referred.

(Adopted in March 2021)

100“Multiannual Financial
Framework” (Adopted in・At least 35% of the budget for EU framework for R&D assistance “Horizon Europe” will
be devoted to climate change-related R&D.
･The investment guidelines for the “Global challenges and European industrial
competitiveness” (announced March 2021) indicate a policy of making investments inline with strategic orientations, such as making Europe the first digitally enabled circular,
climate-neutral and sustainable economy.

Next Generation EU, therecovery fund for Europe

Of the 750 billion euros in reconstruction funds, 672.5 billion euros in “Recovery resiliencefacility” are subject to conditions such as more than 37% of the budget will be allocated togreening and more than 20% to digitization.

December 2020)

EU

- 10

90

ASEAN “ASEAN Comprehensive
Recovery Framework”

Government
debt(right axis)(Approved in November 2020)

80
2016
17
18
19
20
21
22
23
24
25
26

- 15

(Year)

Source: “Fiscal Monitor” (IMF)(Effective June 2021)

Japan “Action Plan of the
Growth Strategy”(Cabinet approval in June 2021)

The plan will be driven by broad strategies, such as accelerating inclusive digitaltransformation (DX) and advancing towards a more sustainable and resilient future.
・Boldly promote a future-oriented DX as a driving force for growth, strengthen our
professional staff and deliver the benefits of digitization to the entire nation.
・Implement the Green Growth Strategy to achieve the high goal of carbon neutrality by
2050.

Note: The date of the “Next Generation EU, the recovery fund for Europe” is the timing of entry into force of the Own Resources
Decision necessary for the issue of the joint bond in the name of EU as the financial resources.
Copyright © 2021 JETRO. All rights reserved.
Source: Documents published by the governments of respective countries and regions

6

I. World and Japan’s Economy and Trade

4World trade in 2020 decreased in both trade value and volume
In 2020, world trade (trade in goods, nominal export value) decreased by 7.0% (JETRO estimate) from theprevious year. Both the amount and the quantity dropped drastically.
It was the first time since the global financial crisis in 2009, that both the amount and the quantity had
negative growth.
World trade-related indicators

Trends in world trade(Unit: %)World trade (exports)(Trillion USD)

2017

2018

2019

2020

15.7

17.4

19.0

18.5

17.2

Nominal growth rate

-3.2

10.8

9.9

-2.9

-7.0

Real growth rate

1.9

4.5

3.0

0.3

-5.0

Price growth rate

-5.0

6.0

6.7

-3.2

-2.1

World trade (import)(Trillion USD)

16.0

17.8

19.6

19.1

17.6

Nominal growth rate

-2.9

11.1

10.5

-3.0

-7.5

Real growth rate

0.9

5.3

3.5

0.0

-5.6

Price growth rate
Industrial production
index growth rate
(OECD)
Rate of change innominal effective
exchange rate in dollar

-3.7

5.5

6.7

-3.0

-2.0

0.4

3.0

2.3

-0.3

-6.4

0.5

-1.0

-2.4

3.4

-1.0

Note: Both trade values and nominal growth rates are estimated by JETRO. Refer
to Chart I-19 of “Global Trade and Investment Report” for more details.
Source: Trade statistics of respective countries and regions(Billion USD)(%)

25,00025
20
15

20,00010
515,0000-5

10,000

- 10
- 15

5,000

- 20
- 25

0

- 30

2002
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20

2016

Export value
Real growth rate (right axis)(Year)

Nominal growth rate (right axis)

Source: JETRO’s estimates and WTO data
Copyright © 2021 JETRO. All rights reserved.

7

I. World and Japan’s Economy and Trade

5“Travel” negatively impacted service-related trade
According to the WTO, world trade in services decreased by 19.9% from the previous year to $4.910 trillion in2020.
In the World Tourism Barometer released in January 2021, UN World Tourism Organization (UNWTO) described2020 as “the worst year in tourism history when the number of international visitors dropped by 1 billion.”

Service-related export value of world and majorcountries’ trade

Export value of world trade in service by category(2020, estimates)($100 million)
Trade in Services (export basis)

70,000Value

30

Growth rate of trade in services (right axis)
Growth rate of trade in goods (right axis)

60,000(Unit: 100 million USD, %)

(%)

20

50,00010

40,0000Total servicerelated exports

Composition
ratio

GrowthContribution
rate

49,098

100.0

-19.9

-19.9

Goods-related
services

1,983

4.0

-12.9

-0.5

Logistics

8,490

17.3

-18.8

-3.2

Travel

5,326

10.8

-63.2

-14.9

Other Services

33,300

67.8

-2.3

-1.3

30,000- 10

20,000- 20

10,000
0

- 30
2011

2013

2014

2015

Note: Figures for 2020 are estimates.
Source: WTO data

2016

2018

2019

2020

(Year)

Source: WTO data
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8

I. World and Japan’s Economy and Trade

6

China leads world trade growth in 2021
China’s exports grew 48.6% in the 1st quarter of 2021 and imports grew 27.6%, leading the entire growth rateof world trade.
By product, sales of electrical equipment, including integrated circuits, have been recovering since the latter
half of 2020.



Quarterly change in trade values of majorcountries and regions (YoY)(Unit: %)Quarterly exports for 33 major countries/regions by product, on
quarterly basis(Unit: %)Exports

2020

2020
I

II

2021
III

I

II

III

IV

2021 Contribution
*1)
I

IV

I

Total

-5.7

-18.3

-3.1

4.3

16.9

16.9

China

-13.4

0.1

8.8

17.1

48.6

Machinery and equipment

-7.0

-20.5

-1.4

5.9

17.6

7.6

US

-3.0

-29.8

-13.2

-5.4

1.9

General machinery

-8.9

-14.8

-1.7

4.0

17.3

2.2

Germany

-6.1

-25.2

-3.5

5.8

12.3

Japan

-4.4

-23.7

-12.0

3.3

8.8

Computer and peripheral
equipment

-13.0

4.2

12.0

12.4

31.9

1.0

ASEAN-5

-0.2

-15.9

-3.3

1.7

12.6

Semiconductor
manufacturing equipment

8.9

13.3

24.8

10.9

39.5

0.2

Industrial robots

-2.3

-17.5

-14.0

1.3

21.5

0.0

Electrical equipment

-3.2

-5.4

6.0

13.0

27.1

4.2

-11.5

-6.9

-0.6

6.1

29.0

0.8

-3.6

-5.1

3.8

13.5

23.6

0.2

Integrated circuits

8.1

7.0

12.6

17.1

27.4

1.4

Lithium-ion rechargeable
batteries

8.9

4.2

29.3

33.9

57.8

0.1

Import
2020

2021
III

IV

II

China

-2.3

-9.3

3.6

5.7

27.6

US

-4.9

-20.1

-4.8

4.3

11.7

Germany

-5.5

-19.3

-2.2

6.7

12.2

Japan

-6.2

-13.9

-18.9

-8.3

4.7

Transport equipment

-10.8

-48.7

-12.5

-2.4

6.0

0.7

ASEAN-5

-2.8

-22.8

-13.9

-7.1

9.8

Automobiles

-10.5

-54.2

-8.9

5.6

11.6

0.6

-9.3

-54.4

-7.6

6.6

11.1

0.5

Note: 1) Growth rate of imports/exports to the world.
2) The figure for ASEAN-5 is the sum of Indonesia, Malaysia,
Philippines, Singapore and Thailand.
Source: Trade statistics of respective countries and regions

I

Communication equipment

I

Electronic tubes/
semiconductors

Passenger vehicles

Note: 1) 1st quarter of 2021.
2) Only 33 countries/regions with quarterly data for 2021 are included.
Source: Trade statistics of respective countries and regions

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9

I. World and Japan’s Economy and Trade

7

Vaccine is the key component for economic recovery in 2021

In the first quarter of 2021, 33 major countries and regions exported vaccines worth $13 billion. The growth
was led by Belgium and China, up 1.8 times year-on-year.
Some point out that China has been actively engaged in vaccine diplomacy by spreading its own vaccines inemerging countries.



Major countries’ export values of vaccines(YoY comparison, %)(Million USD)

14,00012,000China’s vaccine export destinations (the 1st quarter of 2021)

Belgium
Germany
Spain
Growth rate (right axis)

China
Switzerland
Others90
80
70

10,000Indonesia
18.8%

Others
25.8%

60
50

8,000

Vaccine destinations
from China($1.83 billion)

40
6,000

30
20

4,000

10

2,000

0

Uruguay; 1.8%

Dominican Republic; 1.8%
Hong Kong; 2.1%

Colombia; 2.4%

2020Q1

2020Q2

2020Q3

2020Q4

Mexico7.7%2021Q1

Note: Only 33 countries/regions with quarterly data for 2021 are included.
Source: Trade statistics of respective countries and regions

Brazil
10.4%

Chile
7.5%

- 10

0

Turkey
12.7%

UAE
8.8%

Source: China Trade statistics
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10

I. World and Japan’s Economy and Trade

8

Japan’s trade heading to recovery from the COVID-19 crisisConcerning Japan’s trade (customs clearance basis) in 2020, its exports decreased by 9.3% from the previous
year to $640 billion, and its imports decreased by 12.0% to $634.1 billion. Exports dropped sharply in the
middle of the year, then recovered gradually. Imports also picked up in the second half of the year.
Exports from January to May 2021 increased by more than 20% over the same period of the previous year. The
figure also exceeded that of the first 5 months of 2019.



Japan’s trade trends

Japan’s import & export growth (year-on-year change)(Million USD, %)

2021

50
40
30
20
10
0
- 10
- 20
- 30

2019

2020

705,682

639,963

305,456

-4.4

-9.3

20.6

720,765

634,053

300,056

-3.7

-12.0

10.4

-15,083

5,909

5,400

30

(YoY difference)-4,82020,992

23,71320

Export volume index

103.0

90.9

100.4

(Rate of change)

-4.3

-11.7

14.4

Import volume index

104.6

97.8

102.0

(Rate of change)

-1.1

-6.5

5.0

Total exports(Rate of change)

Total imports(Rate of change)

Balance of Trade

January May(In both of the charts)
Note: 1) JETRO converted the figures disclosed in JPY into USD.
2) The volume index is on a 2015 basis.
Source: “Trade Statistics” (Ministry of Finance), “Foreign Exchange Rate” (Bank of Japan)

(%)
数量ベース
Volume
basis

1

4

7

10

1

Exports
輸出

金額ベース
Value basis

4

2018

7

10

1

4

2019

7

10

1

2020

5
2021

(%)

Import

10

0
-10
-20
-30

Volume basis
1

4

7
2018

10

Value basis
1

4

7
2019

10

1

4

7
2020

10

1

5
2021

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11

I. World and Japan’s Economy and Trade

Antecedent recovery in exports to China

9

In 2020, Japan’s exports to China antecedently rose 4.9% from the previous year, while its exports as a wholedeclined. China’s share in Japan’s total exports rose to 22% from 19% last year. Japan’s exports to the US, theEU and ASEAN rebounded after bottoming out in the 2nd quarter of the year.
By product, exports of semiconductor-related products were strong. In the automobile sector, environmentallycompatible vehicles such as hybrid vehicles are showing steady growth.

Japan’s exports and imports by major country/region (YoY)30

Japan’s export trends by main product(%)(Million USD, %)YoY comparison

20

10

China

2020

EU

0

- 20

ASEAN

- 30

-9.3 305,456

20.6

Semiconductor
manufacturing equipment

23,617

4.4

11,89736.0

Semiconductors andelectronic components

38,081

3.9

16,287

9.9

Automobiles

89,446-18.1

41,44024.7

21,212

9.8

9,854

30.3

Automobile parts(excluding engines)

27,326-17.3

13,71730.7

Iron and steel products

31,665-13.1

16,116

13.9

Environmentallycompatible vehicles

- 40

US

- 50
Q1

Q2

Q3

2019

Q4

Q1

Q2

Q3

Q4

2020

Q1

YoY
21.
20.
change 1Q 2Q 3Q 4Q 1Q

639,963

Total exports

- 10

YoY
changeYoY changeJan. May
2021

2021(year / period)

Note: Growth rate of EU after the 1st quarter of 2020 is a comparisonof 27 countries.
Source: “Trade Statistics” (Ministry of Finance)

Note: Environmentally compatible vehicles: hybrid vehicles, plug-in hybrid vehicles, and electric vehicles.
Source: “Trade Statistics” (Ministry of Finance)
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12

I. World and Japan’s Economy and Trade

10




Strong exports despite of the COVID-19 crisis

Exports of digital-related parts, semiconductor equipment and some consumer goods have helped offset the
decline in Japan’s overall exports due to the COVID-19 crisis. Among consumer goods, skin care products andvideo game equipment were particularly strong.
In 2020, Japan ranked 3rd in the world in exports of skin care products and 2nd in exports of video gameequipment.
Ranking of exports of base makeup and skin care products
2015(All: Million USD, %)2020

Export value

Percentage

Export value

Percentage

World

27,791

100.0

World

49,181100.0

1France

5,604

20.2

1

France

7,532

15.3

2

US

2,851

10.3

2

South Korea

5,698

11.6

3

South Korea

2,247

8.1

3

Japan

4,817

9.8

4

Germany

1,934

7.0

4

US

3,868

7.9

5

UK

1,297

4.7

5

Germany

2,474

5.0

6

Japan

1,096

3.9

Ranking of exports of video game equipment
2015

2020

Export value

Percentage

Export value

Percentage

World

14,099

100.0

World

23,384

100.0

1

China

8,400

59.6

1

China

9,984

42.7

2

US

1,175

8.3

2

Japan

2,726

11.7

3

Germany

818

5.8

3

Netherlands

1,730

7.4

4

Poland

500

3.5

4

Germany

1,379

5.9

5

Japan

445

3.2

5

Poland1,529

6.5

Note: Figures for 2020 are estimated by JETRO. Source: “Trade Map” (ITC) and trade statistics of respective countries.

Copyright © 2021 JETRO. All rights reserved.

13

I. World and Japan’s Economy and Trade11

Surplus of travel services shrunk significantly

In 2020, Japan’s trade deficit in the services sector was $34.9 billion, a significant increase from the previous
year. The decline reflected a drop in the receipts of travel services.
The decline in the surplus in charges for the use of intellectual property was affected by a decrease in the
charges for the use of industrial property rights, mainly in the automobile industry.
Receipt of charges for the use of intellectual property rights
and overseas automobile production volume

Japan’s trade balance in services
60(Billion USD)

5050(Billion USD)(Million units)
20

45

18

40

16

20

35

14

10

30

12

0

25

10

-10

20

8

15

6

10

4

-50

5

2

-60

0

0

40
30

-20
-30
-40

-70

2000
10

11

12

Logistics
Construction
Finance
Other business services
Service balance

13

14

15

16

17

18

19

20

20
21
1-5 1-5(P)TravelInsurance and pensions
Royalties for intellectual property rights, etc.
OthersNote: JETRO converted the figures disclosed in JPY into USD.
Source: “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan)

2005

2010

Copyright, etc.
Industrial property rights, etc.

2015

2020

Charges for the use of
intellectual property rights

Overseas production volume (right axis)
Note: 1) JETRO converted the figures disclosed in JPY into USD.
2) Overseas production volume of Japanese automobile manufacturers
Source: “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan), JAMA data
Copyright © 2021 JETRO. All rights reserved.

