JETRO Global Trade and Investment Report 2023
-International Business Facing Fragmentation Risks-

Japan External Trade Organization (JETRO)
Research and Analysis Department

July 2023

Outline of the JETRO Global Trade and Investment Report 2023
Chapter I: Global and Japanese Economy and Trade
Section 1: Current Situation of the Global Economy
Section 2: Global Trade
Section 3: Current Situation of Japan's Economy and Trade

Chapter II: Global FDI and Japan’s FDI
Section 1: Global FDI
Section 2: Global Digital Industry
Section 3: Japan’s FDI and Corporate Trends

Chapter III: Trends in Global Trade Rulemaking
Section 1: Trade Policies of Major Countries and Regions
Section 2: Trends in Global Rulemaking
Section 3: Current Status of FTAs in the World and Japan

Chapter IV: Policies and Business for a Sustainable Society
Section 1: Rulemaking and Policies of Major Countries and Regions Toward a Sustainable
Society
Section 2: Companies Adapting to Sustainable Business

Copyright © 2023 JETRO. All rights reserved.

1

Key Points of JETRO Global Trade and Investment Report 2023
I. The World’s and Japan’s Economy and Trade
In 2022, global trade increased year-on-year in both value and volume. However, the momentum began slowing down
toward 2023. In addition to the uncertainty in the global economic outlook, high resource prices, food insecurity, andfinancial market instability are downside risks.
The prolonged conflict in Ukraine, increasing trade-restrictive measures by major countries, and geopolitical risks including
U.S.-China relations, are distorting the free trade regime.
Trade relations among major countries and regions, which have been formed based on economic efficiency andcomparative advantage, are gradually shifting in favor of like-minded countries with shared political values.

◼

◼
◼

II Global FDI and Japan’s FDI◼
◼

The strong investment recovery trend, which lasted about two years, turned around and shifted to a downward phase in
the second half of 2022, due to the cascade of crises, including high inflation, high interest rates, and rising debt.
Meanwhile, competition to attract strategic industries with large fiscal outlays, especially in the U.S. and the EU, isaccelerating. Large investment projects by multinationals taking advantage of subsidies and tax incentives have increased.
Competition among self-centered, inward-looking industrial policies and wariness of the risk of supply chain disruptions
are causing changes in corporate investment behavior.

III Trade Rulemaking◼
◼

Economic security and supply chain resilience have encouraged countries to adopt independent policies and regulations
which have increased uncertainty in the trade environment and inhibited the expansion and diversification of transactions.
In a growing urgency to deal with fragmented rules, companies confront a new challenge to prepare for various issues
beyond legal compliance, including consideration of geopolitical supply-chain risks, and responses to reputational risks.

IV Policies and Business for a Sustainable Society◼

Legislation and societal demands for companies on human rights and environmental due diligence are steadily progressing,and appropriate responses throughout supply chains are essential. On the other hand, global investment in ESG bonds has
declined in 2022. There is a sign of change in ESG investment trends.

◼

With the implementation of the EU‘s Carbon Border Adjustment Mechanism (CBAM), carbon pricing, which is being
introduced around the world has entered a new stage. The calculation of greenhouse gas emissions is becoming an
unavoidable issue for companies.
Copyright © 2023 JETRO. All rights reserved.

2

I.

Global and Japanese Economy and Trade~Rising risk of fragmentation in global trade flows～

Copyright © 2023 JETRO. All rights reserved.

3

I. Global and Japanese Economy and Trade

1

Global trade at record high in 2022, but
growth slows◼

Global trade (trade in goods, estimated by JETRO) in 2022 was 24.24 trillion USD, and increased by 11.1%
from the previous year. This was a record high, but the growth slowed from the previous year (+26.6%).

◼

The growth rate of the trade volume (2.3%) was lower than that of the trade value (11.1%). This is likely
related to the surge in prices of resources such as mineral fuels, metals, and food, which pushed up the overall
trade value.
Quarterly changes in trade values of 33 major countries/
regions by product (YoY)

Global trade in goods (export-based)(Unit: %)（％）（Billion USD）

11.1

30,0002.3

25,000

Exports
2022

30
Q1

Q2

Q3

Q4

Q1

Total

15.1

12.5

10.0

- 0.5

- 0.1

General machinery
Semiconductor
manufacturing
equipment
Electronical equipment

6.9

0.7

1.4

- 5.5

- 1.2

9.6

9.4

7.5

- 2.3

- 10.5

13.0

9.9

6.2

- 4.9

- 5.9

Integrated-circuit

23.8

15.4

4.4

- 7.7

- 18.4

Transport equipment

0.3

0.4

12.4

9.0

14.0

△ 20 Chemicals
Food△ 30 Mineral fuels
Natural gas, etc.
Crude oil（Year）

18.6
10.4
74.9
80.2
59.1

10.5
9.2
91.7
130.1
56.7

4.4
8.1
70.0
105.1
55.2

- 6.1
4.5
28.7
29.9
27.4

- 5.3
5.3
8.5
8.5
5.2

20

20,00010

15,0000

10,000

△ 10

5,000
0

export value
Value growth rate (right axis)
Volume growth rate (right axis)
Source: JETRO estimates, WTO

2023

Note: (1) Commodity classification is based on JETRO. (2) Calculated only
for 33 countries/regions for which quarterly data for 2023 are available.
Source: Compiled by JETRO from the Global Trade Atlas.
Copyright © 2023 JETRO. All rights reserved.

4

I. Global and Japanese Economy and Trade

Increased trade between like-minded andneighboring countries

2◼

In the first quarter of 2023, the trade value (export value) increased 16.5% over the same period in 2021.

◼

Trade within the USMCA region, between the U.S. and EU, and between China and ASEAN has had relatively highgrowth. On the other hand, trade between China and the EU, and the U.S. and Japan is growing at a lower rate. A
trend toward stronger trade relations with like-minded and neighboring countries is about to emerge.
Global Trade Value Matrix (Q1 2023 trade value, growth rate over Q1 2021)
Import(Millions USD, %)<Legend>

World
USMCA

Export

EU

Japan

Korea

Taiwan

China

ASEAN

U.S.

World

Less than 20~30%

5,810,903

999,965

732,576

1,834,502

184,704

151,018

78,964514,490448,873

16.5

16.0

14.0

20.6

15.3

16.4

1.3

0.3

18.4

793,495

399,316

226,400

107,395

23,25918,612

10,23847,48028,350

25.7

26.3

29.2

49.3

12.1

2.2

10.3

10.9

18.1

508,764

167,295

95,315

19,073

15,8489,726

38,892

26,028

25.9

22.9

53.8

9.6

1.2

13.1

10.8

17.0

1,802,674

143,098

118,268

1,153,314

16,324

13,2138,809

56,321

23,394

13.1

7.6

5.4

17.8

- 7.1

- 11.5

12.6- 14.22.7

173,906

38,65533,14817,491

12,58011,43428,946

27,040

- 3.9

5.8

4.9

1.0

- 1.1

- 7.9

- 24.00.1

Korea

151,353

32,052

26,977

17,765

4,289

29,56026,324

3.4

18.3

18.1

9.8

3.1

Taiwan90,906

16,48014,901

7,979

6,637

4,314

- 0.6

12.1

12.1

24.8

24.4

1.2

821,891

144,509

115,474

126,120

40,77538,834

15,879

15.8

0.4

- 3.3

14.3

5.3

22.4

- 7.2

459,900

77,701

70,141

42,59432,347

19,09012,10872,127103,264

16.5

19.8

18.3

15.1

15.6

20.5

5.2

19.9

16.0

USMCA
U.S.
EU
Japan

China

ASEAN

30% or more

-

7,055

-

- 17.1-- 18.8

11.9

19,554

15,867- 25.1Less than 10~20%
Less than 0~10%
0～-10%-10～-20%
20% or less

3.1
139,075-

32.3

Notes: (1) Based on exports. (2) Taiwan‘s export data is not included in DOTS, so the Global Trade Atlas was used. The upper row shows the export
value in Q1 2023, and the lower row shows the growth rate compared to Q1 2021.
Copyright © 2023 JETRO. All rights reserved.
Source: Compiled by JETRO from DOTS (June 2023 edition) and the Global Trade Atlas (Taiwan data only).

