How Do the United States and Its Partners Approach Economic Security?
A series of acute geopolitical changes—crystallized both by the Covid-19 supply chain crunches and the Russian invasion of Ukraine—has intensified the focus on economic security as a major pillar of national security. Jake Sullivan, the U.S. national security adviser, has consequently addressed a topic long considered outside of his traditional job description: economics. His landmark speeches in September 2022 and April 2023 sought to redefine the administration’s approach to security. Sullivan’s recent piece in Foreign Affairs identified “competition in an age of interdependence” as the country’s main challenge. Yet economic security remains a broad concept without a common definition, and the United States and its partners are taking somewhat different—although broadly aligned—approaches to mitigating geoeconomic risks.
Q1: How do key actors define economic security?
A1: The G7 Leaders’ Communiqué from the Hiroshima Summit in May 2023 attempted to define economic security as encapsulating a series of policy goals, ranging from building resilient supply chains to combating economic coercion and preventing advanced technology leakage. At its most basic level, economic security centers around backup plans for various contingencies, such as pandemics, geopolitical crises, or growing disruptions related to the climate emergency. The Russian invasion of Ukraine, the Chinese government’s decision to shut down its economy during the pandemic, and coercive economic measures such as the Chinese decision to ban the use of certain foreign technology in infrastructure projects, as it did with Micron, have led to serious risk reconsiderations that inform international economic security agendas.
When the Biden administration assumed office in January 2021, it immediately ordered a review of four critical supply chains: medical, minerals, batteries, and semiconductors. Embedded in that critical supply chain review is the notion that U.S. national security may be imperiled by the inability to obtain inputs for these four sectors. While national security has traditionally related to “hard security” features such as military preparedness, there is a growing sentiment that economic resiliency is a foundational element of national security.
Q2: Which countries have developed economic security strategies?
A2: Relevant economic security policies are often encapsulated in national security strategies, supply chain initiatives, and other trade policies, such as export controls or industrial policy measures. The cross-cutting nature of these agendas can obscure the overall approach of a single country toward economic security. While most countries do not have public economic security strategies, many countries maintain at least some degree of an economic security agenda.
In October 2022, South Korea launched a National Strategic Technology Nurture Plan, which identified 12 technologies considered critical to national security. Each technology will receive its own separate “strategy roadmap,” intended to help attract public and private investment. South Korea has also focused on reaffirming, and in some cases reestablishing, friendly relationships with partner countries, as indicated by the recent trilateral summit with the United States and Japan at Camp David in August. While a trilateral of this magnitude would have traditionally focused on hard security issues, economic security featured prominently.
The United Kingdom’s recent Integrated Review Refresh names economic security as a second priority area after energy security. It also commits to improve economic security, including publishing a new supply chain strategy, and announces the launch of an Economic Deterrence Initiative, which will focus on preventing and responding to hostile acts.
The European Union and Japan both have explicit economic security strategies. The European Economic Security Strategy, published in June 2023, calls on the bloc to reassess economic security and to “de-risk.” The EU strategy relies on a three-pronged approach: protect, promote, and partner. This communication serves as a kickoff, with further iterations expected in the coming months. In October 2023, the European Commission released a recommendation on critical technologies, which links to the Joint Communication. It urges member states to conduct risk assessments on four technology areas important to security and prone to leakage: advanced semiconductors, artificial intelligence, quantum, and biotech. Overall, both documents represent a shift toward a more institutionalized economic security agenda for the bloc.
Shortly after the European Union announced its strategy, Germany followed suit with its July 2023 Strategy on China, which emphasizes the importance of resiliency through reducing dependencies in critical areas. This strategy marks a sea change in the German approach to China and draws heavily on lessons learned from overdependence and trade weaponization in the wake of the Russian invasion of Ukraine.
In Japan, two primary documents inform economic security policy. First, the Economic Security Protection Act (ESPA) became law in May 2022. It contains four pillars that aim to decrease Japanese dependency on unfriendly countries by building up indigenous supply chains or rerouting them to partners that do not pose a national security risk. Reducing dependency on China, especially for critical technologies and minerals, has been a years-long concern for Japan, particularly since 2010, when China banned rare earth materials after Japan detained a Chinese fisherman, exposing Japanese supply chain vulnerabilities. Japan’s 2022 National Security Strategy affirmed the continued importance of implementing the ESPA, securing stable supply chains for items such as critical minerals, and combat economic coercion. A variety of agencies are responsible for implementing the policies mandated under these strategies. Japan is currently reviewing its economic security strategy, which will be updated and public by the end of October 2023. It is anticipated that this strategy will closely mirror the EU approach in that it will also center around the three pillars of protect, promote, and partner.
Q3: Does the United States have an economic security strategy?