14

I. World and Japan’s Economy and Trade

12




Japan’s agricultural, forestry and fishery exports show rapid
recovery in second half of 2020

In the 2nd half of 2020 (July to December), Japan’s exports of agricultural, forestry and fishery products forcountries and regions that experienced a rapid economic recovery from COVID-19 crisis, and processed foods
suitable for stay-at-home demand, mainly contributed to 10.1% increase year-on-year.
For the whole of 2020, it increased by 1.5% from the previous year to ¥925.7 billion, hitting a record high for 8
consecutive years.
Trends in quarterly growth rate of exports of agricultural, forestry and fishery products, and main growth items(%)
70

Alcoholic beverages

60
50

Total agricultural,
forestry and fisheryproducts

4030

20Soft drinks

10

Sauces and mixed
condiments andseasonings

0
-10
-20
-30

Q1

Q2

Q3
2020

Q4

Q1
2021

Note: 1) The figures up to 2020 are before the revision of the definition. The figures of the 1st quarter of 2021 are after revision of the definition.
2) The figures are calculated using fixed data for 2019 and detailed data for 2020 and 2021.
Source: “Trade Statistics” (Ministry of Finance) and “Overview of Foreign Trade of Agricultural, Forestry, and Fishery Products” (Ministry of Agriculture, Forestry and Fisheries)
Copyright © 2021 JETRO. All rights reserved.

15

II. Global FDI and Japan’s FDI

Copyright © 2021 JETRO. All rights reserved.

16

II. Global FDI and Japan’s FDI

1

Global FDI worldwide fell 34.7% in 2020
According to the UNCTAD, global inward FDI in 2020 (on a balance of payments basis, net, flow) decreased by
34.7% from the previous year to $998.9 billion. In the wake of the COVID-19 pandemic, it dropped to thelowest level since 2005.
By country and region, the reduction of investment in developed countries and regions was remarkable. In
emerging and developing countries, investment in China, Hong Kong and India increased. China’s share of
global inward FDI has increased to 15.0%.
Trends in global inward FDI (net and flow)

Top 10 countries/regions in the world in terms of FDI (2020)

2,200

0%

2,000

20%

40%

60%

80%

100%

1,800
1,600

1,400

2019

1,200

17.1

9.2

58.1

1,000
800

4.8 7.5

600

3.3

400
200

2020

FDI in developed countries
FDI in emerging and developing countries
Note: 1) The figures for developed economies are totals for 38 countries and regions basedon UNCTAD category of inward FDI.
2) The figures for emerging and developing countries derived by subtracting
developed countries from the world.
Source: UNCTAD

15.6

15.0

11.9 9.1 6.4

42.0

20

19

18

17

16

15

14

13

12

11

10

09

08

07

06

05

04

2003

0

US
Singapore

China
India

Hong Kong
OthersNote: The top 5 countries of 2020 inward FDI only.
Source: UNCTAD
Copyright © 2021 JETRO. All rights reserved.

17II. Global FDI and Japan’s FDI

2

Cross-border M&A declined year on year in many industriesGlobal cross-border M&As conducted in 2020 fell 9.8% from the previous year to $967 billion. By acquired
country and region, the Netherlands’ share increased significantly. This is because of the integration of
Unilever’s headquarters to the United Kingdom ($106.9 billion.)
By industry, sales fell negative year-on-year in many sectors, except for some cases where large-scaleacquisitions were carried out.

Global cross-border M&A by country/region (2020)

Global cross-border M&A by industry (2020)

Acquiredcountries/regions
World(Unit: Million USD, %, case)
Growth Compositi No. of
Value
rate
on ratio
cases
967,028
-9.8
100.0
9,994

US

248,363

-9.7

25.7

1,674

EU

305,730

-25.2

31.6

3,360

Germany

65,592

11.1

6.8

517

Netherlands

135,648

449.9

14.0

364

UK

73,665

-16.3

7.6

928

Australia

36,491

-9.7

3.8

Japan

9,900

19.9

East Asia

82,707China

ASEAN-10
Singapore
India(Unit: Million USD, %)2017-2019
Annualaverage

2020

1,230,246

967,028-21.4

Primary industries

103,043

47,078-54.3

Manufacturing489,655

410,642-16.1

Food and tobacco

78,072

133,828

71.4

339

Chemical

196,603

88,993

-54.7

1.0

134

106,578

113,361

6.4

-17.2

8.6

1,044

Machinery andequipment

34,720

41.5

3.6

362

637,548509,308-20.1

21,471

-44.2

2.2

449

Telecommunications

33,00989,287170.5

10,714

-31.7

1.1

186

Finance and insurance

230,694

144,001-37.6

39,329

45.9

4.1

310

Note: 1) As of July 2, 2021.
2) The figures for “East Asia” are the sums of China, South Korea, Taiwan, Hong Kong
and ASEAN-10.
Source: Thomson ONE (Refinitiv)

All industries

Services

ChangeNote: 1) As of July 2, 2021.
2) Based on the industry of the acquired companies. Industry classification follows
Thomson Reuters.
Source: Thomson ONE (Refinitiv)

Copyright © 2021 JETRO. All rights reserved.

18II. Global FDI and Japan’s FDI

Cross-border M&As have been on a recovery trend since theend of 20203The amount and number of cross-border M&As continued to decline until the 3rd quarter of 2020, but
recovered from the 4th quarter, and from January to June 2021, they increased by 37.6% from the same period
last year to $651 billion.
By country and region, the EU and the US are leading the recovery. On the other hand, China and ASEAN
countries have been on a downward trend since the latter half of 2018, with no sign of bottoming out yet.
Transition in total values of global cross-border M&A andnumber of deals（Million USD)

（Case）

Number of cross-border M&A deals in EU, US, China
and Japan (Quarterly)

16,00014,000(Case)
1,200

14,00012,0001,000

12,00010,000Value

No. of cases

10,000

800

8,000

8,000
6,000

6,000

600

4,000

4,000

400

2,000

2,000

200

Source: Thomson ONE (Refinitiv)(as of July 2, 2021)

Jan-June 20
Jan-June 21

0

2008
09
10
11
12
13
14
15
16
17
18
19
20

0

0

EU

US

China

Japan

ASEAN-10

Note: Based on the nationalities of the acquired companies. 2)
Data up to the second quarter of 2021.
Source: Thomson ONE (Refinitiv)(as of July 2, 2021)
Copyright © 2021 JETRO. All rights reserved.

19II. Global FDI and Japan’s FDI

4

Cross-border greenfield investments are globally declined
Global cross-border greenfield investments in 2020 dropped by 30.3% to 11,757 cases, the lowest level since2006. By region, the decreased number of investments in Europe and Asia Oceania contributed to the decline.
On a monthly basis, from January to May 2021, the number of cases decreased by 24.8% from the same period
last year to 4,040 and has not yet recovered to the level before the COVID-19 pandemic.

Number of outward greenfield investments worldwide (by region)(Case)
18,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000

11,757

Asia Oceania

EuropeNorth America

Latin America

AfricaMiddle East

World

Source: fDi Markets (Financial Times)
Copyright © 2021 JETRO. All rights reserved.

20

II. Global FDI and Japan’s FDI

Significant negative impact on accommodation & foodservices, and global companies

5The impact of COVID-19 on the performance of global companies varied by region and time of year, but
affected a wide range of industries. Travel restrictions as part of infection control measures have had aparticularly negative impact on accommodation and food services.
The impact of COVID-19 on the performance and business of companies in major countries (by industry)a. Chinese companies

QuestionsLarge
influence

Companies that answered “largely
affected” by COVID-19

c. Japanese companies in
Asia/Pacific (Including China and
ASEAN)

d. US companies

Companies that answered“negatively affected” by COVID-19

Companies that answered
Companies that answered
anticipating operating “deficit” (full “largely and negatively
year 2020)
affected” by COVID-19

Accommodation/foodservices

63.7%

Construction/engineering (n=151)

79.0%

Travel andentertainment
business (n=84)

78.6%

Accommodation/f
ood services

63.5%

Leasing/business services(travel, law, advertising, etc.)

61.7%

Retail, real estate,accommodation, foodservices (n=108)

73.0%

Food services(n=38)

65.8%

Educational services

58.2%

Culture, sports, entertainment

60.7%

Education and medicalcare (n=35)

65.7%

Arts, entertainment,
recreation

55.2%

All industries average(n=5,623)

32.4%

All industries
average(n=17,610)

29.7%

Chemicals,
pharmaceuticals(n=211)

20.9%

Construction

15.5%

All industries average(n=10,747)

AverageSmallinfluenceb. Singaporean companies

50%

All industries average(n=1,075)

63.0%

Mining44.5%

Construction

40.7%

Logistics, transportation(n=53)

62.0%

Electric and electronicequipment (n=176)

18.8%

Finance andinsurance

11.1%

Finance33.1%

IT, professional services(n = 108)

46.0%

Finance, insurance(n=210)

12.9%

Public utility

8.3%

Investigation
August 25 to October 20, 2020
periodOctober 9 to November 28, 2020

August 24 to September 25, 2020

November 9 to November 15,
2020

Note: 1) Of a., “largely affected” is the top 3 items of impact (“Faced with a bankruptcy crisis,” “Inability to continue existing business,” “Relatively large impact”.)
2) Of d., “largely affected” refers to “very negative impact” out of the 5 of “very” or “somewhat” negative impact, no impact/slight impact, “somewhat” or “very” positive impact.
Copyright © 2021 JETRO. All rights reserved.
Source: China Institute of Enterprise Department Research, Singapore Business Federation (SBF,) JETRO, U.S. Department of Commerce21II. Global FDI and Japan’s FDI

6

Global inward FDI to recover after 2021
According to UNCTAD, global inward FDI in 2021 is expected to increase by 10-15% from the previous year.
UNCTAD expects that the amount will hit bottom in 2021 and start to recover, but it will not yet return to thelevel before the COVID-19 crisis.
In the fields of vaccines, digital goods, semiconductors, and renewable energy, where demand is growing, there
are moves to expand investments. Global investments in renewable energy are expected to increase by 2.4% in
2021.
Investments in power generation facilities worldwide(by source of power)

Forecast of inward FDI in 2021 (net and flow)(Unit: %)
2018

2019

2020

2021
(Forecast)World
Developed
countries/Regions

-12.8

6.5

-34.7

10 - 15

-20.9

5.8

-58.3

15 - 20

Europe

-31.5

5.3

-80.0

15 - 20

-17.7

18.2

-41.7

10 - 20

-1.4

4.5

-8.4

5 - 10Africa

12.9

3.9

-15.6

0-10

Asia

-1.7

3.8

3.8

5 - 10

-4.0

6.9

-45.4

-5 - 5

-27.5

58.0

-58.2

-10 - 0

North America
Emerging/developing
countries and regions

Latin America
Transitional
economies

Note: 1) 2021 data are estimated values by UNCTAD.
2) Regional classification is based on UNCTAD classification.
Source: UNCTAD

0

200

400

2018

318

2019

336

2020

359

2021

367

Coal

Gas and petrol

Nuclear power(Billion USD)
600

Renewable

Note: 2021 data are estimates.
Source: IEA
Copyright © 2021 JETRO. All rights reserved.

22II. Global FDI and Japan’s FDI

Investment in semiconductors is expected to expand owing
to increased demand and supply risks7In the semiconductor field, where supply risk is expected to increase owing to the COVID-19 crisis and demandis expected to expand due to the shift to DX and the introduction of 5G, new investments and increases ininvestment have been announced.
Taiwan’s TSMC and South Korea’s Samsung have bolstered their manufacturing capacity to meet the risingdemand. Intel will launch a foundry business in the U.S. and Europe, in addition to building a new plant in the
U.S.
Major semiconductor investment plans announced in 2021
CompanyApple

Investment
location

Date ofpublication

Germany

March 10

Over the next 3 years, the company will invest more than 1 billion euros to establish a silicon design centerin Munich. It is scheduled to start operations in 2022 as Europe’s largest base for the development of
wireless semiconductors and software. Like other plants, this center is to use 100% renewable energy.

Description

SMIC

China

March 17

The company entered into a partnership agreement with Shenzhen Major Industry Investment Group, aShenzhen-government-owned enterprise, and invests $2.35 billion in the production of integrated circuits
and the provision of technical services. It is expected to be able to produce 40,000 12-inch wafers permonth, and production will start in 2022.

Intel

US

March 23

Invested $20 billion and opened 2 new plants in Arizona. In addition, the company will launch a
semiconductor foundry business (Intel Foundry Service: IFS) in the U.S. and Europe to meet growing
demand for semiconductors.

TSMC

TaiwanUS and othercountries

April 16

Capital expenditures in 2021 are expected to be about $30 billion, with some room for adjustment(including expansion of facilities in Arizona, the U.S.) The company also plans to invest $100 billion over the
next 3 years to support capital investment, and research and development to meet growing demand.

Samsung

South Korea

May 13

By 2030, investment in system LSI and foundries will be increased by 171 trillion won (approx. $150 billion)
to accelerate the construction of cutting-edge semiconductor processing technology and new production
plants. In addition, the company plans to build a new production line in Pyeongtaek and start operation in
the second half of 2022.

Bosch

Germany

June 7

To bolster its own semiconductor production capacity, it has invested 1 billion euros (approx. $1.2 billion) in
Dresden to open a semiconductor manufacturing plant combining AI and IoT. The company plans to start
production of semiconductors for its power tools in July 2021 and for automobiles in September.

Source: Data from respective companies.
Copyright © 2021 JETRO. All rights reserved.

23II. Global FDI and Japan’s FDI

8
Japan’s outward FDI in 2020 is $171.1 billion
Japan’s outward FDI in 2020 decreased by 33.8% from the previous year to $171.1 billion. Although the COVID19 crisis dampened the investor appetite and caused a reactionary drop from large-scale M&As in the previous
year, it surpassed the level in 2018.
Trends in Japan’s outward FDI by type

Japan’s outward FDI by country/region(Billion USD)

260

240
220

(Million USD, %)Equity capital

Growth rate

January-May
2021 (P)41,227-25.8

25,91341.9

2020

Reinvestment of earnings

Asia

Growthrate

200

Debt instruments

China

11,287

-7.5

3,981

-30.6

180

Outward FDI

ASEAN

21,552-34.4

16,66883.4

160

Singapore

8,547

-42.2

10,263280.0

140Thailand

4,475

2.2

2,002

-14.8

120

Indonesia

3,231

-63.7

1,758

5.2

51,681-6.1

33,07234.2

48,935-4.3

31,991

37.8

Latin America

18,312

3.6

8,147

-13.5

Oceania

17,077

54.3

1,561

-49.1

Europe47,845-60.4

17,538

-4.3

20

UK

3,477

-63.7

2,868

315.6

0

Switzerland

20,464

-49.4

8,404

79.5

171,123-33.8

86,648

16.9

North America

100

US

80
60
40

World

(Year)
Note: JETRO converted the figures disclosed in JPY into USD
Source: “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan)

Note: JETRO converted the figures disclosed in JPY into USD
Source: “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan)
Copyright © 2021 JETRO. All rights reserved.