5

I. Global and Japanese Economy and Trade3

Growing trade deficit, new risks with China
are rising◼

The U.S. trade deficit with China peaked in 2018 and narrowed once, but has begun to grow again.
The trade deficits of the Netherlands, Japan, and Germany with China are also on the rise.

◼

The ratio of U.S. imports to China peaked at 21.6% in 2017 and declined to 13.4% January-May
2023. The ratio of imports to China from the Netherlands, Japan, and Taiwan is also declining.
Trade balance with China
in six countries/regions

Ratio of imports to China by six major countries/regions(%)(Billions of dollars)
1,000

259.2

Surplus

12.1
0

30

21.9
25

△ 242.4

Deficit△ 440.6△ 1,000△ 1,262.5△ 2,000

21.5

20

17.7
15
14.8

13.4
10

△ 3,000

5△ 4,000

11.4△ 3,823.00△ 5,000

U.S.

Germany

Netherlands

Japan

South Korea

TaiwanNote: Six countries/regions are the top five countries in terms of imports
from China (excluding Hong Kong) and Taiwan in 2022.
Source: Compiled by JETRO from Global Trade Atlas.

U.S.

Germany

Netherlands

Japan

South Korea

TaiwanNote: For 2023: January to May for U.S., Japan, and South
Korea; January to April for Germany, the Netherlands, and Taiwan.
6
Source: Compiled by JETRO from Global
Trade Atlas.
Copyright © 2023 JETRO. All rights reserved.

I. Global and Japanese Economy and Trade

4◼

Semiconductor-related products enter
recessionary phase of market cycle
In exports of semiconductor-related products, PCs, telecommunication equipment including cell phones,
and memory devices grew slower than the previous year. This was mainly due to the market cycle.

The U.S. export share of semiconductor manufacturing equipment to China shrank due to stricter
export controls to China from October 2022. The contraction is also seen in Japan and the Netherlands,
and is thought to be a spillover effect of the U.S. export controls.
Changes in exports composition of
Global trade by semiconductorsemiconductor
production equipment
related products (in terms of export value, 2022)◼

(Billions USD, %)Computers and components
Telecommunication equipment
Cell phones
Semiconductors and otherelectronic components (Note (3))
Integrated-circuits
Processors/controllers
Memory devices
Amplifiers
Other integrated circuits
Semiconductor manufacturing
equipment
Microtomes
Semiconductor measurement andinspection equipment
Semiconductor, photomask andlectil inspection equipment
Silicon carbide
Silicon wafers

Composit GrowthValue
ion ratio
rate
6,877
2.8
- 2.2
6,144
2.5
- 7.6
2,825
1.2
- 2.8

40

(%)

U.S.
20.4

23.5

25.7

25.9

20
19.1

14.7

16.0

0

12,840

5.3

10.4

11,042
4,076
2,408
274
4,052

4.6
1.7
1.0
0.1
1.7

9.1
16.3
- 8.8
5.4
15.4

60

Japan

40

28.8

1,381

0.6

12.3

0

154

0.1

0.5

60

73

0.0

8.2

106

0.0

47.3

12
202

0.0
0.1

30.2
19.2

2017

2018

2019

2020

2021

2022

2023*

39.6

36.5

38.1

38.8

31.5

31.5

2018

2019

2020

2021

2022

2023*

12.6
2021

11.3
2022

10.6
2023*

20

2017

Netherlands
40
20

0

12.4
2017

19.0
2018

10.6
2019

16.8
2020

Notes: (1) Item classification is determined by JETRO. (2) The composition
ratio is the percentage of the total global exports. (3) The growth rate is for
TaiwanChina
Korea
reference only. HS codes that were split and integrated from HS2017 were Note: 2023 is the cumulative total from January to April.
done so in accordance with the revision of HS2022. Source: JETRO
Source: Compiled by JETRO from Global Trade
Atlas
Copyright© 2023 JETRO. All rights reserved.
estimates

7

I. Global and Japanese Economy and Trade

5

Trade in services rebounds on travelrecovery◼

In 2022, global trade in services (in terms of exports) exceeded 7 trillion USD for the first time, growing
15.3% year over year. This is above the level of 2019 before the COVID-19 pandemic.

◼

By sector, "travel" recovered sharply (+91.5% y-o-y) due to the resumption of traveler traffic in many
countries and regions, contributing significantly to the recovery in trade in services.
Global trade in services

Contribution of global trade in services by sector(Billion USD)(%)

10,000

30

(%)

30.0

15.3
8,000

20

19.0

20.0

15.3

11.1
6,000

10

10.0

9.3 10.0

6.5 7.1

3.3

1.4
4,000

0

2,000

△ 10

0

△ 20

0.0
△ 4.5

△ 10.0△ 17.3△ 20.02013 14Services exports
Trade in services growth rate (right axis)
Goods trade growth rate (right axis)
Note: (1) Commercial services only. (2) Exports of services are
estimates based on quarterly data. The growth rate of trade ingoods is in value terms.
Source: JETRO estimates, WTO

15

16

17

18

19

20

21

22

Other Services
Goods and Services
traveltransport
Note: (1) Commercial services only. (2) Calculated using estimates
based on quarterly data.
Source: WTO
Copyright © 2023 JETRO. All rights reserved.

8

I. Global and Japanese Economy and Trade

6

Negative contribution of trade to Japan’s current
account has become serious◼

Japan’s account surplus in 2022 was $90.7 billion, the first time in eight years, since 2014, that it has
fallen below $100 billion.

◼

While the primary income remained in a large surplus, the current account was pushed down by trade turningfrom a surplus of $16.5 billion in the previous year to a deficit of $117.6 billion.
Japan’s current account(Billion USD)

Primary income

300
250

196.8

200
150
100

90.7

50
0
-50
-100
-150

-200
10

11

12

Goods
Portfolio investment income
Current account

13

14

15

16

17

ServicesPrimary income, others

18

19

20

21

22

Direct investment income
Secondary income

Note: JETRO converted the figures disclosed in JPY into USD; P stands for “preliminary.”
Source: "Balance of Payments Statistics" (Ministry of Finance, Bank of Japan)

22

23

1-5

1-5P

Copyright © 2023 JETRO. All rights reserved.

9

I. Global and Japanese Economy and Trade

7

Real effective exchange rates and policy
rate trends in major countries and regions◼

The yen has been depreciating rapidly from 2021 onward. The Japanese yen's real effective exchange rateindex (2020=100) fell below 80 in April 2022, the weakest level since 1971.

◼

A series of policy rate hikes by major countries widened the interest rate gap with Japan, which maintains
negative interest rates.

Real effective exchange rate indicesfor major countries and regions (monthly average)
120
115
110
105
100
95
90

（2020=100）

Country/region

Appreciation of currency
U.S.
106.57

Euro Area
100.61

India
97.35
China
93.9

85

70

Argentina
Australia
BrazilCanadaChina
Euro Area
India
Indonesia
Japan
Korea
MexicoRussiaSaudi Arabia
Republic of South Africa

8075

Policy rates in G20 countries and regions

Japan
76.2

TurkeyUnited Kingdom
U.S.

(%)
End of December,Endo of June, 2023
2020
38
97
0.1
4.1
2
13.75
0.25
4.75
3.85
3.65
0
4
4
6.5
3.75
5.75
- 0.1
- 0.1
0.5
3.5
4.25
11.25
4.25
7.5
1.0
5.75
3.5

8.25

17
0.1
0 to 0.25

15
5
5 to 5.25

Note: (1) Countries/regions in red are those whose policy rates increased
compared to the end of 2008. (2) Figures in bold indicate countries/regionsthat revised their interest rates from March to May 2011.
（Monthly） Source: Compiled from “central bank policy rate statistics" (BIS) and websites
10of national and regional central banks.
Copyright © 2023 JETRO. All rights reserved.
Source: Compiled from Bank of International Settlements

I. Global and Japanese Economy and Trade8◼

◼

Significant increase in Japan’s trade deficit in 2022

In 2022, Japan’s exports were $751.6 billion, down 0.9% from the previous year, while imports were $902.6 billion, up
16.6% (customs-cleared basis). Imports rose sharply due to higher energy prices. The trade deficit was the largest in
history.
Export and import volumes for 2022 were negative for the first time in two years, and remained negative
between January to May 2023.