A3: The United States does not have an official economic security strategy, but nonetheless carries out a robust set of economic security policies, ranging from industrial policies with “strings attached” to an expanded export control toolkit. The first major mention of economic security came from a concept put forth by the Trump administration in the 2017 national security strategy, noting that “economic security is national security.” The Biden administration has refined its own approach to achieving economic security goals, which focuses on revitalizing and securing critical technology and mineral supply chains, pursuing a “de-risking” strategy with China, and strengthening partnerships with key allies through its “friend-shoring” agenda. The international side of this agenda has manifested via bilaterals on critical minerals, “minilaterals” such as the Chips 4 Alliance, smaller trilateral arrangements such as the pact between the United States, Netherlands, and Japan on semiconductor export controls, and broader initiatives such as the Indo-Pacific Economic Framework.
This practice of pursuing an economic security agenda without an explicitly written strategy has been copied by several of the United States’ G7 partners, while others are having to play catch up. Japan and the European Union, which is a permanent G7 observer, maintain explicit economic security strategies, while Germany and the United Kingdom have clear economic security agendas shown in recent national security or government review documents.
France, Italy, and Canada have taken a relatively more restrained approach to economic security. France and Italy, as EU member states, are naturally implicated by the commission’s recent strategy, but unlike Germany, they have not developed national economic security agendas. Canada does not have an economic or national security strategy, although, a coalition of leading Canadian CEOs and entrepreneurs has called on the Canadian government to stronger economic security policies. Canada has been actively engaged in bilateral forums with Indo-Pacific allies on the subject, but comparatively, it lags behind other G7 members on the topic.
Q4: Are economic security agencies standard?
A4: There are emerging calls for the United States to erect an “Economic War Council.” These calls reflect a sense that the U.S. government is institutionally designed in a way that inhibits its ability to promulgate an economic security strategy in a way that close international partners have done. For example, while the United States has arguably the most advanced economic security agenda, combining industrial policies, export controls, and new investment screening measures, it does not have a strategic roadmap or risk taxonomy akin to what the European Union or Japan have produced.
Japan’s economic security strategy is carried out via an interagency process that includes bodies such as the Council for the Promotion of Economic Security, the Economic Security Legislation Preparation Office, and the Office for the Promotion of Economic Security. Many of these offices receive their direction from the Prime Minister’s Office of Japan and were created in a policy push started by Prime Minister Abe Shinzo but expanded under the current prime minister. In April 2020, Abe oversaw the addition of an “economy group” to its National Security Secretariat, which supports the work of the National Security Council. Then in 2021, Prime Minister Fumio Kishida created a new position in his cabinet for an economic security minister and established the Council for the Promotion of Economic Security. Lastly in August 2022, the Office for the Promotion of Economic Security was created by the Minister’s Cabinet Office to administer and implement the ESPA.
Similarly, the European Union’s economic security strategy is carried out via an interagency process. The role of the European Commission is to assess risk, draft legislation and other measures, and oversee the implementation of its economic security strategy. Within the European Commission itself, economic security policies are devised in coordination between the Directorate-General for Trade and the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs. A complicating factor for the European Union is that it is tasked with coordinating seismic policy shifts 27 member states, which retain national security competency. Member states must then implement certain facets of the European Union’s economic security strategy at the national levels after specific instruments and regulations have been adopted. At the international level, the European External Action Service (EEAS)—similar to the U.S. Foreign Service—must integrate EU economic strategy into its broader foreign policy agenda.
Q5: Which U.S. agencies oversee economic security policy, and how does that affect the advancement of the economic security agenda?
A5: In the United States, economic security strategies, including the broader friend-shoring agenda, are carried out across several agencies. These include the Commerce Department, State Department, Treasury Department, U.S. Trade Representative, and others. The U.S.-EU Trade and Technology Council (TTC) in some ways encapsulates the difficulties of promulgating an economic security agenda in the United States. The 10 working groups of the TTC include a range of agencies such as U.S. Trade Representative and the Departments of Energy, State, and Treasury. In a historic shift, the Commerce Department is experiencing unprecedented power since it oversees both the deployment of CHIPS and Science Act funds and the promulgation of export controls. Another change is the consolidation of power within the White House National Security Council, which oversees and coordinates interagency cooperation on economic security matters.
Questions abound about whether the world is shifting toward an era of multipolarity and minilateralism and thus the suitability of 20th century institutions for confronting today’s problems. Questions also abound. In a recent Foreign Policy article, Stephen M. Walt describes an “inauspicious return of the Cold War strategy of ‘pactomania.’” It may be premature to conclude what many of these economic security focused minilaterals amount to, but it is clear that the United States and its partners are entering a new era of technology-driven economic security.
Emily Benson is the director of the Project on Trade and Technology and senior fellow with the Scholl Chair in International Business at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Catharine Mouradian is the program coordinator and research assistant with the Project on Trade and Technology at CSIS.
The authors would like to thank Gloria Sicilia for her valuable insights and research support for this piece.