24II. Global FDI and Japan’s FDI

Japan’s outward FDI return (receipt) and rate of return decreased9

Revenue from outward FDI (receipt) in 2020 decreased by 1.7% to $134.5 million. This income consists ofdividends from overseas subsidiaries of Japanese companies and reinvestment income equivalent to retained
earnings of local companies.
The return on investment (revenue [receipt]/average of the beginning and end of the period FDI balance) was
7.0%, down for 2 consecutive years.

Revenue

Dividends and others
Interest Incomes

140,000

Asian Currency Crisis

9.2

120,000
100,000
80,000

5.1

9.5

8.9

8.2

7.9

The 2008 financial crisis

Trends in return/receipt (by item) from Japan’s outward FDI and rate of return
Rate of return

Earnings on reinvestment
Rate of return

8.1
7.4

8.1

10

7.9

7.2

9
7.7

8.1 8.1

7.7
7.0

7
5.8

6

6.0

5.3

5.1

5

4.4

60,0004

4.3
2.8

40,000

8

3.1

3
2

20,000

1

0

0
97

98

99 2000 01

02

03

04

05

06

07

08

09 2010 11

12

13

14

15

16

17

18

Note: Calculation of the rate of return on FDI: The rate of return on outward (inward) FDI = Return (payment) on FDI for the period/Outward (inward) FDI beginning and ending balance x 100 (%)
Source: “External Assets and Liabilities of Japan” (Ministry of Finance, Bank of Japan,) “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan)

19 2020(Year)

Copyright © 2021 JETRO. All rights reserved.

25II. Global FDI and Japan’s FDI

10

Keeping high return on investment in China

The rate of return on outward FDI in China is as high as 14.9%, far exceeding other major investment
destinations such as North America (6.1%,) Europe (5.1%) and ASEAN (9.1%).
The rates of return in China are particularly high in industries such as transportation equipment, wholesale andretail, all of which exceed 20%.
The rate of return by major FDI destinations
(%)
16

14.9

14
12
10
8
6
4

2
0
08

09

2010
China

11
Asia

12

13
Latin America

14

15
ASEAN

16

17

18

North America

192020 (Year)

EuropeNote: Calculation of the rate of return on FDI: The rate of return on FDI by country/region = Return on FDI for the period (by region)/ FDI beginning out ending balance x 100 (%)
Source: “External Assets and Liabilities of Japan” (Ministry of Finance, Bank of Japan,) “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan)
Copyright © 2021 JETRO. All rights reserved.

26

II. Global FDI and Japan’s FDI

11




More than half of Japanese companies revise business strategies

Since 2020, global factors such as the COVID-19 pandemic and US-China friction, as well as many other eventsoccurring in various regions, have affected the activities of Japanese companies inside and outside of Japan aswell as the extensive supply chain that spans countries and regions.
More than half of Japanese companies operating overseas have been forced to review their overseas businessstrategies owing to the expansion of risks, such as COVID-19.

Review of business strategies and business models of Japanesecompanies operating overseas (world) (by industry)0■ Total Manufacturing (n=4,005)■ Total non-manufacturing (n=4,969)

20

40

60

48.6

80

100
(%)

57.6

42.4
14.0

Employment agency / temporary staffing (n=48)

85.4

14.6

Food service (n=52)

82.7

17.3

Educational/research institutions (n=29)

79.3

20.7

Medical care/welfare/healthcare (n=25)

76.0

24.0

Advertising/marketing/research (n=62)

71.0

29.0

Retail (n=83)

68.7

31.3

Media (n=31)

67.7

32.3

BPO (n=37)

67.6

32.4

Consulting (n=123)

65.9

34.1

65.4

34.6

Source:Not reviewed (no plan to review)“2020 JETRO Survey on Business Conditions of Japanese Companies Operating
Overseas (Global)”

0

20

(%)

40

38.1

Review of sales destination

86.0

Revised (planning to revise)

Sales

51.4

Hotel/travel (n=121)

Wholesale (n=136)

Details of review of business strategies and businessmodels of Japanese companies operating overseas (world)

Promotion of utilizing virtual exhibitions

30.4

Promotion of digitalization including AI
utilization

27.8

Review of sales products

24.8
12.5

Start of EC sales of own products(n=4,705, multiple answers)

Procurement/production

0

20

Cancellation/postponement of new
investment/capital investment

20.6

Changeover in procurement sources

20.4

Promotion of automation/labor saving

15.7

Implementation of multiple procurement

15.5

Use of EC sites

(%)

40

12.2
(n=4,705, multiple answers)

Source:“2020 JETRO Survey on Business Conditions of Japanese Companies
Operating Overseas (Global)”
Copyright © 2021 JETRO. All rights reserved.

27

II. Global FDI and Japan’s FDI

12

Sales of Japanese companies overseas - remarkable recovery
in China

More than 80% of about 9,000 Japanese companies operating overseas are expected to normalize theirbusinesses in 2021.
Sales at overseas subsidiaries by region recovered after bottoming out in the 2nd quarter of 2020 (April-June). In
particular, the business recovery in China has been remarkable. Strong domestic demand in China led the growth.
Prospects for business normalization at Japanesecompanies (By region of operation)(%)
Overall (n=9,008)

0

100

(%)

14.7 4.0

50

50

18.7

30.9

32.4

Northeast Asia (n=1,632)

31.7
27.0

30.3

9.9 3.4

North America (n=1,097)

19.8

Southwest Asia (n=473)

22.0

Latin America (n=526)

18.5

36.1

27.6

14.3 3.6

Africa (n=282)

18.1

34.4

30.1

14.5 2.8

Europe (n=930)

15.8

26.6

Middle East (n=242) 13.2

33.1

34.3

16.2

28.0

41.9

9.7 4.3

ASEAN（n=3,530） 13.0

31.6

35.9

16.0 3.6

Russia (n=93)

31.4

27.4

Year-on-year sales growth rate of overseas subsidiaries ofJapanese companies (manufacturing)

38.9

14.2

24.5

30.0

1st half of 2021

Latter half of 2021

2022 and later

中国(香港含)Hong
Kong)

ASEAN10
欧州
Europeその他
Others25

10.2 4.4

21.1

Within 2020

4.2

北米 America
North
China (including

14.9

Source: “2020 JETRO Survey on Business Conditions of Japanese Companies
Operating Overseas (Global)”

0

6.6
4.5

- 25

- 50

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2018
2019
2020
2021

Source: “Quarterly Survey of Overseas Subsidiaries” (Ministry of
Economy, Trade and Industry)
Copyright © 2021 JETRO. All rights reserved.

28

II. Global FDI and Japan’s FDI

13




Prevalence of vaccine and progress of vaccination
certificates is the key

Japanese nationals living overseas have been gradually vaccinated in accordance with the policies of each country.
With the introduction of vaccination certificates in major countries, progress has been made in easing epidemic
prevention measures at the border and after entry to the country, on the basis of certificates. In EU, mutual
recognition of certificates has been in full operation since July. Restrictions on entry from outside EU have been
lifted on the basis of certificates.
Progress in vaccination (Japanese) and certification of vaccination in major countries/regions
Commencement ofvaccination

US

December 14, 2020

EU

December 27, 2020

China

In January 2021,
vaccine rollout wasstarted by the
notification of eachgovernment.

ThailandFebruary 28, 2021

South
Korea

February 26, 2021

Vaccination ofJapanese residents

Vaccination certificate

Relaxation of restrictions by certificates• Card holders will be exempted from preliminary screening for travel
in US and for departure for travel purposes, and from voluntary
CDC issues vaccine card to
All residents, including
quarantine inspections after domestic and overseas travel.
certify completion ofJapanese residents (Free)vaccination (paper)• No common use of certificates, mutual recognition, or relaxation ofentry restrictions with other countries or regions• Each member state may, in addition to within EU, lift entry
Mutual recognition of
restrictions for non-EU countries upon the presentation of an EUVaccination is available in certificates issued byapproved vaccination certificate.
each EU member state
member states as digital• In addition, measures were introduced to waive inspections,(voluntary)
COVID certificates on an EU
voluntary isolation, and the presentation of negative certificates after
common platform
entry.
• From March 15, simplification of visa application for foreign nationals
Vaccination of foreignIssuance of vaccination
who have been vaccinated with a Chinese-made vaccine and have anationals started in major
certificates started on Marchcertificate of vaccination
cities in late March (The
8 (digital certificate on
cost depends on each
• The country is discussing the introduction of a mutual certification
smartphone app.)province or city.)recognition system with South Korea and other countries.
• Shortening the period of isolation after entry and reducing thenumber of PCR tests during isolation
Residents are eligible for “Vaccine passport” (paper
vaccination (free)based) is issued.
• On July 1, under the sandbox system (Phuket), the acceptance of
foreign travelers under quarantine exemption started.
Foreign nationals staying
in the county for 90 days
Digital certificates via mobile • From July 1, those who have completed WHO emergency
or more are eligible forapps through government
vaccinations will be exempted from two-week quarantine upon thevaccination regardless of
sitespresentation of their certificate, with limitation to entry purpose.
their status of residence(Free)

Source: Reports from JETRO offices in respective countries and regions

Copyright © 2021 JETRO. All rights reserved.

29

II. Global FDI and Japan’s FDI

14
Progress in efforts to adapt to new normal

Japanese companies are making progress in their efforts to adapt to a new normal. The key is a shift to “noface-to-face and no contact,” “multilateralization” in the business field, and “diversification” and “visualization”
in the value chain.
Trends of Japanese companies adapted to a new normal

Visualization

Diversification Multilateralization

No face-to-face
No contact

Commitment

Company

HitachiAutomation andlabor-saving on site YASKAWA
Electric, Daifuku,
etc.
Development of new
Sense Things
technologies andJapan
services

RegionThailandChina and others

Establishment of systems to meet demand for labor-saving and automation, such as industrial robot
parts and in-plant transport equipment.

Canada and Japan

Jointly developed contactless-type device with Canadian AI startup using image processing technology

In response to the non-contact needs of consumers, the company has invested in a local startup thatdevelops and provides robots to automate serving of coffee. It is expected to be used for services atrailway stations.
Entered manufacturing and sales of medical protective clothing and gowns to meet demand for
Chinastockpiling. Production in cooperation with Chinese companies
Started AI medical image analysis and management efficiency improvement service for COVID -19
diagnosis with a partner in India. Together with Microsoft, the company helped improve access to TB
India
diagnosis for approximately 100,000 people.
Focuses on expanding new use of products, such as medical wear in response to changes in demand
Malaysia
structure due to the COVID-19 crisis.
Production in Wuhan, China, was shifted to Vietnam and Indonesia after the outbreak of COVID-19.
Vietnam, Indonesia,
Planning to promote sharing of roles with Vietnam, Indonesia, and Cambodia as forwardingetc.
destinations.
Vietnam, Thailand, Transferring part of products manufactured in China to Vietnam, Thailand, Japan, etc., along withJapan
partner companies that can respond to “Dual Source (diversified procurement).”
Returning part of overseas manufacturing processes to Japan to flexibly respond to changes in demand
Thailand, Japanafter the outbreak of COVID-19.
Formulated BCPs to cover intermediates, APIs, final products, and packaging materials in each region.
The company also uses AI to forecast changes in demand considering risks. Global implementation ofWorld
optimal procurement, production and shipping strategies.
Joint development and global deployment of DX service to upgrade supply chain with SAP, Germany.
Germany,
Assumes visualization of manufacturing process, distribution and sales network, as well as support forworldwide
construction of COVID-19 vaccine supply network.
Inspecting the supply network on the assumption that the company and its business partners may
temporary cease their economic activities, and seeking alternatives. Promotion of initiatives to expandWorld
the understanding of overseas suppliers which are currently Tier-1 suppliers, to Tier-3 suppliers

Non-face-to-faceservice

JR East Singapore
Singapore
subsidiary

New areas andproducts

Nikke Group

Collaboration andcooperation

NTT DATA

Portfolio

Toray Group
Malaysia

Decentralization

Asics

Procurement/supply
Return to Japan

Komatsu (andmany others)
Pioneer (andmany others)

Regional control

Eisai

Advancement
through DX

Meiji Seika
PharmaUnderstanding
business partners

TOTO

Description of commitment
Teamed up with US Microsoft to offer IT services to manufacturers and logistics companies worldwide.
Exploiting growing demands for remote and labor-saving systems due to the spread of COVID-19,
including system maintenance and automation.

Source: Newspaper reports and press releases from respective companies

Copyright © 2021 JETRO. All rights reserved.

30

II. Global FDI and Japan’s FDI

15
Japan’s inward FDI in 2020 was $66 billion

Japan’s inward FDI in 2020 increased by 65.2% to $66 billion from the previous year. However, equity capital
was down year-on-year, M&A activity and new investment in the Japanese market were slow.
Japan’s inward FDI by type

Japan’s inward FDI by country/region(Million USD, %)(Billion USD)

70

Equity capital

60
50

2020

Reinvestment of earnings

Asia

Debt insturuments
Japan’s inward FDI

40

0.6

13,258

371.5

China

1,354

-29.2

-188

-

Hong Kong

1,147

-44.7

10,592

-

ASEAN

5,990

47.3

2,746

21.4

Singapore

5,119

103.6

2,835

21.6

Thailand

1,000

-4.2

-139

-

North America

21,135

22.6

5,198

187.0

21,058

23.0

4,859

171.0

Latin America-1,847

-

2,807

983.8

Oceania-1,227-216-

Europe38,262364.3-6,355-

World

65,97765.2

15,064

530.1

US

10

0
-10

January-May
Growth2021 (P)
rate

9,580

30

20

Growthrate(Year)
Note: JETRO converted the figures disclosed in JPY into USD
Source: “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan)

Note: JETRO converted the figures disclosed in JPY into USD
Source: “Balance of Payments Statistics” (Ministry of Finance, Bank of Japan)
Copyright © 2021 JETRO. All rights reserved.

31

III. Trends in Trade Rule Formation

Copyright © 2021 JETRO. All rights reserved.

32

III. Trends in Global Trade Rule Formation1

New rule formation with COVID-19 in the context
Countries have been introducing export restrictions to prevent the spread of COVID-19 infection. The number of
newly introduced restrictions fell in the 2nd half of 2020, but the cumulative number has remained high during2021 owing to the increasing number of vaccine-related measures, etc.
Efforts to make temporary trade facilitation and tariff elimination in response to the COVID-19 pandemic,
permanent has continued.
Status of trade rules with COVID-19

COVID-19 Measures related export restrictions
180

60(Number)

150

50

120

40

90

30

60

20

30

10

0

0
1

2

3

4

5

6

7

8

9

10

11

2020

12

1

2

3

2021 (year/
Month)

Number of introductions

Number of eliminations

Ongoing measures (Cumulative total)

Export restrictions on vaccines (Cumulative total) (Right axis)

Note: In addition to the COVID-19 vaccine, those defined as vaccine-related measures in the source
documents are counted as “export restrictions on vaccines.”
Source: “21st Century Tracking of Pandemic - Era Trade and Investment Policies in Food and Medical
Products” (Global Trade Alert)

Relevant Rules

Tightening
existing
rules

Trade Facilitation
Agreement (TFA), Trade
Facilitation Chapter of
FTA

OutlineSteady implementation of documents
computerization and prompt customs
clearance among the signatory countries

Information Technology Expanding the target products list to include
Agreement andartificial respirators, etc., and increasing the
Expanded Information
number of participating countries
Technology Agreement(ITA)
Technical Barriers toClarification of rules on domestic regulations
Trade (TBT), the TBT
and harmonization of related rules to enablechapter of FTAs
the prompt supply of essential productsIntellectual property
Temporary exemption from patent protection,rights (TRIPS)
application of compulsory license
Control on trade
Obligation on trade restriction control in
restrictions stipulated in future FTA negotiations and revisions
FTAs
Establishing Temporary measures for Proposal from the Ottawa Group and others
new rules
tariff elimination andon trade facilitation in essential products,
mitigation
including continuing tariff reductions on
medical supplies
Electronic commerce
Based on the increased use of EC due torestrictions on movement, establishment of
new rules which has been advanced among
voluntary members are accelerated
Shared standards for
Consideration on international rules
personal informationaccommodating increasing remote activities
protection and dataand expanding use of tracking systems
transfer
Note: Created from various sources

Copyright © 2021 JETRO. All rights reserved.