Japan’s trade trends

Japan’s import & export growth (year-on-year change)(Million USD, %)2023

Total exports(Rate of change)

Total imports(Rate of change)
Trade balance(YoY difference)

2020

2021

2022

January May

639,950

758,572

751,551

290,278

- 9.3

18.5

- 0.9

- 7.1

635,707774,421902,600

343,039- 11.8

21.8

16.6

- 6.6

4,243 - 15,849 - 151,049 - 52,761
19,325 - 20,091 - 135,201

2,157

91.0

101.9

100.0

90.7

(Rate of change)- 11.7

12.0

- 1.9

- 7.8

Import volume index

97.9

102.8

102.5

98.1

(Rate of change)

- 6.4

5.0

- 0.3

- 3.6

Export volume index

Volume basis
Value basis ($)
Value basis (￥)（％） Exports

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

1

4

7

10

1

4

2020

7

1

4

2021

（％）
60
Volume basis
50
Value basis ($)
40
Value basis (￥)
30
20
10
0
-10
-20
-30
1 4 7 10 1 4

7

2020

2021

(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)

10

7

10

1

2022

45

2023

Imports

10

1

4

7

2022

10

1

45

2023

Copyright © 2023 JETRO. All rights reserved.

11

I. World and Japanese Economy and Trade

9

General machinery exports remain steady, while
movement slow in export volume◼

In 2022, the export price index on a US dollar basis rose slightly from the previous year, but the volume index failed to reachthat of the previous year. The export volume of passenger cars, which account for a large share of total exports, remainedsluggish. On the other hand, exports of general machinery, such as semiconductor manufacturing equipment, continued to see
steady growth.

◼

The yen has continued to weaken in 2023. While the export price in dollars declined, some items, such as food products, haveincreased in export value from the same period last year, due to volume growth.
Export volume and US dollar-based price index (2022)
Price

115

Price

Construction
Machines+

Volume +Medical Products

Semiconductor manufacturing equipment
Metal Working machines

GeneralMiscellaneousBuses, Tracks

Inorganic Chemicals

Machinery105

TextilesElectric Power

Rubber Manufactured
Non-Ferrous Metals
Passenger Car

Machinery Power generating machinery

100

Transport

Ships

Metal Products

Price

Semiconductors, etc.

－

Office machines
Plastic Materials

85
90

Iron & Steel &Products

Non-Mtl.Min.Manufs
Electrical

Price

Machinery

Volume －+Organic Chemicals

100

Nonwoven fabrics (70g ≦150g /1㎡)
Synthetic merino fabrics (dyed)
General machinery
Turbojet, turbopropeller parts
Semiconductor ball/wafer manufacturing equip.

Air conditioner parts
Other
Playing cards and other amusement cards
Wheeled toys, dolls, plastic models, puzzles

Chemicals

Volume －Foodstuff
WhiskyNon-alcoholic beverages, etc.
Beef (fresh and chilled, boneless)
Textiles and textile products
Synthetic filament woven fabrics(Polyester filament content ≧85% of total weight)

MetalsFood-stuff

Parts of Motor Vehicles

instruments

90

Total Expoet

Equipments

Pump Centrifuges
ElectricalElectrcal
95
Apparatus
measuring &controlling(Jan-May 2022 =
100)
Price
Value
Volume (dollars(dollars))（Volume：2021＝100）－

Volume +110

Items with increased export volumes (Jan-May 2023)

110（US dollar-based Prices：2021＝100）

Note: JETRO created the dollar-based price index based on the 2015-based export
volume index by commodity. 2021=100 for both export volume and dollar price.
Source: "Trade Statistics" (Ministry of Finance)

Ink cartridges

101.0
100.1
100.6

100.5
113.3
115.9

100.5
88.4
86.8

94.3

100.6

93.8

112.1
110.6

117.9
109.8

95.1
100.7

115.9
138.7
111.9

126.3
127.1
110.3

91.8
109.1
101.5

175.4
93.1
77.3

227.5
105.0
124.9

77.1
88.7
61.9

Notes: (1) Japan‘s exports during Jan-May 2023, 4,459 items (HS 6-digit level,
about 92% of total export value) were analyzed. Top 3 items in export value ineach category, those with an increase in export volume, YoY change. (2)Shading indicates year-on-year increase in export value (in U.S. dollars).
Source: Global Trade Atlas, S&P Global, Inc.
12
Copyright © 2023 JETRO. All rights reserved.

II. Global FDI and Japan’s FDI～Overseas expansion of global and Japanese companies
and investment in growth industries～

Copyright © 2023 JETRO. All rights reserved.

13II. Global and Japanese FDI

1

Global FDI shifts back to the downside in 2022◼

Global foreign direct investment (FDI) in 2022 declined 12.4% from the previous year. Investment todeveloped countries and regions pushed the total down by 36.7%. The U.S., the largest recipient of FDI,
declined 26.5%. Cross-border M&A to the same country dropped by half.

◼

Meanwhile, investment in emerging countries and regions increased 4.0%. Brazil, ASEAN, China, andother countries saw boosted investment.
Inward FDI (net and flow)of major countries and regions in 2022

Trends in global inward FDI (net and flow)（Billion USD）

（%）

2,500

53.7

2,000

60

Value

30

1,500

0

△ 12.4

1,000

-30

500

-60

0

-90
FDI in developed countries
FDI in developed countries
growth rate

(Million USD, %)Growthrate

Composition
Contribution
ratio

1,294,738

-12.4

100.0

- 12.4

378,320- 36.729.2- 14.8285,057-124,948
61,629- 26.5
194.9

22.0
4.8

- 6.9
- 18.82.8

Japan

32,509

31.9

2.5

0.5

Russia- 18,681

-

-

- 3.9

Emerging/
developing
countries

916,418

4.0

70.8

2.4

ASEAN

222,305

4.1

17.2

0.6

China

189,132

4.5

14.6

0.6

India

49,355

10.3

3.8

0.3

Latin America

208,454

51.2

16.1

4.8

Central Asia

10,041

39.3

0.8

0.2

Middle East

48,26844,929- 13.7- 43.5

3.7
3.5

- 0.5
- 2.3

World
Developed
countries
US
EU
Australia

Africa(Both figures) Note: Definitions of developed countries/regions and emerging/developing countries/regions are based on UNCTAD classifications.
Copyright © 2023 JETRO. All rights reserved.
Source: UNCTAD

14

II. Global and Japanese FDI

2

Cross-border M&A peaked out in 1Q22◼

Global cross-border M&A declined 14.8% to $1,386.1 billion in 2022. The decline began in the second
quarter of 2022 due to monetary tightening and increased uncertainty from the Ukraine conflict.

◼

In the EU and the U.S., the number of mergers and acquisitions in the second quarter of 2023 will fall tothe level seen immediately after the COVID-19 outbreak in 2020. In China, where economic recovery is
slowing, the number of mergers and acquisitions is at its lowest level since 2010.
Global cross-border M&A total value
and number of deals

Number of cross-border M&A
for major countries and regions (Quarterly)(Both figures) Note: Data up to the second quarter of 2023.
Source: Workspace (Refinitiv) (as of July 4, 2023)
Copyright © 2023 JETRO. All rights reserved.

15

II. Global and Japanese FDI

3

Global greenfield investment is strong◼

The number of global greenfield investments in 2022 (announced basis) increased 17.6% to 16,456. The levelis close to the record high of 2018-19. Increases in the Asia Pacific, Africa, and the U.S. contributed to the increase.

◼

Investment in India surged 2.3 times that of the previous year, moving the country up to third place from seventh
the previous year. Meanwhile, China, which ranked 7th in the same category in the previous year, did not do so well,falling 23.8% to 13th place (336).
Number of greenfield investments(top 5 receiving countries)

Number of global greenfield investments by recipient region（Cases）（Ratio by region） （Cases）

18,0004.5%

16,000

2,000

2019

2020

2021

2022

1,975

7.7%
14,0008.8%

12,000

14.2%

1,500
1,119

10,000

995
43.5%

8,000

1,000

940

925

6,000
500

4,000
21.3%

2,000

0

Asia-Pacific

EuropeNorth America

AfricaLatin America

Middle East

(Both figures) Source: FDI Markets (Financial Times)

US

UK

India

Germany

UAE

Copyright © 2023 JETRO. All rights reserved.

16

II. Global and Japanese FDI

4

Mega investment projects in renewableenergy and semiconductors◼

The increase in the number of global greenfield investments in 2022 is due to strong growth in softwareand IT services (+42.3%) and business services (+43.9%), as in the previous year.

◼

In value terms, the market increased by 63.7%. Driven by mega projects in renewable energy, fossil fuels, andsemiconductors.

Number of greenfield investments in 2022
(by industry)（Cases）

Greenfield investment in 2022(% of total by industry)

5,000
4,500

4,000
3,500

Software and IT services
Business services
Financial services
Transportation and Warehousing
Communications
Industrial equipment
Renewable energy

3,000

Automotive
OEM
3.3%

Other
18.3%

Communications
4.7%
Transportation
andWarehousing
4.7%
Metals
4.9%

2,500
2,000
1,500

Renewableenergy29.9%

Coal, oil and
gas
8.8%

1,000

Real estate
5.4%

500
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Software and IT
services
5.8%

Semiconduct
orsElectronic
7.7%
components
6.5%

Note: Only the top seven industries are listed.
(Both figures) Source: FDI Markets (Financial Times)

Copyright © 2023 JETRO. All rights reserved.

17II. Global and Japanese FDI

Competition to attract industry with huge
subsidies and tax credits

5◼

Major countries and regions, such as the U.S. and the EU, have been trying to attract Net Zero projects throughmassive subsidies and tax credits. Competition to attract climate change-related projects is intensifying,
involving large financial outlays.

◼

The U.S. Inflation Reduction Act was the direct trigger for the EU Green Deal Industrial Plan in February 2023.
Green Deal Industrial Plan (announced February 2023)

Inflation Reduction Act (enacted August 16, 2022)✓ The plan was presented as a countermeasure to the✓ Largest expenditure in history (about 437 billion dollars
U.S. Inflation Reduction Act, seen as a threat to the EU's
over 10 years)
Net Zero industry (see table below for a summary).
✓ Approximately $369 billion in subsidies and tax✓ Full-scale support for the location of global companies tocredits for renewable energy and EV technology
policyprevent their net-zero industrial base from relocating
deployment projects
competition
outside the EU.
✓ Various requirements to strengthen Buy American✓ Adopted the Interim Crisis and Transition Framework,
policies in the application of tax credits, etc.
which relaxes EU state aid regulations. Member states✓ Tax credits for EVs must meet procurement
may provide up to a certain percentage of state aid forrequirements (see table below) for critical minerals
investments in related industries.
and battery components.
Important minerals in battery
materials

Production and assembly ofbattery components% of material extracted/processed in% of the price of items produced
countries with which the U.S. has FTAs
or assembled in North America
or recycled in North America
Sales period
During 2023

Proportion
Sales period
40% During 2023

Proportion50%

During 2024

50% During 2024-25

60%

During 2025

60% During 2026

70%

During 2026

70% During 2027

80%

After January 1, 2027

80%. During 2028
90%
After January 1, 2029
100%
*Only vehicles assembled in North America are eligible for the tax credit.

Note: Critical minerals and battery components involving foreign entities ofconcern will be excluded from the deduction beginning in 2025 and 2024,
respectively.
Source: U.S. Internal Revenue Service

Main policies

Point
Improving the regulatory environment, including
Net Zero Industry Bill expediting and simplifying licensing proceduresfor clean technology projects
Important Raw
Identify strategic raw materials to strengthen the
Materials Billvalue chain and diversify sources of supply
Enabling the provision of state aid forRelaxation of state aid
production activities of enterprises in netrules
zero industries
Compensate for the difference in production costs
Establishment of the
between green hydrogen and fossil fuel-derived
European Hydrogenhydrogen to encourage green hydrogen-relatedBank
investments
Creation of the
Details of new budgets providing subsidies at
European Sovereignty
EU level to be announced by summer 2023
Fund
Creation of an important raw materials club by
Launch of new tradevolunteer countries, international partnership in
related initiatives
cleantech

Source: European Commission

Copyright © 2023 JETRO. All rights reserved.

18II. Global and Japanese FDI

6

Semiconductor industry support measures tobe introduced in major countries and regions◼

While the semiconductor market is in decline, governments of major countries and regions are intensifying
competition to attract semiconductor manufacturers in order to secure a stable supply of semiconductors
for mid- to long-term market expansion, expanding support for global companies by investing huge budgets.

◼

In May 2023, Japan's Ministry of Economy, Trade, and Industry (METI) released a revised draft of its"Semiconductor and Digital Industry Strategy," setting a new goal of achieving "total sales of over 15 trillion
yen for companies producing semiconductors in Japan" by 2030 (approximately triple the 2020 level).
Semiconductor industry support measures in major countries and regions (2022 and beyond)
Policy and rationale
SupportThe CHIPS and Science Act (CHIPS Subsidies for the construction, expansion, or modernization of domestic facilities andPlus Act)
equipment for the design, manufacture, and research and development of semiconductors ($39
(effective August 2022)
billion worth)US
Promotion of semiconductor-related R&D programs under the jurisdiction of the Department ofCommerce ($11 billion).
A 25% tax credit for investments in semiconductor manufacturing.
European Semiconductor BillThe European Semiconductor Initiative consists of: 1) financial support for semiconductor R&D
and production; 2) incentives for semiconductor production facilities; and 3) semiconductor
supply chain monitoring and crisis response.
EU
The total amount of financial support and private investment by the EU and its member states
is expected to be 43 billion euros. Of this amount, the EU budget allocated through 2027 islimited to 3.3 billion euros as proposed by the European Commission.
Proposed Amendments to the
The tax deduction is 25% of research expenditures for advanced technology and 5% ofIndustrial Innovation Ordinanceexpenditures for new equipment and facilities used for advanced processes.
(Articles
10-2
and
72)
The deduction is based on the size of the research and development project and the ratio of
Taiwan(effective January 2023)
research and development to net sales. The total amount of the credit must not exceed 50% of
the corporate tax amount.
Revised Special Taxation Restriction The tax credit rate for capital investment in national strategic technologies, including
Korea Bill (passed at the end of March)semiconductors, was increased from 8% to 15% (with an additional 10% credit).
Partial Amendment to the Law
Concerning the Promotion of
Development, Supply andIntroduction of Specified Advanced
Information, etc.

The second supplementary budget for FY2022 will be used to strengthen the semiconductor
industry, including securing domestic production bases for advanced semiconductors andstrengthening the infrastructure for next-generation information and telecommunicationsJapansystems.
The second supplementary budget for FY2022 allocates a total of 1.3 trillion yen to strengthen
the semiconductor industry.
19
Copyright © 2023 JETRO. All rights reserved.
Source: Government documents in each country and region.

II. Global and Japanese FDI

7

Investment in semiconductor plant construction◼

Despite the deteriorating semiconductor market conditions, investment in semiconductor front-end factory
construction is expected to reach a record high in 2023. According to international industry associations, a
total of 97 construction projects will be underway this year, including 29 new construction projects worldwide.

◼

The largest investment related to front-end factory construction in 2023-2024 will be for the U.S.,
followed by Taiwan. In the U.S., TSMC, Intel, and others are making progress with plans for large construction
plants, assuming the application of subsidies under the CHIPS Plus Act.