33

III. Trends in Global Trade Rule Formation

Biden administration’s trade policy focuses on worker
protection and environment2The US Biden administration sets a trade policy centered on workers and the environment.
While returning to the path of international cooperation, the administration maintains a hard-line stance toward
China. It emphasizes the use of all possible means to correct China’s unfair trade practices. While maintaining
additional tariffs, sanctions for human rights abuses are also implemented.
Biden administration’s trade policy
Field

GeneralLabor

Stance of the Administration• The key elements are workers, environment and climate, relation with China, cooperation with friendly
nations.
• For business with the US, considerations on workers and climate change are essential.
• Based on the belief that trade should bring economic benefits to all US workers, the aim is to create a global trade
structure that is meaningful to the workers and companies in the US.

Environment and Climate • Lead the world to a sustainable environment and climate.
change• New rules such as carbon border taxes are considered to address climate change issues in cooperation withfriendly countries.
Supply Chain• Flexible, diverse, and secure supply chains are essential for US economic prosperity and security.
• Focus on flexible supply chains in various fields such as COVID-19 and environmental measures. Strengthen
capabilities to address international emergencies in cooperation with allies with shared values.
Attitude toward China• Recognize that China’s coercive and unfair trade practices hurt US workers, threaten US advanced technologies,
and harm US supply chains and national interests.
• Recent policies toward China have been fragmentary and lacking a comprehensive strategy. To establish acomprehensive strategy toward China, a review of trading strategies with China is essential.
• Implement all possible means to correct China’s unfair trade practices.
WTO• Priority for restoring US leadership in the international community and restoring international cooperation.
• Address the challenges that the global trade system is facing, such as increasing inequality and digitization, in
cooperation with the WTO, friendly countries and allies.
• Work to reform the rules and procedures in cooperation with the new WTO Director-General.

FTA• Generally cautious about entering into new trade agreements.
• Include a high standard of labor rules in trade agreements, with workers attending the negotiating table.
• Include systems providing companies economic incentives for promoting environmental protection.

Source: “The 2021 Trade Policy Agenda and 2020 Annual Report” (USTR) and other sources

Copyright © 2021 JETRO. All rights reserved.

34

III. Trends in Global Trade Rule Formation3

EU’s new trade policy focuses on openness, sustainability, andinterest protection
The EU sets sustainability as one of the strategic pillars for the first time in a new trade strategy. It also links thetrade policies with environment and digital policies.
Along with openness, such as multilateralism, the EU stresses that it will defend the EU’s interests to counter
unfair trade practices.
New EU trade policy (released in February 2021)

Item
WTO Reform

Specific Policies, etc.
・ Promote WTO reform focusing on sustainable development
・

Launch negotiations for new rules to avoid state interventions which may distort markets

・ Restore dispute settlement functions
Shifting to Environment- ・ Promote WTO environmental agendas (e.g., develop subsidy disciplines to fossil fuels, resume negotiations

on environmental commodity agreements, etc.)
conscious Styles and・ Introduce the Carbon Border Adjustment Mechanism (CBAM)
Promotion of・ Review policies for promoting human rights and workers’ rights protection (e.g., reviewing the operation of
Responsible andSustainable Value Chain
GSP for developing countries)
・ Enhance implementation of the Trade and Sustainable Development Chapter in the FTAs
Transition to Digitization ・ Early conclusion of the WTO electronic commerce negotiations and commencement of plurilateralnegotiations for liberalization of service trades
and Promotion of・Service Trade
Bolster the cooperation on regulations in digital trade fields with other countries (e.g., promote free transfer
of data with secured personal information protection)
Enhancing EU regulation ・ Bolster regulatory cooperation and dialogues in fields critical to ensuring EU competitivenessInfluence・ Deepen cooperation with the US in the digital and environmental fields
Bolstering Relations with ・ Strengthen economic relations with countries in the Western Balkans and North Africa that are
geographically close to the EU
Neighboring Countries,
Prospective Member
・ Bolster intercontinental cooperation with Africa (e.g., propose sustainable investment initiatives)
Countries, and Africa
Ensuring Fair Competing ・ Conclude trade agreement negotiations with the Asia Pacific and Latin America countries.
Conditions by Enhancing
the Implementation and ・ Ensure implementation of existing trade agreements monitored by a Chief Trade Enforcement Officer.
Enforcement of Trade
・ Take countermeasures unilaterally against the actions inconsistent with WTO agreements, FTAs, etc.
Agreements
Copyright © 2021 JETRO. All rights reserved.
Source: “Trade Policy Review - An Open, Sustainable and Assertive Trade Policy” (European Commission)

35

III. Trends in Global Trade Rule Formation

4


Economic security’s medium- to long-term potential impact onoverseas business
A quick overview of recent economic security policies reveals that many of them have set medium- and longterm objectives, such as strengthening industrial competitiveness and reinforcing core functions of the nation. As
such, the impact of those policies on overseas businesses needs to be examined.
Examples of economic security policies and possible responses taken by businesses
PurposeEnhancing
Industrial
CompetitivenessStrengthen theCore Functions of
the Nation

OutlineEnhance management and R&D ofsensitive technologies including
high technologies, to form an
industrial foundation withinternational competitiveness.

Overcome vulnerabilities in the
supply of social and economic
infrastructure and necessary
materials essential for the survival
and maintenance of people’s lives

Influence
Achieve diplomatic objectives
Countries’ Behavior through economic pressure

Source: Various materials

Examples of measures

Strengthen export control

Possible Responses, etc.
Review supply chain and internal
technology management

Promote government-led R&D and capital Enhance R&D by obtaining government
support, etc.
investment
Tighten inward FDI screenings in hightech fields
Tighten inward FDI screenings in criticalinfrastructures
Exclude specified companies fromgovernment procurement market- Enhance due diligence on corporate
acquisitions- Closely communicate with thegovernment of target countries
Review the use of eliminatedcompanies’ products and services

Restructure supply chains- Additional tariff measures

Review and rebuild supply chains- Prohibit the export of rare resources andnecessary materials
Copyright © 2021 JETRO. All rights reserved.

36

III. Trends in Global Trade Rule Formation

US and china tighten export control system, attention to
extraterritorial application

5



The US and China are tightening their export control systems by revising the list of controlled
items/technologies and target entities subject to the restrictions.
The export control rules of the two countries could be extraterritorially applied to re-exports. Japanesecompanies, whose inputs and outputs are deeply integrated into supply chains involving the US and China, needto re-assess the supply chains and their management system of sensible technologies in order to prepare forfurther tightening of regulations.
Examples of application of EAR

Major trends in us-china export control regulations (since 2020)

US
US

US

2020

US
China
China
China

US
US

2021

China
US
China

Date

Major Trends

Revised the regulations on direct products and
May 19tightened the export controls to Huawei Technologies
and 114 related companies
Added 11 Chinese companies in textile and other fields
July 22to the Entity List (EL)
August 17 Revised the regulations on direct products and further
tightened export controls to Huawei and its affiliates
Added 24 entities primarily in the infrastructure field to
August 27 the EL, including China Communications Construction
Company (CCCC) affiliates
Revised significantly the Catalogue of Technologies
August 28 Prohibited or Restricted from Export, and enforced it on
the same day
September 19 Enforced the Provisions on the Unreliable Entity List
December 1 Enforced Export Control Law
Added to the EL 60 Chinese entities, including
December 18 semiconductor manufacturing giant SMIC, CCCC, anddrone giant DJI
Announced that it would apply export control
December 23 regulations to Hong Kong in the same way as it does tomainland China
Promulgated and enforced the Rules on Counteracting
January 9
Unjustified Extra-territorial Application of Foreign
Legislation and Other Measures
April 8Added 7 Chinese supercomputer agencies to the EL
Established Anti-Foreign Sanctions Law and enforced it
June 10on the same day.Source: JETRO “Biz news”

US

Japan

US goods

Product withbuilt-in US
goods

ExportYear Country

China

Re-exportUS-originatedtechnology

Deemed export

Deemed re-export

Foreign nationality
holder
Export control
regulations

Foreign nationality Extraterritorial
holderapplication(EAR)

Note: 1) This table shows brief examples of EAR applications and does not cover all application patterns.
2) In China, the Export Control Law specifies that the extraterritorial application is available (Article45). However, the definition and implementation rules of “re-export” are expected to be clarified in
the future.
Copyright © 2021 JETRO. All rights reserved.
Source: EAR

37

III. Trends in Global Trade Rule Formation

Steady movements to introduction and tightening regulations
on inward FDI

6

From the perspective of preventing the leakage of critical technologies, major countries have tightened theinward FDI screening mechanism in the high-tech field, etc., and intensified its enforcement.
As of the end of June 2021, the number of countries that introduced the system reached 34, accounting forabout 70% of the world’s total inward FDI stock.

Trends in major countries regarding investment screening systems(since January 2021)
Country/
RegionMajor Trends

EU

With the enforcement of the EU Investment Screening Regulation(October 2020), EU member states, including Germany, France, Italy, andSpain, have tightened their system for inward FDI screening. The interim
measures in response to COVID-19 (e.g., lowering thresholds forinvestments subject to screening) have also been extended. The Czech
Republic and other countries introduced investment screening mechanisms ,and the number of EU countries that introduced the system increased to 19(as of the end of June 2021). The Netherlands is also preparing a newlegislation to establish a comprehensive investment screening mechanism.

UK

China

Australia

US

The National Security and Investment Act was enacted in April 2021. It
was UK’s first comprehensive investment screening system. The UK says thatthe number of screenings is expected to increase significantly. The Act is
expected to be enforced by the end of 2021.
The Measures for Security Review of Foreign Investment enforced in
January 2021. The measures are the first of their kind in the country to
regulate a comprehensive investment screening system and are expected to
be clarified in the operation form through detailed implementation rules in
the future.
The Foreign Acquisitions and Takeovers Act was significantly revised andenforced in January 2021. It also regulated to carry out a preliminary
screening from the national security perspective. In addition, revisions torelated laws continue to expand the scope of industries subject toscreenings.
A nonpartisan group submitted a strategic competition bill to the Senate in
April 2021. As transactions subject to CFIUS screenings, the bill proposed toinclude donations from foreign entities ($1 million or more) to US higher
education institutions and arrangements (contract) for joint research with US
universities that possess critical technologies.

Source: Documents from each country’s government

No. of screened investment project(Number)(Number)

300

1,200

250

1,000

200

800

150

600

100

400

50

200

0

0
2014

2015

2016

2017

2018

2019

2020

FranceGermany

Italy

US

Australia (Right axis)

Canada (Right axis)

Note:The numbers of Italy and Canada show notifications, Australia shows
approvals (excluding real estate), and others show screenings.
Source:Documents from each country’s government
Copyright © 2021 JETRO. All rights reserved.

38

III. Trends in Global Trade Rule Formation

Major countries enforce regulations on inward FDI in wideranging industries and fields

7

Screening of foreign investments is seen in a wide range of fields, including 5G, semiconductors, and access topersonal information.
Since smaller scale of foreign investments are becoming subject to scrutiny, it may affect the investment
activities of small and medium-sized enterprises (SMEs).
Examples of investment screening

Date

Investment
Screening
Origin Countries
Country
and Regions

Dec. 2019

China

Hong Kong

Mar. 2020

US

China

Dec. 2020

Dec. 2020

Germany

FranceOutline[Retail] Yonghui Superstores (Retail), with a British company in Hong Kong as the largest shareholder,announced the submission of a tender offer on Zhongbai Holdings Group (Retail). However, after being
subjected to a national security screening by the authorities, the plan was withdrawn.
[Access to personal information] Then-President Trump ordered Beijing Shiji Information Technology(IT) to sell the US IT company StayNTouch acquired by the company in 2018. There seems to be aconcern that customer information held by StayNTouch could leak in China.

China[Satellite and communications] A local subsidiary of China Aerospace Science & Industry Corporation
submitted the acquisition of IMST (Satellite and Radar Technology), but the acquisition was not
approved owing to security concerns. In addition to handling 5G technology, IMST is believed to supply
products and services to the German Federal Armed Forces.

US[Weapons-related equipment and nuclear power] The French Ministry of Armed Forces rejected theplan of the US industrial equipment Teledyne to acquire Photonis. The aim was to protect the country’s
national interests and economic and industrial sovereignty. Photonis produces infrared night visionscopes for the French military and has strategic technology in the nuclear field.

Jan. 2021

Australia

China[Biotechnology] China State Construction Engineering Corporation (Construction) submitted a priornotification to acquire a company in the same industry, Probuild. However, the Treasurer of Australia
announced the intention to reject the bid because of security concerns. The company later withdrew its
prior notification. Probuild was contracted to build the headquarters of CSL, a major pharmaceuticalcompany that researches and produces COVID-19 vaccines.

Mar. 2021

Italy

China

[Semiconductor] Shenzhen Investment Holdings tried to acquire 70% stake in LPE (semiconductor
manufacturing), but Prime Minister Draghi vetoed and stopped the takeover. Semiconductors are
deemed of strategic importance in Italy.

Source: Various press reports, corporate press releases, and government press releases

Copyright © 2021 JETRO. All rights reserved.

39

III. Trends in Global Trade Rule Formation

Required response to business and human rights fromcompanies8Consideration of human rights in the business and supply chain is an essential requirement for a company’ssustainable activities.
Implementing appropriate initiatives, including human rights due diligence, and actively disclosing informationon these initiatives influence the competitiveness of own products and services in the market. Risks caused byfailing to respond are also exposed.