Semiconductor front-end plant construction
investment by country/region
3,000

Major FDI projects in semiconductors (Jan 2022 - May 2023)(Billions USD)(Million USD)

Company (headquarters
location)
TSMC (Taiwan)

2,500

280.0

India

195.0

March 2022

Ireland133.7

UMC (Taiwan)

February
2022

Singapore

50.0

Global Wafers (Taiwan)

February
2022

US

50.0

Micron Technology (US)May 2023

Japan

37.0

IGSS Ventures (Singapore)

June 2022

India

32.2

ISMC (International Federation ofCompanies)(Israel)May 2022

India

30.0

Infineon Technologies (Germany)

February
2022

Malaysia

22.0

STMicroelectronics (Switzerland)

July 2022

France13.7

Merck (Germany)

April 2023

US

12.8

Intel (US)

1,500

1,000

500

0

1Q

2Q

3Q

4Q

1Q

2Q

2022

3Q

4Q

1Q

2023

2Q

3Q

2024

US

TaiwanEurope

Japan

China

SE Asia

Korea

Source: SEMI (March 2023), World Fab Forecast 1Q 23 Edition

4Q

Investment Amountdestination invested
US

Vedanta Resources (UK)2,000

Date ofpublication
November
2022
September
2022

On Semi (US)July 2022
Korea
10.0
20
（Source: fDi Markets (based on announcement)
Copyright © 2023 JETRO. All rights reserved.

II. Global and Japanese FDI

8

Japan's outward FDI declined year-on-year, with
M&As down 70%.

◼

Japan‘s outward FDI in 2022 declined by 16.4% year-on-year to $175.6 billion, with few large-scale
projects. Due to the sharp depreciation of the yen, FDI on a yen basis increased by 0.8% to 23 trillion yen. FDI in
the first five months of 2023 also remained weak.

◼

Due to the weak yen and monetary tightening, outward M&A (execution value) in 2022 was $24.1 billion,
down about 70% from the previous year. This is the lowest level since 2009 ($21 billion), when M&A fell dueto the global financial crisis.
Japan's outward FDI by country/region

Trends Japan's outward FDI by type(Million USD, %)(Billion USD)

300
250
200

2022

Debt instruments
Reinvestment of earnings

Asia

Equity capital
Outward FDI

150

50
0
（Year）

Jan-May
Growth2023 (P)rate

41,976- 34.4

15,927

- 3.1

China

9,185

- 25.2

3,423

- 5.4

ASEAN

21,407- 40.3

8,296

16.7

Singapore

5,775- 71.8

3,389

164.1

Thailand

6,242

43.7

1,683

0.3

North America

63,659- 24.6

14,441- 40.361,025- 26.4

13,635- 40.7

Latin America

14,201

31.3

5,332

- 2.6

Oceania

11,358

47.3

4,415

- 14.9Europe42,052

2.4

19,896

53.3

Germany

5,050- 32.42,271

4.8

United Kingdom

7,263- 58.4

4,146

123.8

Switzerland

5,021

49.5

1,767

13.5

175,557- 16.461,601

- 6.2

US

100

Growthrate

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

Copyright © 2023 JETRO. All rights reserved.

21II. Global and Japanese FDI

Japan’s outward greenfield investment
shrinking9◼

In 2022, Japan had 423 outward greenfield investments, a record low for the third consecutive year.

◼

Worldwide, software/IT services and business services, which account for 40% of all industries, led growth.
Japan saw sluggish growth in the number of investments in this sector, while the mainstay industrial
equipment and transportation equipment saw downward pressure.
Number of outward greenfield investments
in Japan by region
EuropeASEAN
Latin America
Northeast Asia

（Cases）
300

Number of outward greenfield investments
worldwide and in Japan（Cases）
1,000

North America
Middle East
Southwest Asia
Africa

Japan
Other

800

Automotive

600

Chemicals
400
Electronic
components

200

200

Industrial
equipment2015 2016 2017 2018 2019 2020 2021 2022
（Cases）
16,000world

Financialservices
Business
services

100

Software andIT services

12,000
8,000
4,000

0

2010 11

12

13

14

15

(In both of the charts)
Source: FDI Markets (Financial Times)

16

17

18

19

20

21

22
2015 2016 2017 2018 2019 2020 2021 2022
Copyright © 2023 JETRO. All rights reserved.

22II. Global and Japanese FDI

10

Japan's presence declines noticeably ininvestments for major Asian countries◼

Japan's presence as a major investor in greenfield investments in China and Southeast Asia (numbers,announced basis) has declined markedly, with its share of total investment in China falling to 3.2% in 2022.

◼

While global greenfield investments in ASEAN in 2022 totaled 1,031, exceeding 1,000 for the first time in three
years, investments from Japan, the second largest investor on a cumulative basis, totaled 41, down more than
20 from 63 the previous year.

30%Greenfield investment in ASEAN, composition of major
investing countries

Greenfield investment in China, composition ofmajor investing countries
25%

25%

20%

20%
15%
15%
10%
10%

5%

5%
3.2%

0%

US
FranceGermany
Switzerland

UK
Japan

4.0%
0%

US
China

Singapore
Germany

UKJapan(In both of the charts)
Note: Percentages are based on the number of cases. Major investment countries are the top five countries in terms of the number of investments in 2022
Copyright © 2023 JETRO. All rights reserved.
(announced basis) and Japan, respectively. Source: FDI Markets (Financial Times)23III. Trade Rulemaking~ Trade and investment restrictions based on economic security
increasingly impose higher costs on businesses~

Copyright © 2023 JETRO. All rights reserved.

24III. Trade Rulemaking

1

EU+18 impose Russian sanctions◼

As of June 2023, 45 members, including EU-27, have imposed trade sanctions against Russia.
The G7, EU, and Australia launched a price cap for Russian oil in December 2022.

◼

In response to food insecurity, over 35 countries introduced 96 export restrictions on agricultural
products in the year since the invasion of Ukraine. Of these, only 13 were reported to the WTO.

Export restrictions on Ukraine war (in force, June 2023)

International crude oil price (monthly average)

130
120
110
100

（USD/Barrel）

North Sea Brent
Dubai
WTI
Urals

90
Effective export restrictions on
agricultural products
Effective export restrictions on nonEffective export restrictions on both agricultural products(Source: ITC (as of June 30, 2023))

Price cap for Russian oil (G7, EU, Australia)
Coverage
Crude oilOil products at a premium
to crude oil (diesel,
kerosene, gasoline, etc.)
Oil products discounted
against crude oil (fuel oil)Price
Start dateContentscap$60 Dec 5, 2022 Sea shipment andinsurance banned if$100 Feb 5, 2023 the price exceeds thecap. Otherwise, it isrequired to submit$45 Feb 5, 2023 price certification.

Source: Statement by the Price Cap Coalition, Feb 4, 2023, etc.

80
70

60
50
40

The price gap between Russian Urals
crude oil and international crude oil has
widened since the introduction of the pricecap.

Source: World Bank. Prepared based on Commodity Prices,
Copyright © 2023 JETRO. All rights reserved.
etc.)

25

III. Trade Rulemaking

2

Fragmentation seen in trade with Russia◼

The G7 and EU have decreased their trade with Russia since the 1Q of 2022 on pre-invasionbasis after they imposed Russian sanctions late February 2022.

◼

India and China increased imports of Russian oil below international prices. India's imports inthe first quarter of 2023 are about 6.5 times higher than in the fourth quarter of 2021.

Exports to Russia by countries/regions (index basis) Imports from Russia by countries/regions (index basis)
China
India
EU
Japan
United Kingdom

140
120

(2021Q4=100)
China
700
Japan
EU
United States of America
600
United Kingdom(2021Q4=100)

200

160

500

100
120

80
60

400
300

80
45.5

40

43.7

52.2
40

30.7
24.0

22.4

20

10.8
0

Q1

Q2

Q3
2022

Source: Global Trade Atlas

Q4

Q1
2023

0

Q1

Q2

Q3
2022

Q4

1.8
Q1
2023

200
100
0

Copyright © 2023 JETRO. All rights reserved.