Factors Behind the Strong Demand on Companies to Respect Human Rights
Internationalframework
development

Obligedresponse
based onlaws andregulations

Risk
exposureInterest ofinvestors andwhole
society

Trends in obligating human rights due diligence in major countries and regions
 Movements toward obligating information disclosure under laws and regulations are
increasing mainly in Western countries (below)
 Expansion of the subject companies and scope based on current law revisions andshifting provisions from voluntary to obligation also accelerate.
Country/
RegionName of Laws and Regulations (Tentative)

Establishment

Conflict Minerals Regulation

Jun. 2017 Enforcement
Jan. 2021 Commencement of Operation

Non-Financial Reporting Directive

Dec 2014 Enforcement

UK

Modern Slavery Act 2015

Jul. 2015 Enforcement(Occasional review)

Germany

Supply Chain Due Diligence Act

Jan. 2023 Enforcement ScheduledChild Labour Duty of Care Act

Jan. 2022 Enforcement ScheduledBill on Responsible and Sustainable
International Business Conduct

Mar. 2021 Submitted to the Diet
Jan. 2024 Enforcement Target

FranceLaw of the Duty of Care for the Parent andOrdering Parties

Mar. 2017 Enforcement

US

California Transparency in Supply Chains Act

Jan. 2012 Enforcement

EU

Netherlands

Source: Reports from JETRO offices in each country and official announcements by national and regional governments

Noteworthy Trends in Recent Years
In response to the United Nations Guiding Principles on
Business and Human Rights (2011), each country formulateda National Action Plan (NAP) on business and human rights.
 Introduced in 27 countries and regions, including Japan(October 2020)
The EU announced Proposal for a Corporate Sustainability
Reporting Directive (CSRD) in April 2021 as an amendment
to the current Non-Financial Reporting Directive.
 Expanded the scope of companies subject to information
disclosure.
 Revisions of national laws and regulations in each EU
country are required in association with the directive
enforcement.
The movement to tighten export and import regulations
from the perspective of human rights is increasing in the US.
 From January 2021, the import of products, such as cotton,
originated Xinjiang Uygur Autonomous Region is entirely
banned (Withhold Release Order: WRO).
 Some cargo retainment cases by WRO with Japanesecompanies also occurred.
Primary reasons Japanese companies are promoting theinitiatives (Top 4)
1. It is becoming mainstream in international business (79%)
2. Adopting guiding principles (65%)
3. Movement of legislation and guidelines formulation
overseas (65%)
4. Response to investors and rating agencies (63%)(Japan Business Federation, Released in October 2020)
Copyright © 2021 JETRO. All rights reserved.

40

III. Trends in Global Trade Rule Formation9

WTO’s major challenges viewed in the new director-generalspeech at the time of appointment
Director-General of the WTO, Ngozi Okonjo-Iweala, expresses a strong commitment to addressing COVID-19.
In addition to COVID-19 measures, she also emphasizes negotiations on fisheries subsidies. Since the agreement
on fisheries subsidies negotiations can be regarded as a test for evaluating the WTO’s multilateral negotiation
function, attention should be paid to the future of the negotiations.
Summary of the new WTO director-general speech at the time of appointment
Major Topic
COVID-19

Summary of Speech
To restore its credibility, the WTO must early success and results. A key area, where such results are possible, isassistance in controlling the COVID-19 pandemic through the nexus of trade and public health.

Fisheries Subsidies

Hoping that the fisheries subsidies negotiations are finalized, leaving the Twelfth Ministerial Conference (MC12) as
the venue to conclude on modalities for implementation. (Details omitted) (The agreement on fisheries subsidies
negotiations) will signal to the world that it is capable of concluding a multilateral agreement vital for current andfuture generations.

Dispute Settlement
SystemReform of the Dispute Settlement System, which has been a central element in guaranteeing security andpredictability of the multilateral trading system, is of utmost importance to the members (accession to the WTO).
(Details omitted) It will be important to agree on the nature of these reforms, flesh them out, and develop a work
program for implementation that can be advanced at MC12.

The WTO rulebook is outdated and lags behind some regional and bilateral trade agreements which are
Joint Statement Initiative incorporating a lot of innovations. The rulebook must be updated to account for 21st-century realities such as
e-commerce (EC) and the digital economy. (Details omitted) Plurilateral initiatives have brought new energy to the(JSI)
Multilateral Trading System.
Environment

The WTO should support the green and circular economy and address more broadly the nexus between trade andclimate change. (Details omitted) It will be important for members (accession to the WTO) to reactivate and broaden
the negotiations on environmental goods and services.

Note: Major topics were created from the content of the speech.
Source: Appointment of the Next Director-General, JOB/GC/250 (February 16, 2021)

Copyright © 2021 JETRO. All rights reserved.

41

III. Trends in Global Trade Rule Formation

10




New rule negotiations in WTO, results required by MC12

In the WTO, the movement toward new rules formation accelerates in both multilateral and plurilateralframeworks, as the November 30, 2021, Twelfth WTO Ministerial Conference (MC12) approaches.
Concerning COVID-19, discussions have been held to eliminate tariffs on medical supplies and temporarily waive
the obligation on intellectual property protection.
Major rule negotiations attracting attention toward the twelfth WTO ministerial conference (MC12)Multilateral
Plurilateral Disciplines on Fisheries Subsidies• New rules to regulate overexploitation,
overfishing capacity, and government subsidies
that contribute to illegal, unreported, andunrestricted fishing.
• It will be the first WTO rule related to sustainable
development.
• The negotiations have entered the final phase, andintensive negotiations continued based on the
integrative negotiation texts presented by thechairman.

 Exemption from Obligation to Protect
Vaccine-Related Intellectual Property• To increase the supply of necessary vaccines andmedical products for COVID-19 measures, 62 WTO
member countries demand a temporary
suspension of the obligation to intellectual
property protection of such products.
• Members continue to discuss whether thesuspension of intellectual property protection willlead to increased production of vaccines.

 Investment Facilitation in e-commerce, Domestic
Regulations on Services, and Development• Triggered by the joint statement issued in MC11
(December 2017), the voluntary countries, including Japan,
have begun negotiations ahead of the others.
• Negotiations continue with the aim of obtaining
substantial progress by MC12.

 Trade and Health• Voluntary countries, including Japan, proposed the Tradeand Health Initiative to control export regulations on
medical supplies and eliminate tariffs on them.
• Discussions continue to reach an agreement with theparticipation of as many members as possible by MC12.

Copyright © 2021 JETRO. All rights reserved.

42III. Trends in Global Trade Rule Formation

11




Increasing movements to FTA revisions

According to JETRO survey, there were 366 effective free trade agreements (FTAs) globally as of June 30, 2021.
Sixteen each of FTA “Upgrade” (rules added, revised, etc.) and “Expansion” (expansion of liberalization, etc.) aresigned and enacted in Asia-Pacific countries and regions. Movements to revise the agreements have been
increasing in recent years.
Number of effective FTAs worldwide (cumulative)

Number of revised FTAs signed and enacted by Asia-PacificCountries and Regions(Number)(Number)400

15Upgrad300
Expansion

10

200
5
100

0

Note: As of June 30, 2021.
Source: FTA database (JETRO)

20
21

1955-59
60-64
65-69
70-74
75-79
80-84
85-89
90-94
95-99
2000-04
05-09
10-14
15-19

0
1989-2004

05-09

10-14

15- (Year)(Year)
Note: Data as of June 30, 2021.
Source: Asia Regional Integration Center, Asia Development Bank
Copyright © 2021 JETRO. All rights reserved.
(Accessed on July 2, 2021)

43

III. Trends in Global Trade Rule Formation

12

RCEP agreement signed, expectation to early enactment grows

In November 2020, 15 countries, including Japan, signed the Regional Comprehensive Economic Partnership(RCEP).
It is a new form of mega FTA. Various countries that have significant gaps in development stages, existing
systems, and social systems and infrastructure development status, will plan the liberalization of trade andinvestment, the harmonization of rules and systems, and the process standardization in a wide range of fields.
RCEP Economic Scale

Movement to Enact the Agreement

Adding Population, Economic Size, and Two-way Trade of Japan’s FTA
Partners to Japan (100 mil people, %)2015
Population
FTA Partners+ RCEP

2020

GDP

Two-way trade PopulationGDP

Two-way trade

22.7

21.3

22.7

29.4

40.0

36.1

-

-

-

44.0

60.1

65.6

 For the agreement enactment, 6 out of 10 ASEAN countries plus 3
non-ASEAN countries (at least 9 countries) must ratify then depositwith the Secretary General of the ASEAN.
 Deposited by Singapore, China, and Japan as of the end of June 2021
Nov. 15,2020 RCEP
SignedDepositcompletion of theabove conditions

Note: GDP as a percentage of world GDP (PPP Criteria). Two-way trade indicates the ratio of the trade withpartners to the total trade in Japan.
Source: WTO and IMF data

60 days

Enactment*April 2021: Deposited by Singapore and China*June 25, 2021: Deposited by Japan (the 3rd Country)

Main Provisions to Access Markets
Tariff Elimination
The tariff elimination rate is 91%(based on the item numbers) in all
signatory countries. The tariffelimination rates of China andKorea to Japan are 86% and 83%,
respectively.

Rules of Origin
Introduced a self-certification
system for certified exporters
as Japan’s first multilateralagreement. Importers can selfreport in Japan as of the dateof enactment.

Main Provisions Related to Trade Facilitation

Trade Facilitation
Obligation to introduce Advance Rulings on Tariff Classification,
which set the customs office to respond in writing to importers regarding
tariff classification, evaluation, and certification of origin on the importers’application basis. Specifying the deadline relating to acceptancepermissions of incoming cargoes (within 48 hours for general cargoes tothe extent possible). Establishing a moratorium for some partners (below)

Cambodia

Laos

MyanmarVietnam

Other Countries with a Moratorium

Introduction of the Advance Rulings on Tariff
Classification (Article 4.10)✓

3 yrs/5 yrs

5 yrs

End of Dec. 2021

Indonesia: End of Feb. 2022

Release of Goods (Article 4.11)

5 yrs

3 yrs/5 yrs

5 yrs

End of Dec. 2021

Source: Annex 4A “RCEP Agreement” (Ministry of Foreign Affairs)

None
Copyright © 2021 JETRO. All rights reserved.

44III. Trends in Global Trade Rule Formation

Continuously required issue resolution in progressing FTA
utilization

13




Among tariff reductions in partner countries according to FTA, the number of issued Certificates of SpecificOrigin has increased. On the other hand, owing to the spread of the self-certification system adopted by the
CPTPP and the Japan-EU EPA, the ratio of third-party certification has relatively decreased.
The challenges of using FTAs remain, and there are some cases where FTAs are not utilized despite the benefits
are recognized. The digitization of the Certificate of Specific Origin can be one of the solutions, particularly forprocess costs, as is often pointed out.
Number of issued certificates of specific origin

Reasons why companies do not use FTAs

(The number for the first year when a full year value is available for each FTA = 100) *1)

1. Companies that see costs outweighed benefits

1,400 A considerable cost to gain the understanding of suppliers.
 Require cooperation from suppliers, not just own company.
 When a unit price is low, without sufficient quantity, the effect is hard togain.
 On top of the incapability of balancing the cost and procedure forreceiving benefits, only the importer gets the direct benefits.
 It is unclear whether the preference applies to end-users (currently only
to intermediate distributors and trading companies).

1,200

MexicoMalaysia

ThailandIndonesia

ASEAN

Philippines

Switzerland

Vietnam

India

Australia

1,000
800
600

2. Companies that see more benefits (although still not utilizing
FTAs)
 In some cases, when asking for a certificate of origin from a domestic
supplier, there are gaps in companies’ level of understanding and it
often takes time, or sometimes it is not possible to obtain the certificate.
 The FTA cannot be used without the manufacturer’s cooperation, as only
the manufacturer can certify its origin. Because the burden on
manufacturers and the damage caused by mistakes are significant, theuse of FTAs may not be worth it.

400
200
0
2006

07

08

09

10

11

12

13

14

15

16

17

18

19

20
(year)

Note: 1) If an FTA is enacted in the middle of a year, the number of issuances in the following year
is 100. 2) Limit to the certificates issued by the Japan Chamber of Commerce and Industry.
3) Only the top 10 agreements issued in 2020 are shown.
Source: METI

Note: Free description of companies that do not use FTAs among the surveyed
companies.
Source: “FTA Survey on Exports (February 2021)” (JETRO)

Copyright © 2021 JETRO. All rights reserved.

45

IV. Digital Trade and Rule

Copyright © 2021 JETRO. All rights reserved.

46

IV. Digital Trade and Rule

Global digital trade growing during COVID-19 crisis

1

In 2020, trade in digital-related goods increased by 4.3 percent year-on-year to $3.353 trillion.
It is believed to be affected by the increase of demand for digital devices for home use due to COVID-19 andthe special procurement for emerging technology applications such as the 5G mobile communication system.



Trends in global trade in digital-related goods (export basis)(%)(Million USD)

40,00030

2030,00010

20,0000

10,000

- 10

0

- 20
11

12

13

14

15

16

17

18

19

20 (Year)

Exports of digital-related goods
Exports growth rate of digital goods (right axis)
Exports growth rate of non-digital-related goods (right axis)

Note: Estimated by JETRO (See “Appendix 1 and 2” for estimation methods)
Source: Trade statistics of respective countries and regions

Global trade in digital-related goods (export basis, 2020)

Computers and peripherals (total)

Computer and peripheral equipment
Computer parts
Communication equipment
Cellar phones
Semiconductors and other electronic
components
Electron tubes/Semiconductors, etc.
Integrated circuits
Other electrical/electronic components
Measuring equipment/instruments
Medical electronics
Semiconductor manufacturing equipment
Industrial robots
Drone
Digital Components
Digital final goods
Digital-related goods (Total)(Unit: 100 million USD, %)Compositio GrowthValuen ratio
rate
5,983
17.8
4.5

3,955
1,326
5,817
2,534

11.8
4.0
17.3
7.6

8.3
3.3
-1.3
-2.7

9,287

27.7

11.2

1,187
8,101
4,945
2,697
1,345
920
52
951
18,21815,30633,530

3.5
24.2
14.7
8.0
4.0
2.7
0.2
2.8
54.3
45.7
100.0

2.5
12.6
3.3
-2.2
4.7
14.6
-7.4
2.1
6.5
1.9
4.3

Note: (1) Estimated by JETRO. (2) See “Appendix 1” for product classifications. (3)Shading is for products that increased in composition ratio compared to 2010.
Source: Trade statistics of respective countries and regions
Copyright © 2021 JETRO. All rights reserved.

47

IV. Digital Trade and Rule

Semiconductor supply chain to center in Asia

2

China’s semiconductor imports account for 30% of the world market share, and it can be seen that thesemiconductor industry depends on foreign countries.
Owing to widespread expansion, including automobile applications, added to the expectations fornormalization of economic activities due to the progress of vaccinations, demand growth and price hikes due
to a shortage of semiconductors are expected for the future.

Trade matrix for semiconductors and other electronic components(2020, composition ratio based on export amount)(%)
ImportExport

World

Asia

Japan

China Taiwan ASEANUSMCA Europe

Other
areas

Export growth rate of semiconductor-related productvalue (year-on-year)
（％）
(%)
50
50

40

World

100.0

84.5

2.4

33.3

7.1

16.4

5.5

8.5

1.5

Asia

84.5

76.6

2.2

30.2

5.6

14.7

3.3

3.6

1.0

30

84.4

76.5

2.2

30.2

5.6

14.7

3.3

3.6

1.0

20

Japan

4.1

3.7

1.0

0.8

1.0

0.2

0.2

0.0

China

16.6

14.7

0.4

1.9

3.7

0.3

1.1

0.6

100

Taiwan

12.8

12.3

0.8

4.4

2.6

0.2

0.3

0.1

ASEAN

23.4

19.4

0.8

5.0

1.7

4.7

2.0

1.7

0.2

USMCA

6.4

4.1

0.1

1.5

0.4

1.0

1.7

0.4

0.2

△- 20
30

Europe

7.6

2.5

0.0

1.2

0.2

0.7

0.5

4.4

0.2

- 30

Other areas

1.5

1.4

0.0

0.3

0.9

0.0

0.1

0.0

0.0

East Asia

電子管・半導体等
Electrontubes/Semiconductors, etc.

40

集積回路 circuits
Integrated

30

半導体製造機器
Semiconductor
manufacturing equipment

20
10

0
△ 10
△- 10
20
I

Ⅱ

Ⅲ

Ⅳ

I

Ⅱ

Ⅲ

Ⅳ

I

2018III
II

IV

I

2019
II III

IV

2018
Note: Shading is for countries/regions with a global market share of 10% or more.
Source: Trade statistics of respective countries and regions

I

Ⅱ

I

2019

Ⅲ

2020
II III

2020

Ⅳ

I

IV2021
I
2021

Note: Compiled based on data from 33 countries/regions.
Source: Trade statistics of respective countries and regions
Copyright © 2021 JETRO. All rights reserved.

48

IV. Digital Trade and Rule

Digital-related services are heading for recovery

3

In terms of digital-related services, the decline in 2020 was limited.
Demand for digital-related services has increased owing to the impact of COVID-19, and strong positive
growth can be seen, especially in China.

Growth rate of imports of services and digital-related services in major countries(%)

Services (overall)

Digital-related services
10
0
- 10

- 20

- 50

- 30

20

60

0
- 20
- 40
50

China

France0Japan

Germany

US

50

30
0

- 30
Q1

Q2

Q3

Q4

Q1

Q2

2019

Q3

Q4

2020

0
- 50
Note: Listed the top 5 import countries in 2020. Digital-related service trade is defined as “communication/computer/information service trade.”
Source: Compiled from trade statistics for each country and region
Copyright © 2021 JETRO. All rights reserved.

49

IV. Digital Trade and Rule

Rapidly increasing cross-border data distribution volume

4The expansion of the data distribution volume in Asia Oceania in 2020 is remarkable, with a growth rate of
42.8% which is much higher than the growth rate in 2019 (25.6%).
The population using smartphones has continued to grow year by year, increasing from 11.2% to 64.7% in 10
years from 2010.

Trends in Internet/smartphone and cross-border data
distribution volume

Trends in cross-border data distribution volume (by region)(TB per second)

600

Africa (1.6%)(per 100 persons, %)80

Russia CIS (2.6%)70

Middle East (4.9%)

500
400

60

Americas (19.6%)

50Europe (21.3%)

40

Asia & Pacific （41.9％）

300
200
42.8％
100
0
2015

Growth rate (Asia Oceania): 25.6％

2016

2017

2018

2019

Note: Figures in parentheses indicate the composition ratio in 2020.
Source: Compiled from ITU (International Telecommunication Union)

2020(TB per second)
800

Populat ion using the In ternet(per 100 persons)

700
600

Percentage of population using
smartphon es (%)

500

Cross-border data distribut ion
volum e (cross-border bandwidth )(TB per secon d, right axis)

400

30

300

20

200

10

100

0

0
2001
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

700

(Year)

Note: The value of the cross-border data distribution volume in 2020 is an
estimated value.
Source: Compiled from ITU and eMarketer
Copyright © 2021 JETRO. All rights reserved.

50

IV. Digital Trade and Rule

Radically advancing COVID-19 Technology worldwide

5As COVID-19 spread, restrictions on outing and refraining from events continued to be imposed around theworld, and the COVID-19 tech business developed in response to the new lifestyle.
Sectors that realize non-contact and remote environment, including IoT, VR, and EC, are showing new
expansions in business.
New business that became popular after the spread of COVID-19

DigitalTechnology

Handling sectors
Control of human flow,
avoidance of 3 types ofcongestion

IoT/AI

XR

EC

Cloud

OthersResponding to new business and needs under COVID-19
Understanding behavior with AI camera and sensor camera (Locarise, Owl/Japan)

Development of technology to recognize hand movements with AI (Motion Gestures/Canada)
Establishing an unmanned store without a cash register in partnership with restaurant operator Levy
Contactless, automation(American Express/USA)
Popularization of cashless payment (LinkAja/Indonesia)
Virtual private view using VR (KE Holdings/China)
More realistic experience
Watching sports (KDDI/Japan, Intel/USA)
Establishing a system for
Utilize VR to check prototypes (AGC/Japan)
remote works
Responding to shopping Assisting deliver of small grocery stores (Mercato/USA)
demand amid restrictions
Marketing through live commerce (Taobao Live, Wechat/China)
on going out
Providing a video clinic platform (Doctolib/France)
Telemedicine
Development of a terminal for sharing data measured at home with doctors (TytoCare/Israel)
Enhancing video conferencing capabilities stepwise to meet the needs of teleworkers (Microsoft/USA)
Remote work
Providing a platform for virtual events (Hopin/UK)
Delivery
Providing home delivery service for last mile logistics (JOKR/Germany)DX
Providing DX promotion know-how and services for SMEs (Compre dos Pequenos/Brazil)
Increase in stay-at-home Development of instant play video games that do not require app downloads (Playco/Japan)
demandExpansion of video streaming services (NETFLIX, US)

Source: Various materials

Copyright © 2021 JETRO. All rights reserved.

51

IV. Digital Trade and Rule6

New post-covid-19 businesses developing around the worldEspecially after COVID-19 in various parts of the world, movements to create new businesses such as online
communication and electronic settlements are gaining momentum, and VC investment has reached record
highs in countries and regions such as Latin America, Europe, and Africa.
Live commerce is rapidly developing in China and is attracting a lot of attention as a new e-commerce tool.

New businesses after COVID-19 (by region)

EuropeProblem-solving-type startups
are emerging owing to COVID19 crisis. Healthcare, mental
health, and EdTech aresuccessfully raising funds, andthere are also positive
movements in sectors such as
GDPR compliance support.

AfricaThe number of VC
investments in 2020 reacheda record high, and the EC
market is rapidly growing,supported by FinTech
companies.

China
Live commerce is rapidly
growing as a new e-commerce
tool, and the Chinese
government has announced
related measures to encourage
the development of livecommerce as it contributes topromoting consumption andcreating job opportunities.

Asia Oceania
The digitalization of the economy
is accelerating. A large amount ofmoney has been invested in theEC, vehicle dispatch, andsettlement businesses. With thefull-scale arrival of the digital
economy, the possibility of thebirth of a larger-scale digitalcompany began to be seen.

US
Owing to changes in the way
workers work, digitalcommunication tools, including
video meeting systems such as
Zoom and Teams have developed.
Furthermore, EC sales increased
significantly, up 42% year-on-year.

Latin America
COVID-19 crisis highlighted
the weaknesses of the Brazilian
medical system, such as thehigh cost of medical insurance
and the lack of public
hospitals, but at the same time,telemedicine and remotediagnosis became popularized.

Source: Various materials
Copyright © 2021 JETRO. All rights reserved.

52

IV. Digital Trade and Rule7

Japanese companies’ strong interest in DX through overseas
collaboration
COVID-19 increases momentum for Digital Transformation (DX) and green investing.
JETRO launched the Japan Innovation Bridge (J-Bridge) to support collaboration and cooperation with startups in Southeast Asia, India, Israel, Europe, and US in the DX/green sectors.

Sectors of interest in overseas collaboration/cooperation

Japan Innovation Bridge (J-Bridge)

(%)
0

10

20

30

40

Carbon-neutrality

38.3

Smart city

32.7

Mobility

29.9

Health care

29.3

Agricultural and fishingindustries
RetailOthers22.3

Providing information
for momentum
building

Sourcing ofpromising companies

Matching

18.2
15.4

n=358

Project formation

Providing information on
individual companies and sectors
through online events
Discovering overseas companies
such as start-ups and introducing
them to interested companies inJapan (J-Bridge members)
Support for matching processes
between Japanese companies
and overseas companies throughexperts, etc., formation of events
originated overseas
Support for joint demonstrations
between Japanese and Asiancompanies

Note: “n” refers to the number of persons in charge at J-Bridge member companies.
Source: Compiled from a questionnaire to JETRO support companies
Copyright © 2021 JETRO. All rights reserved.

53

IV. Digital Trade and Rule

Japanese companies’ strong interest in DX through overseas
collaboration

8

JETRO supports cooperation/collaboration between Japanese companies and overseas companies that
contribute to solving social issues in the DX sector.
In the projects selected for the demonstration project, there are precedents for business development whileproviding solutions to local social issues in sectors such as medicine and agriculture.
Precedents of DX by Japanese companies’ collaboration/cooperation with overseas companies

Company name
(Domestic
location)(Establishment
year)

Targetcountry /Targetindustry

Outline of the demonstration
project

Pertaining local social issues

Expected effects

Fuso Machine
Works
(Mie)
(1953)

Indonesia /Manufacture ofmachinery andequipment A system was introduced toanalyze the loss of overall facility
efficiency, which indicates thedegree of utilization efficiency ofeach facility while utilizing IoT,
and the effect was verified.

 Indonesia’s manufacturing industry
lacks the knowledge for production
efficiency improvement through theuse of digital technology.

 Which equipment to be improved
with its productivity is accurately
determined by loss analysis of total
equipment efficiency.

Ubie(Tokyo)(2017)

Singapore /Medical care

 Preliminary medical interviews
using AI are conducted to verify
ease of use and status of usage.

 The burden of doctors and patientsis reduced and the efficiency is
 In Singapore, medical expenditure is
improved by shortening
increasing, and its reduction is anconsultation and waiting times.
issue.
 The quality of medical care is At the medical site, there is no
improved uniformly by collecting
custom of prior interviews, and thenecessary information prior to
diagnosis results are uneven.
treatment through preliminary
medical interviews.

Sagri(Hyogo)(2018)

Thailand /Agriculture Visualizing the information ofeach farmland by using satellitedata, machine learning, etc.

 Thailand is aiming to promotesmart agriculture. However, the costof data collection is an issue.

Note: Listed in order of company establishment date.
Source: Compiled from materials related to the demonstration project conducted by JETRO Development of data infrastructure Contributing to the realization ofsmart agriculture throughconsultation, etc. based on data

Copyright © 2021 JETRO. All rights reserved.

54

IV. Digital Trade and Rule

9

Increased regulations such as data governanceThe acceleration of digital transformation due to the COVID-19 pandemic is increasing the introduction ofregulations on data governance and contents.

International organizations are working to harmonize rules concerning privacy information and data transfer
across country borders, while companies are required to address regulations of individual countries.
Status of global digital regulations introduction(Number)
（件）

80
70
60

データ管理
Data governanceContent
and intellectual
コンテンツ・知財関連規制
property

登録、ライセンシング
Registration and licensing

投資規制
Foreign
direct investment

Subsidies and industrial
補助金など産業政策
policies
その他
Other

デジタル課税
Taxation
全体
Total

50
40
30
20
10
0
I

II

III

2020

IV

I

II

2021

（年）
(Year)

Note:1) Limit to measures implemented or introduced as of June 23, 2021, among all measures recorded in the database.
2) The total numbers of whole cases and each category do not match, as some measures are classified into multiple categories.
Source:“Digital Policy Alert” (Global Trade Alert)
Copyright © 2021 JETRO. All rights reserved.

55

IV. Digital Trade and Rule10

Economy digitalization leading to review of tax system

The introduction of digital service taxes, mainly targeting platform users, also surged around 2020.
In response to base erosion and profit shifting (BEPS), the OECD discussed a new taxation formula focusing on
introducing digital taxation and a minimum tax rate. In July 2021, 130 countries and regions reached anagreement on the outline, aiming to introduce it by the end of 2023.
Comparison of taxation methods for the digital economy

Trend in digital service tax introduction (since 2019)

2021

2020

2019

Year Month

Country

Target Industry

Digital Service
Taxes of EachCountry

OECD Digital
Taxation Draft

Characteristic Formulary
Taxation on salesof Tax
distribution of(indirect tax)
consolidated profit(direct tax)

Formulary
distribution of
consolidated profit(direct tax)

TargetConsumer related
businesses,
automated digital
services (notlimited to digitalbusiness)

Tax Rate
(%)

Jan.
Jul.
Jan.

France*Hungary
Italy

SNS, online advertising
Online advertising
Online advertising and online
marketplace

3.0
7.5
3.0

Jan.
Jan.

Austria
Tunisia

Online advertising
Applications and digital
services sale

5.0
3.0

Mar.

TurkeyOnline advertising, content
sales, etc.

7.5

Apr.

UK

SNS, search engines, andonline markets

2.0

Apr.
Jul.
Jan.

India
PolandSpain

E-commerce operator
Video streaming platform
Online advertising and datatransfer services

2.0
1.5
3.0

Jan.
Jan.

Kenya
Sierra Leone

Online trading
Online trading

1.5
1.5

Note: France postponed the measure until the end of 2020 based on consultations with the
US but resumed in December that year.
Source: “Taxation of Digital Economy” (KPMG), JETRO “Biz news,” and the Ministry of
Economy, Trade and Industry

Existing rules

Permanent
establishments(PE), such as
branches or
subsidiarycompanies

TargetIncome derived
Requirement from thecompany’s annual
business activities

SNS, online
advertising, andplatform providing(limited to digitalbusiness)

More than aSales of over 20
certain level ofbillion euros andsales worldwide
profit margin ofand in own country over 10%

Tax Rate

Corporate tax rate About 1 to 8%
under eachcountry’s domesticlaw (about 20 to30%)

Based on corporate
tax rate* undereach country’s
domestic law

Challenge

Transfer businessto lightly taxedcountries

Elimination trendsof each digital
service taxes

Response to eachcountry’s taxationis required

Note: The tentative agreement is made under the policy of making a minimum tax
rate of at least 15%.
Source: OECD and various media reports
Copyright © 2021 JETRO. All rights reserved.

56

IV. Digital Trade Rules

11




Negotiations on WTO’s EC rules, conclusion on someIn December 2020, the WTO distributed an integrated negotiating text summarizing the proposals of eachcountry for the first time. From 2021, negotiations will continue in working groups divided by discussion points
based on the text.
Negotiations on several discussion points related to facilitation and reliability are concluding at the working
group level.
Overview of the integrated negotiation text

A: Enabling Digital Trade/E-Commerce

C: Trust and Digital Trade/E-Commerce

Facilitating electronic ●Electronic transaction frameworks●E-authentication, digital certification and etransactions
signatures●E-contracts●Paperless trading
Digital trade●Customs warehouses/free zones
facilitation●Electronic invoicing

Trust and digital trade/ecommerce●Online consumer protection

PrivacyBusiness trust●Protection of personal information/privacy●Source code
●ICT products that use cryptography●Facilitation of logistics and e-payments

Custom duties●Spam

D: Cross-cutting issues
Transparency●Customs duties on electronic transmissions●Publication and accessibility of laws and regulations●Opportunities to comment

B: Openness and Digital Trade/E-Commerce●Mechanisms for reporting and notifications

Non-discriminationand liability●Cybersecurity●Non-discriminatory treatment of digital products Cybersecurity●Prior authorization

Capacity building●Interactive computer services (limiting non-IP
liability)●Options for capacity building and technical assistance●Cooperation between stakeholders, agencies andinternational organizations

E: Telecommunications
F: Market access
Flow of information(data)

Access to Internet
and data●Cross-border transfer of information (data)●Location of computing facilities●Open government data
●Access to the Internet●Access to online platforms/competition

Note: Negotiating members have (almost) finalised negotiating texts for items highlighted
with red.
Source: UNCTAD, based on Joint Statement on Electronic Commerce: Facilitator’s Reports(INF/ECOM/R/1-7)
Copyright © 2021 JETRO. All rights reserved.