26

III. Trade Rulemaking

3

A New Perspective on Trade◼

The US and Europe suggest a shift in the conventional view of free trade and globalization, as
supply-chain resilience and geopolitical risks have risen as more urgent policy agendas.

◼

International cooperation frameworks have evolved based on this new perspective. Concrete
outcomes have been developed to deal with economic security.

US

EU

President Joe Biden•••[T]he fundamental changes taking place interms of international trade.
[W]e found the cheapest labor in the world…sent
the work to those…I’m not doing that anymore.
[W]e are attracting capacity to build here in
the United States.

Ursula von der Leyen, Presidentof the European Commission••

at release of the Economic Security Strategy on June 20, 2023

Joint press conference after the US-UK summit on June 8, 2023

Charles Michel,
European Council president

Jake Sullivan, National Security Advisor
•

•

G7

[E]conomic dependencies that had built up
over the decades of liberalization had become
really perilous.
[I]n the name of oversimplified market efficiency,
entire supply chains of strategic goods... moved
overseas.
Brookings Institution on April 27, 2023

De-risking= NOT “decoupling”
Emerging technology

TTC

Generative AI /EV charging and 3D printerstandardization

Supply chain resilience
Critical minerals /semiconductors / batteries

Sustainability
Coordination on incentive/ HRDD collaboration[W]e also have to be clear-eyed about a worldthat has become more contested andgeopolitical.
[T]he topic of economic security has become apriority for us and for many of our partners.

••

We must restore the proper balance inour economic relations with China.
We need to address critical supply chain
vulnerabilities and protect European
interests."
Post-EU summit press conference, June 30, 2023

Economic coercion
Adjustment platform

Multilateralexportcontrols

Economic security

Digital

Simplification of re-export control /6G / International
assistance

Legacy semiconductor overproduction

Copyright © 2023 JETRO. All rights reserved.

27

III. Trade Rulemaking

4Countering economic coercion as a key◼

The US, EU and Japan have clearly stated that countering "economic coercion" will be amajor trade policy challenge. Unilateral countermeasures are being developed.

◼

Multilateral coordination on the countermeasures regarding China have also progressed.
Countemeasures on economic coercion by major countries / Multilateral coordination

Country &region/framework

Countermeasures against economic coercion

EU

In March 2023, the Commission had reached a political agreement on the Draft Regulation on Anti-Coercion(published in December 2021), which would allow the implementation of countermeasures on economic
coercion by non-EU countries. If they imposes economic coercion on the EU or a member state, such as
trade or investment restrictions, the Commission will consider countermeasures and, with the approval of themember states, implement them.

US“The Countering Economic Coercion Act" reintroduced to the Senate in February 2023 includes a provisionthat gives the President the authority to reduce tariffs and take trade promotion measures on products fromcountries and regions affected by economic coercion, in addition to countermeasures.

Japan/US

Both parties agreed to counter economic coercion and unfair and unclear lending practices in July 2022. Bothcommitted to cooperate with like-minded partners to address and respond to economic coercion, effectively
counter non-market policies and practices, and deliver a coordinated message to the international community,
including multilateral fora such as the WTO, OECD, G7, and G20.

US, EUThe parties affirm the willingness to cooperate and explore joint initiatives with other like-minded countries to
identify and assess economic pressures, enhance resilience, and deter and counter them, and to use themeans at their disposal to counter economic pressures to the fullest extent.

G7

It expresses serious concern about economic coercion and urges all countries to refrain from its use. It
launched a "Coordination Platform against Economic Coercion" and proposed early warning, rapid information
sharing, regular consultations, situation assessment, pursuit of a coordinated response, and countermeasuresagainst coercion. A commitment to assist countries and entities subject to intimidation.

Australia, Canada, In June 2023, these parties issued a Joint Declaration against Trade-Related Economic Coercion and NonMarket Policies and Practices. They committed to strengthen international cooperation to effectively deter andJapan, New
Zealand, UK, US address economic coercion and non-market policies and practices.
Source: Compiled from government documents in each country and region

Copyright © 2023 JETRO. All rights reserved.

28

III. Trade Rulemaking

5

New era of export control, semiconductors at stake◼

New US export control rules for China over advanced semiconductors on October 7, 2022,
have a wider impact on the supply chains of global companies.

◼

This is a departure from the traditional approach of targeting individual entities of concern.
U.S. export controls related to advanced semiconductors (equipment) to China (October 7, 2022)

China
US / allied

Outside US

Case-by-casereview

US-origintechnology
software

US
OthersPresumptionof denial

Broader end-use rules
regardless of who is an end
users
Source: U.S. government data, etc.

RequirelicenseChina
Advanced
semiconductor
supercomputer

Foreign Direct Product (FDP)
Rules for non-US items

China"U.S. Person."Ship/Install
Repair/Maintain

RequirelicenseDifficult to retain or expand
facilities to produce/develop
advanced semiconductors
Copyright © 2023 JETRO. All rights reserved.

29III. Trade Rulemaking

6

Spreading export controls hit Japan◼

The US export controls have had an indirect impact on companies even if they are not under its control.
Some have lost sales to US companies and refrained from exporting to China.

◼

China regulates minerals for semiconductors, followed by trilateral controls.

China's imports of semiconductor production equipment(Jan 2021 - May 2023)
Japan
The Netherlands
United States of America$100 mil
1,500

Company comments◼

All shipments of advanced equipment from U.S.
manufacturers to China have stopped. The impact(decrease in orders) was significant.

◼

Japanese and US equipment are complementary, notcompeting. Without U.S.-made equipment, there is no
point in installing Japanese equipment.

◼

The company can hardly export to China's advanced
semiconductor production facilities, due to hesitant forexport to to avoid being investigated.

US
control

1,000

Source: Interviews by JETRO

Export control related to semiconductors
500

0

1

3

5

7

2021

9 11 1

3

5

7

2022

9 11 13

52023

Note: HS8486, imports are 3-month backward moving averages.
Source: Global Trade AtlasCountry/Enf
Rules / Subject items
orcement
23 equipment items (deposition, exposure,Japancleaning, edging, etc.). Blanket license is
July 23
2023
applicable to 42 countries and regions.
Eight items, including deep ultraviolet (DUV)Netherlands
lithography
Sep 1
Extreme ultraviolet (EUV) lithography systems are2023
covered starting in 2019.
Gallium and germanium related items used inChinanext generation semiconductor materials, etc.,
Aug 1
Exporters are required to submit proof of end-user
2023
and end-use applications on application.
Source: Press release by Governments

Copyright © 2023 JETRO. All rights reserved.

30

III. Trade Rulemaking

7

Information to manage risk◼

Beyond trade compliance, management of business risks related to economic security requires
analysis of a wide range of information regarding products, business partners, end-use.

◼

Among many responses to risks, reviewing the supply chain requires complex considerations.
Illustration of risk management response
Scene

Examples of correspondence

In transactions, note the following(see the figure on the right).
Beforetransaction ◇Is it subject to the regulation?
◇Any security concerns with partners?
◇Any risk of military diversion?
Anticipate that they will be exempted if sanctions
make transaction unfillable.
Adopt a “force majeure,” which exempts the
supplier from liability in the event ofContracts unforeseeable events (e.g., regulations,natural disasters, wars, etc.).
Exclude executives who may be subject to export
control from the decision making process.
Aware of a risk of discrimination if nationality is ahiring requirement.
Diversify suppliers and/or transactions.
Avoid large volume orders at a single time.
Consider the following in supply-chains
Reviewing Relationship with the country/region
supplyCritical items or NOT
chainsIntroduction of security-related regulations
Investment incentives
FTAs that lead to cost reduction
Reputation risk,
etc.
Source: Interviews by JETRO

Matters that require attention

What
Product

Who
Counterparty✓

Subject to export controls?

✓

Any risks to human rights?

✓

Critical/emerging technologies?

✓

Any entities of concern?

✓

Any restrictions on the destination?

✓

Any suspicions in the transaction?
(Refusal to witness or installation/nondisclosure of information, etc.)

How✓

Aware of the uses?

✓

Any risks of military use?

Use✓

Performance match the businesspurpose?
Copyright © 2023 JETRO. All rights reserved.

31

III. Trade Rulemaking

8Japanese firms building structure for economic security◼

While there are various patterns in systems to deal with economic security, awareness of its need isincreasing. The rise in geopolitical risks have led to a movement to establish specialized units.

◼

Some do not set up specialized units, but rather use a meeting body consisting of the person in charge andrelevant departments, or as an extension of the existing system.
Specializedunit

Committee

Traditional
type

Responsible person(executive level)

Responsible person(executive level)

Responsible person(executive level)

Type

Order

Report andconsultation

Specialized units
Organization
chart

Information
sharing

Departments concerned
Legal/HR/procurement/
business units/...

Reportingandconsultation

Decision
Committee
Participation by related
departments

Regular meeting convened
once a month or as needed

Reportingandconsultation

Order

Trade compliancedept. (export
control office, etc.)
Information
sharing

Relateddepts.

Advantage ➢ Easier to collect information and make➢ Well-diffused information and internal
policies➢ Low additional costs➢ Requires resources (Some companies
adopt additional post systems.)➢ Lack of intelligence functions such as
information gathering➢ Decision-making
beyond compliance
may be challenging.

decisions quickly

Challenge

Source: Interviews by JETRO

Copyright © 2023 JETRO. All rights reserved.

32

IV. Policies and Business for a Sustainable

Society～Evolving legalization and policy formation in human rights andenvironment: What companies are required to respond～

Copyright © 2023 JETRO. All rights reserved.

33

IV. Policies and Business for a Sustainable Society

1

Global ESG bond issuance fell in 2022◼

ESG bond issuance has been expanding year by year, but declined slightly in 2022 due to rising interest rates causedby monetary tightening by central banks in various countries. Despite this, green bond issuance in China and the EU
has risen. China overtook the U.S. to become the top in the world.

◼

Financial authorities in the EU and the U.S. are stepping up their scrutiny of “greenwashing”, in which products
and services claiming to be green are not so in reality. In countries such as the US, thorough information disclosureand the introduction of related regulations may have led to a decline in green bond issuance.
ESG bond issuance in the world

World’s top 10 countries, etc. in green bond issuance（Billions USD）

（Billions USD）

1,000

1,000

China
157.9

Africa800

Latin America
159.5

Supranational
600

191.9

North America

204.6

Asia-Pacific
400

200

0

Europe

20.5
49.9
38.0
74.0

2017

83.3

2018

Germany

115.7
120.6

Supranational
600

Netherlands
France

86.2
42.6
68.1

38.9
41.2
60.5

USA

800

189.6

400

UK

160.1

Spain
440.4

83.3

335.1

266.7

Italy

200

Japan

152.1

2019

2020

2021

2022

Note: As of the end of 2022.
ESG bond issuance is the sum of green, social, and sustainable bondissuance. Supranational includes the EU and the European Investment
Bank, etc.
Source: Created by publicly available data from the Climate Bonds Initiative.

0

2017

2018

2019

2020

2021

2022

Note: As of the end of 2022.
Supranational includes the EU and the European Investment Bank, etc.

Source: Created by publicly available data from the Climate Bond Initiative.
Copyright © 2023 JETRO. All rights reserved.

34

IV. Policies and Business for a Sustainable Society

2

Installed renewable energy capacity and EV
sales steadily increasing◼

The share of renewable energy in the world's installed electric power capacity is 40.2%,
exceeding 40% for the first time, while the growth of wind power generation has slowed.

◼

Global EV sales exceeded 10 million units for the first time in 2022. The sales share is
14.0% and the cumulative share is 2.1%.

Global cumulative installed renewable energy capacity andGlobal sales of new EVs (passenger cars)

year-over-year growth in installed capacity of major energy sources（y-o-y growth、％）

250.0

（GW）

3,500

（1,000 Units）

12,000

（%）

Other

200.0

3,000

150.0

2,500 10,000

United States of America

100.0

2,000

Europe

50.0

1,500

0.0

1,000

-50.0

500

-100.0

0

8,000

China
6,000
4,000

EV share (right axis)

Cumulative EV market share(right axis)

2,000
Cumulative installed capacity (right axis)
hydraulic power
Onshore wind power
offshore wind power
sunlight
Solar PV
Source: Compiled from International Renewable Energy Agency (IRENA) data.

16

14
12
10
8
6
4
2

0

0

Source: Compiled from International Energy Agency(IEA) data.
Copyright © 2023 JETRO. All rights reserved.

35

IV. Policies and Business for a Sustainable Society

EU implements Carbon Border Adjustment
Mechanism (CBAM)

3◼

In May 2023, a new system of border adjustment measures for greenhouse gas emissions came into effect,
which will gradually replace the EU Emissions Trading Scheme‘s free emission quotas with a new measureagainst “carbon leakage” for specific import products from countries outside the EU region.

◼

The provisional application (transitional period) will begin in October 2023. Importers of the subject products
will be obliged to report information such as total embedded emissions and the carbon price paid in the
country of origin by one month after each quarter.
EU CBAM Timeline(i) Submit quarterly CBAM reports
during the transition period
Transition period begins
October 2023(ii) The importer or agent needs to bean "Authorized CBAM Declarant".

Full-scale application
starts in 2026

Prior to importation after
full-scale application

Concept of the EU CBAM
NonEU

EU MemberStates
CBAM
Certificate

carbonprice

Classification

Target products

CementKaolin clay, cement clinker, white cement, alumina cement, otherhydraulic cements
Electric power
Nitric acid and nitrous sulfuric acid, anhydrous ammonia and ammonia
water, nitrates, nitrogen fertilizers and other fertilizers
Iron and steel (except ferrosilicon, ferrosilicomanganese and othersilicon compounds and steel scrap), condensed iron ore, steel sheet
piles and welded steel shapes, rails (railroad construction materials),
cast iron pipes, steel pipes and fittings, structures and parts thereof,
steel storage tanks, drums, cans and other containers, screws, Bolts,
nuts, rivets and other steel products
Aluminum ingots (except scrap), powder, flakes, rods and profiles,
wires, plates, sheets and strips, aluminum foil, aluminum pipes andfittings, containers such as tanks, drums and cans, aluminum containers
for compressed or liquefied gases, stranded wires, cables, braids, etc.
(except electrically insulated) (excluding electrically insulated ones), andother aluminum products
HydrogenElectricity

Iron andsteel

Product value

Product value

Intra-EU market priceimport2034 free allowanceabolished

Items covered by EU CBAM

Fertilizer
Purchase
(From
2026)

(3) Declare total emissions, purchaseand submit CBAM certificates

Aluminum(Al)

Chemicals
Note: (1) Excluding countries/regions that are fully linked and integrated into
Note: (1) For details on eligible items, it is necessary to check the CN code.
the EU-ETS. (2) During the transition period, adjustments are made(2) The Commission will evaluate whether to add additional products to be covered by the end of 2025.
according to the free allowance of EU-ETS. In addition, a deduction could be
36
Copyright © 2023 JETRO. All rights reserved.
Source: European Commission, Council of the EU
made for the carbon price paid in the country of origin

IV. Policies and Business for a Sustainable Society

4

Decarbonization throughout supply chains◼

An increasing number of companies are encouraging their suppliers to calculate and reduce greenhouse gas(GHG) emissions in order to reduce emissions throughout supply chains. Some companies are setting their own
targets for their suppliers to set science-based emission reduction targets (SBT).

◼

For SMEs, to calculate and to get the picture of their emissions will not only maintain and strengthen relationships
with existing clients, but will further lead to the development of new clients. Grasping emissions per product will
help differentiate the company from competing products.
Decarbonization policy in procurement
Classification of emissions in supply chains
TargetCompany nameSummaryyear(schematic diagram)
Supply chain emissions = Scope 1 (in-house)+Scope 2 (in-house)+Scope 3 (upstream)+Scope 3 (downstream)

Upstream(Scope 3)- Raw materials- Transportationand delivery- Commuting- Other

In-house
Direct:Fuel combustion(Scope 1)

Indirect:
Use of electricity(Scope 2)

Downstream(Scope 3)- Use ofproducts- Disposal of
products- Other

Scope 1: Direct greenhouse gas emissions by company-owned orcontrolled resources (fuel combustion, industrial processes)
Scope 2: Indirect discharge of GHG derived from the use of electricity, heatand steam supplied by other companies
Scope 3: Indirect emissions other than Scope 1 and Scope 2(Emissions of other companies related to the activities of the operator)
Source: Ministry of the Environment, Ministry of Economy, Trade andIndustry, etc.