57

IV. Digital Trade and Rule

Many recent FTAs constituting digital trade rules

12




FTAs constituting digital trade rules increased particularly in the late 2010s. The ratio of FTAs constituting
digital trade rules to all FTAs is also rising.
In the early days, the US-type FTAs, constituting an e-commerce-specific chapter, took a large part but
recently types are more diverse.
FTA including digital trade rules(Number)
（件）

(%)

10

米国型
US
type

EU型
EU
type

その他
Other

100

全FTAに対する割合（右軸）The ratio to all FTAs (Right axis)

9

90

8

80

7

70

6

60

5

50

4

40

3

30

2

20

1

10

0

0
2001 02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19* 20*(Year)

Note: 1) FTA by enactment year. 2) Even if the FTA does not constitute an e-commerce chapter, it is counted as long as there is a digital-related regulation, including thedigitization of trade documents. 3) It also includes field-specific agreements such as the US-Japan Digital Trade Agreement. 4) Created based on source data with
supplementing agreements concluded since 2019.
Copyright © 2021 JETRO. All rights reserved.
Source: “The TAPED (Trade Agreements Provision on Electronic-commerce and Data)” (University of Lucerne)

58IV. Digital Trade and Rule13

Sophistication of regulation contents as digital market grows

Recently, the digital trade rules in FTAs have been expanding both in quality and quantity.
Since 2015, high-standard rules have spread, such as the TPP Three Principles (free data flow, general
restriction on data localization, and prohibition of obligatory source code disclosure).
Development status of digital trade items in FTAs

Reliability

Liberalization

Facilitation

Type

Item

2001 - 2005

(Unit: %)2006 - 20102011 - 20152016 - 2018

Domestic electronic trading framework
Electronic authentication and electronic signatures
Digitization of trade documents
Internet interconnection charge sharing
No custom duties on electronic transmission
Non-discriminatory treatment of digital products
Liability on a supplier or user of an interactive computer service

50.0
27.8
33.3
0.0
50.0
16.7
0.0

68.2
59.1
54.5
0.0
68.2
45.5
0.0

68.6
65.7
54.3
0.0
74.3
22.9
0.0

58.6
79.3
51.7
10.3
79.3
34.5

* Cross-border transfer of information by electronic means

0.0
0.0
0.0

0.0
0.0
0.0

8.6
0.0
0.0

17.2
37.9

0.0
38.9
0.0
27.8
0.0
0.0

0.0
63.6
13.6
13.6
0.0
0.0

0.0
74.3
40.0
31.4
0.0
0.0

6.9
82.8
72.4
48.3
24.1
3.4

16.7

36.4

34.3

55.2

426

647

666

1,304

* Prohibition of requirements for location of comping facilities
Prohibition of requirements for location of computing facilities
in financial services
Expansion of access to and use of public government data
Online consumer protection
Measures against unsolicited commercial messages
Personal information protection* Prohibition of requests for source code disclosure
Prohibition of requests for algorithm disclosure

Crossover
Cooperation on cybersecurity matters
Matter
Reference: Average number of languages used

6.9

6.9

Note: 1) Shaded area represents the ratio of FTAs constituting each item to all FTAs constituting digital trade-related provisions. The higher the ratio, the darker the color. 2) *indicates the TPP Three Principles. 3) After 2019, not all FTAs are covered, and only the agreements listed in the source are categorized.
Source: “The TAPED” (University of Lucerne)
Copyright © 2021 JETRO. All rights reserved.

59

V. The World Heading for Green Growth

Copyright © 2021 JETRO. All rights reserved.

60

V. The World Heading for Green Growth1

Major countries competing for GHG reduction targets
The movement toward carbon neutrality, which balances greenhouse gas (hereinafter referred to as GHG)
emissions and absorption, is accelerating worldwide. Countries and regions that account for about 70% of theworld’s total emissions have declared the goal of carbon neutrality.
Major countries are raising their GHG reduction targets under the Paris Agreement.

Number of national net zero pledges and share of global
CO2 emissions covered

GHG reduction targets of major countries
GHG reduction targets(Countries)

Percentage
of CO2Time of CN emissions inachievement the world

50

100%

Medium-term goals

40

80%
US

-26% to -28% in 2025 (compared to 2005)
 -50% to -52% in 2030 (compared to
2005)

EU

-40% in 2030 (compared to 1990)
 -55% in 2030 (compared to 1990)

UK-68% in 2030 (compared to 1990)
 -78% in 2035 (compared to 1990)

1.1%

Japan

-26% in FY2030 (compared to 2013)
 -46% in FY2030 (compared to 2013)

3.2%

China

• -65% for CO2 emissions per GDP in 2030
(compared to 2005)• Commence reduction of emissions by
2030.

30

60%

20

40%

10

20%

2015 2016 2017 2018 2019 2020 2021
Q1
Declarations only
Bills have been submitted to Congress
Legislated
CO2 emission coverage ratio (right axis)
Source: “Net Zero by 2050” (IEA)

0%

14.7%

2050

2060

9.4%

28.4%

Note: (1) Red characters are the increase in the numerical targets announced at the Leaders
Summit on Climate in April 2021 (but EU announcement was made in December 2020). EU
emissions include the UK.
(2) CN stands for Carbon Neutrality.
Source: Compiled by the materials from UN, Ministry of Foreign Affairs, and IEA.
Copyright © 2021 JETRO. All rights reserved.

61

V. The World Heading for Green Growth2

Making green growth a pillar of economic recovery
In addition to responding to the Paris Agreement, an increasing number of countries and regions are advocating
green growth strategies to achieve sustainable societies and economies through climate change countermeasures.
EU, US, South Korea, Thailand, and other countries have made green growth a pillar of economic recovery fromCOVID-19.

Green growth strategies of major countries
Country/
RegionGrowth strategy

Overview
A growth strategy for realizing a sustainable EU economy. In addition, the Recovery
Fund and the Recovery Package will be used to induce investment.

EU

European Green Deal

US

U.S. Jobs Plan, etc.

UKThe 10-point plan for a green
industrial revolution, etc.

Japan

Green growth strategies
associated with carbon
neutrality in 2050

South
Korea

South Korea’s Green New Deal, Among the South Korean version of the New Deal policies, the Green New Deal
2050 Carbon Neutral Strategy, aims to supply new and renewable energy sources and to popularize the use of
etc.
environment-friendly automobiles.

ThailandBio-Circular-Green (BCG)
EconomyImplementing climate change countermeasures such as subsidies for the installationof EV facilities, electrification of ports, waterways and airport facilities, andsustainable housing construction and renovation.
The plan to support up to 250,000 jobs by 2030 and mobilize £12 billion in public
investment and more than 3 times as much from the private sector throughenhanced climate change countermeasures.
Formulating an action plan that addresses 14 sectors as growth industries that arenecessary to achieve carbon neutrality, including the offshore wind power industry,
the automobile and rechargeable battery industries, and the housing and building
industries. Creating a 2 trillion-yen Green Innovation Fund.

A concept to drive new sustainable growth by simultaneously promoting economic
recovery from the damage caused by COVID-19 crisis, progress in environmentfriendly technologies such as biotechnology, renewable resources and energy, andimprovements in production efficiency.

Note: Targets for contribution to the Paris Agreement (NDCs and INDCs) and measures focused on GHG reduction are not included in this table.
Source: Compiled based on data from various countries and regions
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62

V. The World Heading for Green Growth

About 80% of the world’s energy supply comes from fossil
fuels

3



The world’s energy supply is largely derived from fossil fuels, and oil, coal, and natural gas accounted for morethan 80% in 2018. Much of this energy was consumed in the form of petroleum products, electricity, etc.
The composition of power sources in the world and major countries (2019) shows that more than 60% of total
power generation is from fossil fuels such as coal, oil, and natural gas. The percentage of electricity generated
by hydraulic, solar and wind power was 23.7%.
Composition of electricity generation by power source in the world
and major countries (2019)

Breakdown of the world’s energy supply (2018)
Hydro
2.5%
Nuclear
4.9%

Biomass
and waste
9.3%

Oil
31.5%

World’s Totalenergy supply
14,280 Mtoe
(2018)

Coal
26.9%

Note: Mtoe = 1 million tonnes of petrol equivalent. Toe stands
for tonne of oil equivalent. 1 toe is the approximate
amount of energy that can be obtained from 1 tonne ofpetrol.
Source: International Energy Agency (IEA)

100
90
80
70
60
50
40
30
20
10
0

Others
Wind
Solar
Hydro
NuclearNatural gas
Oil

Republic of South Africa
IsraelRussia
UK
Spain
Italy
FranceGermany
Chile
BrazilMexicoCanadaUS
Australia
India
Indonesia
ThailandSouth Korea
China
Japan
World

Natural
gas
22.8%

(%)

Wind and solar
2.0%

Coal

Note: Others include solar thermal, biofuel, waste, tidal power, geothermal, etc.
Source: Compiled based on “World Energy Outlook 2020” (IEA) and “Data and Statistics” (IEA)

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63

V. The World Heading for Green Growth4

Renewable energy introduced at a rapid pace
The world’s introduced capacity of renewable energy is growing. The world’s newly introduced renewable energy
capacity in 2020 reached a record high of 261 GW, up 45.1% year-on-year, centered around China and US.
The usage of renewable energy as a power generation source is one of the keys to achieving carbon neutrality.
Many countries and regions are taking measures to introduce renewable energy. A reduction in the power
generation cost by renewable energy is also behind the expansion of its use.



Global installed capacity of
renewable energy
（GW）
3,000

Support measures and targets for the introduction and expansion of renewable energy
in major countries

（GW）
300

Country/
RegionStrategy, plan

Outline/Objectives

EU

European Green Deal, etc.

Increase the share of renewable energy in EU to 38-40% by 2030.

2,500

250

UK

The 10-point plan for a green
industrial revolution, etc.

2,000

200

US

New NDCs, etc.

1,500

150

1,000

100

Brazil2050 National Energy Plan
(NEP 2050)

500

50

Japan

Strategic Energy Plan (Draft)

0

0

China

Statement at the UN Climate
Ambition Summit (December
2020)

Quadruple the current amount of offshore wind power to 40 GW
by 2030.
Aim to increase offshore wind power to generate 30 GW ofelectricity by 2030.
Set renewable energy as one of the priority investment sectors
and expand solar power generation and wind power generation tobreak away from excessive dependence on hydropower.
Increase the share of renewable energy in total electricity
generation to 36-38% by FY2030.
Raise the share of non-fossil fuels in primary energy consumption
to around 25% by 2030 and increase the installed capacity of windand solar power to more than 1.2 billion kW.

South Korea The Third Energy Master Plan

Raise the share of new and renewable energy to 30-35% by 2040.

（Year）
Newly introduced capacity(right axis)
Cumulative introduced
capacity
Source: “Renewable Capacity Statistics
2021” (International Renewable
Energy Agency: IRENA)

Indonesia

Medium-Term National
Development Plan (RPJMN)
2020-2024

Increase the share of new and renewable energy to 23% by 2024.

Raise the share of power generation capacity from renewable
Green Technology Master Plan energies such as biomass, biogas, solar power, and small
Malaysia(2017-2030)
hydropower to 20% of the total installation capacity andoperational capacity by 2025.
Raise the amount of renewable energy generated to be 58.7 GW
National Transformation
Saudi Arabia(including 40 GW from solar power and 16 GW from wind power)
Program “Vision 2030”
by 2030.
Note: NDCs are contributions to the Paris Agreement determined by the country; INDCs are drafts of NDCs.
Source: Compiled based on country and regional data, business briefs, and regional analysisCopyrightreports.© 2021 JETRO. All rights reserved.

64

V. The World Heading for Green Growth

Expected business opportunities creation by significant
investment demand5In 2018, the power generation and heat generation sector accounted for over 40%, which was the largest
amount of worldwide carbon dioxide emissions by sector. While the transportation and industrial sectors also
account for around 20% each. It is necessary for all sectors to take action to realize carbon neutrality.
The amount of investment required to realize carbon neutrality by 2050 is expected to augment to $5 trillion
per year (as of 2030), which is expected to create business opportunities.

Global carbon dioxide emissions by sector (2018)

Amount of investment required to realize carbon neutrality in 2050
(Billion USD)

(Unit: %)Agriculture,
1.3

6,000

Fisheries
industry, 0.1
Others, 0.5

Commercial and public
services, 2.5

5,000
4,000

Building, 6.1

World’s CO2
emissions
33,514 Mt CO2(2018)

Transport,
24.6

Electric
power, 41.7

3,000
2,000

1,000
0

Industry, 18.4

Note: Sector definitions are based on IEA.
Source: International Energy Agency (IEA)

Other power,
4.8

2016-2020

2030

2040

Fuel Production

Power generation

Infrastructure

Industry

Transport

Building

2050

Source: “Net Zero by 2050” (IEA)
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65

V. The World Heading for Green Growth

Carbon pricing being introduced, covering 20% of global
emissions6Countries and regions which introduce carbon pricing (carbon tax and emissions trading system (ETS)) to
reduce GHG emissions, are expanding. The number of introductions has at least tripled in the past 10 years to
64. It covers about 20% of worldwide emissions.
Since December 2020, when EU agreed to raise its GHG reduction target, the EU-ETS price has been on an
upward trend, and as of July 2021, it reached the level of above 50 euros per ton of CO2.
Trend in trading prices in the EU-ETSClassification and overview of carbon pricing

Pricing

EmissionsFeatures
Number of
introducing
countries/regions
worldwide

Carbon tax

Emissions trading system

The price (tax per ton of CO2
emissions) is set by thegovernment.

The price is determined as aresult of trade in the market ofemission allowances distributed
to each entity.

The amount of emissions isdetermined as a result of theactions of each emitting entity
based on the tax level.

The government sets an upper
limit on emissions. Each entity
determines its own emissions
and the amount of emission
allowances it will buy and sell
while watching the market price.

Price is fixed, but there is
uncertainty about emission
reductions.

The total amount of emissions isfixed, but the price varies.

35

Major introducing
countries/regions Sweden (137), Switzerland(carbon price in(101), France (52), UK (25),parentheses,
Japan (3)dollars)

29

70(Unit: Euro)

60
50
40

30
20
10
0

EU (50), California (18), South
Korea (16), Tokyo (5), China(n.a.)

Note: Number of introductions and carbon prices are from World Bank data (as of April 2021).
Carbon price is the price per ton of CO2 emissions.
Source: Compiled from the materials of Ministry of the Environment, World Bank, etc.

Jan. 2018
4
7
10
Jan. 20194
7
10
Jan 2020
4
7
10Jan. 2021
4
7

Description

Source: European Energy Exchange
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66

V. The World Heading for Green Growth7Carbon border adjustment considered ahead in EU
Discussions on carbon border adjustment have begun to make progress mainly in Western countries owing toconcerns about carbon leakage (increased imports from countries with lax emission regulations and outflow of
production bases).
There are numerous institutional design issues to be addressed. Consistency with WTO rules is also
unprecedented and seems to depend on institutional design. EU released a draft regulation linked to the EUETS in July 2021. It is planned to be introduced on a trial basis in January 2023.
Image of carbon border adjustment(from the perspective of country A)

Elements of institutional design for carbon border adjustment

Country A

Country B

Element

Climate change
measures

Climate change
measures

Target country

Consideration for developing countries, andconsideration of climate change
countermeasures in the target countries.