TakedaPharmaceuticalcomanyGenex

Have suppliers responsible for 67% of emissions from2024 purchased products and services, capital goods, andtransportation and delivery (upstream) set SBT targets
Completion of SBT target setting by suppliers
2024 representing 80% of emissions for goods and services
purchased
Share GHG reduction targets with 90% of suppliers of2024 products and services and have them develop SBTtargets

Daiwa House
Industry Co.

2025 Have 90% of suppliers set SBT targets

Sony Group2025 material and component suppliers and contract

Navtesco

2025

10% equivalent of GHG in the supply chain raw
manufacturers to set SBT-equivalent targets

RenesasElectronics

Have all major suppliers set reduction targets, aiming
for SBT by 2030
Have major suppliers, which account for 76% of2026 emissions from purchased products and services, set
SBT targets
Have suppliers (including outsourced production) set
2026 SBT targets equivalent to 70% of emissions frompurchased products and services

Bridgestone

2026

Have suppliers set SBT targets for 92% of emissions
related to purchased products and services

Sekisui House

2026

Increase materiality indicator “supplier SBT target
setting rate" to 80%.

Hamamatsu
Photonics

Source: Ministry of the Environment data, company websites,
Copyright © 2023 JETRO. All rights reserved.
and various media reports.

37

IV. Policies and Business for a Sustainable Society

5◼

Responsible behavior required of companies

On June 8, 2023, the OECD revised the OECD Guidelines for Multinational Enterprises for the first time in
12 years. The guidelines include a requirement for companies to align with internationally agreed targets on
climate change and other issues, as well as the importance of conducting due diligence downstream in the supply
chain. In September 2022, the Japanese government released "Guidelines on Respecting Human Rights in
Responsible Supply Chains".

International Principles Calling for Voluntary Initiatives
Major International Principles, Declarations, etc.
UN
ILO

OECD

Structure of Japan's Guidelines on Respecting
Human Rights (September 2022)

The Ten Principles of the Global Compact
Guiding Principles on Business and Human Rights
Declaration on Fundamental Principles and Rights at Work

Generalremarks

Multinational Enterprises (MNE) Declaration
Guidelines for MNE(June 2023, first revision in 12 years)
Due Diligence Guidance for Responsible Business Conduct

5.Communicate
how impacts
are addressed

4.Track
implementation
and results

2.Identify & assess
adverse impacts

1. Embed responsible
business conduct into
policies andmanagement
systems

6. Remediation
when appropriate
3.Cease, prevent or
mitigateadverse impact➢ Outline of business efforts➢ Approach to efforts to respect humanrights➢ Points for consideration when establishing
Human rights
a human rights policy➢ Points for consideration after establishing a
policyhuman rights policy(1) Identification and assessment of adverse
impacts(2) Prevention or mitigation of adverse
Human rights
impactsdue diligence(3) Tracking effectiveness of the efforts(4) Communication and information
disclosure

Remedy➢ Grievance mechanism➢ State-based remedy mechanism

Source: “Guidelines on Respecting Human Rights in Responsible Supply Chains” (Japanese government) and “OECD Due Diligence Guidance for Responsible
Copyright © 2023 JETRO. All rights reserved.
Business Conduct "38

IV. Policies and Business for a Sustainable Society

6

Sustainable and responsible procurement
policy◼

Companies are required to develop, manage, and operate responsible procurement policies to comply with their
obligations in response to various social issues and to address requests from various stakeholders, including
consumers and NGOs, both on their own and through their suppliers.

◼

Characteristics common to leading companies in sustainable procurement include participation in industry
initiatives, risk management throughout the supply chain, and consideration of diverse values.

Corporate stakeholder engagement (conceptual diagram)<Stakeholders>
Legal compliance and disclosure

Social issue
Environment
Decarbonation

Labor

Cultural diversity

Ethical consumption

Gender inclusion

Work-life balance

Supply chain
corporate responsibility

Information disclosure

Traceability
Capacity building

Source: Prepared based on JETRO survey reportEnterprise

Diverse values

Compliance

Laws and regulations, national
action plans enacted
Participation in industry initiatives

Human rights

Establishment of industry andproprietary standards
Information disclosure, dialogue
Monitoring and filing complaints
Changes in consumption andinvestment behavior
Labor-management dialogue
Contract compliance, reporting
Code of conduct establishment,
audits, and guidance

Government &municipalities
Trade associations
and privateorganizations
NGOs
Consumers
Investors
Shareholders
Employees
Client (supplier)companies

Suppliers (primary)Contract compliance, issue remediation,
reporting
Tracing and information sharing
Suppliers (secondary and
Code of conduct compliance,
issue remediation

beyond)Copyright © 2023 JETRO. All rights reserved.

39

IV. Policies and Business for a Sustainable Society

7

Human rights due diligence of Japanesecompanies on the move◼

Japanese companies that have implemented human rights due diligence account for 10.6% of the total.
Including those companies that “plan to implement it within a year” or “are considering implementing it within a
few years," 50% of the companies are implementing HRDD or indicate a willingness to do so.

◼

In the information and communication machinery/electronic components and devices and finance and insurance
sectors, 30% of companies reported that they "conduct" HRDD.
Status of implementation of human rights due diligence[All][Industry]■Manufacturing(n=1,719)●製造業全体(n=1,719)（n=2,941）
No plan toimplement

20

14.9

Petroleum products/plastics/rubber
products(n=89)
石油・プラスチック・ゴム製品(n=89)

14.6

Ceramics/earth& stone(n=28)
窯業・土石(n=28)

14.3

Cars/carparts/other transportation machinery(n=78)
自動車・同部品／その他輸送機器(n=78)

14.1

Planning to
implement it
within a year,
3.3%■Non-manufacturing(n=1,222)●非製造業全体(n=1,222)
Considering to
implement it
within a few
years,
39.9%

34.7

10.8

Finance &insurance(n=49)
金融・保険(n=49)

32.7

Communication,通信・情報・ソフトウェア(n=75)
information & software(n=75)

13.3

Transport(n=65)
運輸(n=65)

12.3

Construction(n=98)
建設(n=98)

12.2

Professional
services(n=61)
専門サービス(n=61)

11.5

Notes: (1) In both figures, "n" is the number of companies excluding "no response" from the number of responding companies. (2) "Plans to
implement or considering implementation" is the sum of "Have not yet implemented but plan to implement within a year" and "Have not yet
implemented but considering implementation within a few years”.
Source: "FY 2022 Survey on the International Operations of Japanese Firms" February 2023 (JETRO)

(%)
40

10.4

Implementing human IT equipment/electronic parts & devices(n=49)
情報通信機械／電子部品・デバイス(n=49)
rights due diligence,
10.6%
Chemicals(n=74)
化学(n=74)

it,
46.2%

0

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40

JETRO Global Trade and Investment Report 2023

International Economy Division,
Research and Analysis Department
Japan External Trade Organization(JETRO)

03-3582-5177
ori@jetro.go.jp〒107-6006
6F ARK Mori Building, 1-12-32 Akasaka,
Minato-ku, Tokyo,Japan◼

N o t e : The original report is available only in Japanese. Figures may not sum up to the total due to fractional units.

◼

Disclaimer of liability: Responsibility for any decisions made based on or in relation to the information provided in this overview shall rest
solely on the reader. Although JETRO strives to provide accurate information, JETRO will not be responsible for any loss or damages
incurred by readers through the use of such information in any manner.

【Reproduction without permission is prohibited.】
Copyright © 2023 JETRO. All rights reserved.