Scope of target
sectors

Should it be limited to energy-intensive
industries such as steel, aluminum, and cement?
Or all import products?

Borderadjustment(tax)

Scope of emissions to
be targeted

Include only direct emissions from the factory or
also indirect emissions (purchased electricity,
raw materials, and parts)?

ImportCalculation method of
Apply the actual emissions of each factory? Useemissions per productbenchmarks such as international standards?
unit

Loose

Exports
Tax refund

Source: Compiled by JETRO based on various data

Goods priceGoods priceDomestic sales price

Carbontax

SevereIssues for consideration

Should it be equivalent to the domestic carbon
Carbon price forprice (carbon tax, auction price of the emissions
adjustment calculation
trading system)?
Concomitant use ofother domestic
measures

Treatment of load reduction measures (such as
free quotas under the emissions trading system)for domestic products

Use of income

Are they domestic climate change
countermeasures? Aid to developing countries?

Source: Compiled from materials of the Ministry of Economy, Trade andIndustry, Ministry of the Environment, etc.
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67

V. The World Heading for Green Growth

Hydrogen expected to be used as clean energy8Hydrogen, which can be stored and transported energy, along with storage batteries, is expected as a newenergy source.
In Europe, measures to promote the production and use of hydrogen have been put forward by EU and othercountries. Projects and corporate affiliation to promote the production, transportation, and use of hydrogencan also be seen in countries other than Europe.
Major hydrogen-related projects and support measuresin major countries

The process from production to use of hydrogen

O O
Production

Storage
Logistics

HH
HH
HH
HH

Producing hydrogen
without CO2
emissions by theelectrolysis of waterusing renewableenergyStorage andtransportation in theform of compression,liquefaction, metal
absorption/
attachment, etc.

Country
Germany

FranceItaly
Austria
China

South Korea

SupplyUse

Supply at hydrogenstations, use in fuelcell vehicles, use infactories, etc.

Australia
Saudi Arabia

Chile
Source: Compiled based on “White Paper on Hydrogen Energy” (NEDO), theMinistry of the Environment

Major projects and support measures
Implementation of various projects backed by investments from the
National Innovation Programme Hydrogen and Fuel Cell Technology(NIP) and the Energy and Climate Fund (EKF), and support measures“Decarbonising in Industry.”
Projects to popularize fuel cell vehicles, projects related to CO2-freehydrogen production for industrial use, etc.
Hydrogen train project by FMN and Trenord, which operate railtransitGreen hydrogen production and decarbonized steel production
project at the steel giant Voestalpine’s plant
Implementation of various projects based on taxation and subsidies
for the development of fuel cell vehicles and hydrogen fuel, and thefosterage of hydrogen-related industries led by local governments
A green industrial park was built in Saemangeum in the southwest of
the country, and renewable energy and green hydrogendemonstration projects will be promoted.
Hydrogen Energy Supply Chain (HESC) ProjectGreen hydrogen and green ammonia production facility is built in
NEOM
Leading Chilean major energy corporation Andes Mining and Energy
and German and Italian companies collaborate to establish thecountry’s first green hydrogen plant

Source: Compiled based on each company’s website and regional analysis reports
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68

V. The World Heading for Green Growth

The electric vehicle (EV) market expected to expand rapidly in
China, Europe and US

9China, Europe and US account for 95% of the worldwide EV new car market (2020). In 2030, the worldwide EV
market will be 25.76 million units per year, with China, Europe, and US accounting for nearly 80% of the total,
and the 3 regions will continue to lead the EV market for the next 10 years (IEA forecast).
Major countries are strengthening regulations and support for the expansion of EVs, including China, whichaims to expand new energy vehicles by cost reduction through enhanced competitiveness; EU, which aims tocreate a market by tightening regulations and securing resources; and US, where California is leading the way
with stricter fuel efficiency standards than the federal government.

Worldwide annual new car (automobile)
sales forecast for EVs (BEVs, PHEVs)

30(Million units [Left axis,] % [Right axis])

18

Others

16.0

India

25

Japan

2.9

US
Europe20

China
EV share (right axis)

10.0

1.9
1.5
2.9

15
1.2
0.8
1.0
1.4

10
4.0

5

0.1 3.7
0.0

0

0.3 0.0 5.0
1.4
1.3
2020

2025

7.1

16
14
12
10
8
6

EV-related targets, key regulations, and incentives in major countries
Region/Country/StateU.S.
(Federation)2

Note: (1) Baseline scenario only for 2025 and 2030
(2) EVs include BEVs and PHEVs.
Source: Compiled by the International Energy Agency (IEA)

Major regulations(governing laws), etc.

Major incentives,
etc. (for consumers)• GHG emission standards(Clean Air Act)
• Tax credit for• Fuel efficiency standards
certified EVs(Energy Policy andConservation Act (EPCA))• Low-Emission Vehicle(LEV) regulation• Zero-Emission Vehicles(ZEV) regulation• Clean Vehicle
Rebate Program(CVRP)EU• All new passenger cars and new lightcommercial vehicles sales to be ZeroEmission Vehicles (ZEVs) by 2035
• About 3.5 million EV chargers by 2030

Germany• Introduce 7-10 million EVs by 2030.

• Green car subsidy

China• Increase the share of new energy vehicles to• New energy vehicle credit
total new vehicle sales to 50% or more by• Fuel efficiency credit
2035.

• Purchase subsidies
available (for BEVs
with a cruising
range of 250 km or
more)

Japan

• EV share to new car sales (passenger cars) to
be 100% by the mid-2030s.
• Energy Conservation Act• 30,000 quick chargers (for public use) by
2030• Subsidy for clean
energy vehicle
introduction project02030• 100% Shifting to EV of small and mediumsized vehicles based on new fuel efficiency
standards• 500,000 EV charging facilities by 2030
• Shift to renewable fuels (new NDC)

• All new passenger car and truck sales to be
US (California)
Zero-Emission Vehicles (ZEV) by 2035

4
9.5

Medium- and long-term goals

Source: Compiled from the IEA and other information• Revised CO2 emission
regulations(EU Regulation 2019/631)–

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69

V. The World Heading for Green Growth10

Stakeholders demand green-related investments fromcompanies

Pressure on companies to respond to climate change by citizens, employees, investors, and other stakeholders
has intensified in recent years and is one of the reasons why companies are making green-related investments.
The market for environmental bonds (green bonds), which is one of the financing means for the public andprivate sectors, increase by 11.3% year-on-year to $297 billion in 2020, even during COVID-19 crisis, owing to
the recovery in the 2nd half of the year. Energy, buildings, and transportation account for 85% of the total.

Companies that are required by their stakeholders to takeaction on climate change

Consumer
Ethical (Ethical)
Consumption

Land use

250

Waste
Logistics

0.2

Employees

NGO

Including reserve
forcesBusiness partner
Greening of the
supply chain

Source: Compiled from various sources

Millennials andGeneration Z are
extremely
concerned aboutclimate change.

100

1.5

0.7
2.9

50

0

0.1

0.6

1.2

6.9

10.8
1.6 12.6
4.0 16.6

20.6

7.4

6.2 20.4

1.7 24.0

30.7

4.5 44.1

47.1

7.4 4.2 7.2
23.7 6.0 33.8
18.4

53.0

53.8

2014

2017

2018

2015

Source: Compiled from CBI

2016

66.4

0.8

5.2

Energy150

0.9

25.0 9.9

Water

200

9.1 14.4
18.7

Building

Company

Environmental
protection
activities gaining
momentum

1.9

Industry

Paris Agreement
Net Zero by 2050
Information
disclosure on ESG
investment(Billion USD)

300

Government

Investor

Worldwide environmental bond issuance(time series, by usage)

52.7

7.6
76.2
79.6

84.2

2019

102.7

2020

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70

V. The World Heading for Green Growth11Promotion of climate change response by companies
through international initiatives

Global companies are taking the lead in the climate-change response, setting targets, and disclosing
information throughout their supply chains by participating in and endorsing international initiatives.
Efforts to encourage companies to take action throughout whole supply chain include requiring suppliers todisclose information through CDP and setting GHG reduction targets, including Scope 3 of the SBT initiative.
Major international initiatives on climate change

Classification

Name

Overview

Size of participating companies
and institutions worldwide

CDP

The CDP Climate Change Questionnaire is sent to companies with high market
More than 9,600 companies
capitalization, companies are rated at their information disclosure and environmental disclosed information throughactivities based on the responses, and the results are announced to the public.
CDP in 2020.

TCFD

It is recommended that companies perform analysis using a 2°C scenario anddisclose their governance, strategies, risk management, indicators and targets related More than 2,300 companies haveto the risks and opportunities to business caused by climate change through financial expressed their assent.
reports, etc.

GHG reduction

SBT Initiative

Encourage companies to set GHG-reduction targets that are consistent with the Paris
Agreement and the scientific evidence. Companies are required to reduce GHG
throughout their supply chain, including not only their own direct GHG emissions andindirect emissions from the use of electricity, heat and steam supplied by othercompanies, but also the emissions of other companies related to their own activities.

The number of participatingcompanies is 1,577, of which 796
are SBT-certified companies
whose goal setting has been
deemed appropriate.

Use of renewableenergyRE100

An initiative that aims to have 100% of its operations powered by renewableelectricity by 2050. One of the WMB’s initiatives.

319 companies

Efforts to increase the number of companies making their effort toward transition toelectric vehicles or the expansion of infrastructure development by 2030.

110 companies

Information
Disclosure
Information
Disclosure

Transition to EVs andinfrastructure facilities EV100
including charging
Energy efficiency
improvement
Others

Efforts to reduce GHG emissions by doubling energy efficiency in business,developing energy management systems, and implementing Net Zero Carbon
128 companies
Buildings.
We Mean Business A platform for 10 different initiatives, including SBT, RE100, EP100, EV100, and carbon
1,965 companies(WMB)
pricing, in a coordinated manner.
EP100

Note: The scale of participating companies and institutions other than CDP is as of July 5, 2021. The number of companies disclosing information through CDP is based on the CDP’s
annual report (announced in April 2021).
Source: Compiled based on the Ministry of the Environment, annual reports of each initiative, websites, etc.
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71

V. The World Heading for Green Growth12Startups turn climate change response into a business
opportunity

Global companies and start-ups are aggressively offensive, seeing this as an opportunity to expand theirbusiness. Startups that have strengths in technology such as data utilization will work with wisdom toward
decarbonization.
Startups active in the green sector

SectorBuilding

Building

Buildings(buildingmaterials)

Food waste

Company namevilistotado°

Carbon Cure
Technologies

Country

Summary of business

Issues to be addressed

Germany

Installed sensors recognize when a room is unoccupied andEnergy conservation in
automatically adjust the temperature. Saves 20% of energy for central
buildings (leads to CO 2
heating. For corporate customers including those who have offices
reduction)with fewer workers due to COVID-19 crisis.

Germany

By connecting the heating and cooling system to the Internet, thetemperature, etc., can be controlled for each room via a smartphone.
Energy conservation in
The system senses the opening and closing of windows and thebuildings (leads to CO 2
return/departure of residents to/from their homes and adjusts the
reduction)
temperature efficiently. Saves up to 31% in energy consumption. For
individual customers.

CanadaThe company has carbon recycling technology that injects CO 2 into
concrete building materials. Reduce the usage of cement, which is asource of CO2 emissions, by immobilizing and effectively using CO 2during the production of ready-mixed concrete. Investment by
Mitsubishi Corporation (announced in January 2021).

Use of CO2 in theatmosphere (leads to CO 2
reduction)

At the time of food disposal, AI ascertains food items and theirweight by using cameras and scales. By visualizing food waste, thesystem users (i.e., restaurants, hotels, etc.) will strive to reduce theamount of waste, achieving CO 2 reduction as well as savings.

Reduction of incineration(landfill) of waste (leads to
CO2 (methane gas)
reduction)

Winnow Solutions UK

Source: Compiled from each company’s website, etc.

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72

V. The World Heading for Green Growth

13




Response toward the goals of global companies and in their
supply chain

Global companies promote climate-change countermeasures for themselves and their entire supply chain by(1) ascertaining the current situation, (2) setting medium- and long-term goals, (3) “success model” in small
units, and (4) requesting suppliers for cooperation.
The content and speed of efforts differ depending on the company and industry, but SMEs with which they
have a business relationship will eventually be required to respond. Regardless of the size of the company, it
should be regarded as one of the important management issues over the medium to long term.
Global companies’ goals and initiatives toward climate-change response

Company (sector)

Medium- and long-term goals

Policies, investment plans, etc.

Specific projects, etc.

Unilever(Food, daily
necessities)• Achieved 100% renewable energy at Japanese• Halve GHG load generated from product life cycles bybase of the company (November 2015).
• Reduce CO2 emissions in the supply 2030.
• Launched the initiative Renewable Carbon withchain to virtually zero by 2039.
• Replace fossil fuel-derived carbon with renewable orother companies (September 2020).
• Achieve “carbon positive” by 2030.
recycled carbon in all detergent and clothing products by• Participated in “1.5°C Supply Chain Leaders”
2030.
(September 2020).

Apple(Technology)• Achieved 100% renewable electric power at our• Reduce CO2 emissions in the supply • Established the China Clean Energy Fund with 10 Chinese own sites in 43 countries (April 2018).
chain to virtually zero by 2030.
suppliers and will invest $300 million by 2022.
• Launched the Supplier Clean Energy Program(October 2015).

Microsoft(Technology)• All electricity to be used will be converted to clean• Achieved conversion of 100% energy• “Carbon negative” by 2030
energy by 2025.
consumption at the company’s base in Sweden• Completely compensate for all past
• Reduce Scope 3 emissions by half by 2030.
to renewable energy (November 2020).
emissions (direct and indirect) by• Developing and deploying digital technologies to enable • Started providing analytical information on CO2
2050.
suppliers and customers to reduce their carbon footprint. emissions data (January 2020).

Starbucks(Coffee chain)• Reduce GHG emissions from directbusiness operations and supply• Convert 10,000 stores around the world to eco-friendly
chain by 50% by 2030 (achieve
stores by 2025.
“Resource-Positive”).

Source: Compiled from each company’s website• Purchase electricity from solar or power storage
projects in US (December 2020).
• Announced support for the dairy industry’s
Dairy Net Zero initiative (December 2020).
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JETRO Global Trade and Investment Report 2021: The world changed by COVID-19,
the outlook for sustainable international business -Overview+81-3-3582-5177
International Economy Division,
Overseas Research Department
Japan External Trade Organization (JETRO)

ori@jetro.go.jp
1-12-32 Akasaka, Minato-ku, Tokyo
107-6006 Japan

No te ： The original Report is available only in Japanese. Figures may not sum up to the total because some are less than one unit.

Disclaimer of liability: Responsibility for any decisions made based on or in relation to the information provided in this overview shall rest sorely on thereader. Although JETRO strives to provide accurate information, JETRO will not be responsible for any loss or damages incurred by readers through the useof such information in any manner.
[Reproduction without permission is prohibited.]
Copyright © 2021 JETRO. All rights reserved.

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