issues, not economic ones. that being said, although they are intertwined these days when security is so critical to the united states and japan and to the philippines as well, that being said and the japanese as we all know are too polite to say this, there is unhappiness in japan over president biden's decision to publicly oppose the sale of u.s. steel to nippon steel so we thought to focus on the importance of u.s.-japan cooperation on economic security, on reliable supply chains, on japan's significant and long-standing direct investment across the united states and the potential benefits that an enriched u.s.-japan partnership offers to american workers and allied technological leadership.

all these things will be on the agenda at the white house next week. we have two panels of experts today. one on economic security that i will moderate and another on foreign direct investments that my japan chair colleague will moderate. but first we have the honor of a keynote and discussion with governor from indiana. now the governor, who is finishing his final term as governor, has a track record of balanced budgets, infrastructure improvement and low unemployment that are the envy of governors across the country, not only was he re-elected in 2020 with the most votes in indiana history. he has focused on economic development and has turned indiana the best state to start a business and the first quarter of 2024 alone, 45 companies committed to locate or expand in indiana, investing over $0 billion in operations creating over 5,000 new jobs. i just had breakfast this

morning with the korean ambassador who is out in indiana with the governor and for an important announcement on a big investment in indiana. indiana as well has more -- he sends his best to you, governor. indiana has more japanese investment per capita than any other state with more than 300 japanese owned businesses, employing over 55,000 hoosiers and the governor rearranged his schedule to be with us here today, but unfortunately matt painter, zach edey and the boilermaker teammates had a better idea, to qualify purdue for the final four for the first time since 1980. i can say this as a one-time hoosier in indiana, nothing tops basketball, not even japanese investment, not even the indianapolis 500. the governor finds himself

happily in arizona. we thank you for being with us and it's my honor to turn it over to you, and we look forward to hearing your remarks. thank you so much, governor. >> good morning, and thank you all, especially for the invitation to speak with you on a topic that's very important and matters a lot to me and our citizens, hoosiers as you mentioned. it matters to us professionally and personally and quite frankly patriotically. the two-way trade relationships with our allies around the world are nothing short of what i would describe as one, a major one of our american superpowers, if you will. and that applies just as much at

the state level as it does at the national level, as i am here to hopefully try to convey as the governor of one of those states, the great state of indiana. it's always a pleasure to bring a little bit of our hoosier heartland spirit where we actually get stuff done and try to export that to washington, d.c., itself and now for those of you in the audience who may not be -- there are probably very few but may not be steeped in hudson institute lore, allow me to share a few things that may surprise you. first, ken who has just mentioned the hudson institute has the eyes to indiana was home

to indiana for two decades, from 1984 to 2004, so four years after the boilers made it to the file four -- final four and ken first joined hudson when it was based in indianapolis. even lived there for a while and by all accounts he liked it. so forgive me for blowing the cover of an influential washingtonian. but one of my and predecessors, as indiana governor, mitch daniels, he was also the president of hudson during some of that time and the institute helped to inspire a spirit of policy entrepreneurship and education and health care and workforce development and much more of that, that theme continues to

this very day and has been instructive and i had the joy of working to sustain that very spirit that was first started and could be traced to hudson's contributions here on hoosier soil. you see in indiana to this day, we pride ourselves on being an incubator for innovative ideas and problem-solving, not just approaches and commitments with that special hoosier touch and it has by now become part of our culture and it is who we are proud to identify with, as problem solvers, people who get things done. here's a thought. hudson spent his first two decades in new york and his next two in indiana.

i'm thinking cyclically here. we embrace and promote the values that hudson held so dear and i think we are just the two guys that can make that move happen. forgive me, but i hope i have at least demonstrated i'm always hustling, which brings me to another surprising fact about hudson institute in light of our topic our topic here today. japan was not always recognized as an economic powerhouse, a major global player. sometimes we take them for granted in today's world but one american saw it coming and his

name was hermann con, the founder of the hudson institute. in 1970, he published a book called the emerging japanese superstate. the book was a work on futurism and unlike most, he didn't get every detail exactly right, but he got the big picture spot on and namely that japan would grow and prosper through its work ethic, its growth strategy, strategies and economic connections to the rest of the world. the book was a smash hit in japan, inspiring confidence in a nation that was still just 25 years beyond that wartime

devastation. the book fortunately also inspired this institute to keep its i on japan -- keep its eye on japan. rest assured that i do keep my eye on's fixed on -- my travel itinerary focused on japan as well, for many of the very same reasons. there is a strange -- to me -- counterproductive notion in some political circles today, may be more pronounced, that governors should not travel overseas because that somehow means you're taking your eye off the ball, or not paying enough attention to your home states benefit and my reaction to that is huh? i don't get it. traveling abroad is one of the best ways to help my state and i

think when you do the math, it becomes pretty obvious why. it is how we bring indiana's success story to the world and how we seek out true partners who want to grow together on both sides of the pond, whatever it may be. over the last seven years, just to demonstrate i practice what i preach, i've had the privilege of leading 13 now, more international trips, covering 22 different countries, many of them more than once and one of those countries, three times and that country would be surprise surprise, japan. a bond that i and my predecessors have really come to

treasure and cherish. japan could not be more critical or paramount to our suspect -- success story and the indiana-japan relationship is one that my fellow hoosiers and i take tremendous pride in. its impact is woven into our economy, our education, our communities, deep roots, supply chain small business, deliveries to the big tier one, tier twos, tear threes, and really has just become part of our everyday life in sony different ways and if you really want the tape, we have come far fast, to nearly go back 40 years ago to use one milestone or one point, when a

small but rising japanese company took a chance on indiana , it was 1986 and subaru had just made big news in indiana and in america and committed to located -- locating its first u.s. manufacturing plant. its first manufacturing plant outside of japan, in lafayette indiana. that is when i would say looking back, the indiana-japan relationship began to take root and as we see today, annually bloom in ways that we couldn't have envisioned 40 some years ago and since then, they have invested hundreds of millions, billions, hundreds of millions of dollars in resources into its indiana facility, expanding

again and again in developing new talent and giving back to its community in the same could be said for honda and toyota. i remember when i moved down near princeton, indiana, when toyota first moved into what was then a field and built their first plant and that was about an 800 million dollar capital investment at the time. i was just down for another expansion not too long ago and they mentioned that they have now invested $6.6 billion. from the initial euphoria and excitement of $800 million back in 1997, today almost knocking on $7 billion in investment is just quite amazing and shows you how people around the world have

so many options in where to invest and reinvest and grow and they are doubling down so to speak on their commitment to indiana and us to them. with each new announcement, each new groundbreaking ribbon-cutting, each new car that rolls off the line, indiana and japan have invested outside of the plant or factory campus, so to speak, and we have invested in each other in so many different special ways, but we have really grown up together and growing stronger together, as a result. our mutual success as i just alluded to has come in ways where now the home to over 300

japanese companies. it goes up every day but the last time i checked, about 1050 international companies and of those, 300 are japanese companies alone. they support about 55 high quality careers. not just jobs but careers for hoosiers and that stability that comes along with it. we likewise have indiana headquarter companies operating in japan, like eli lilly and company and cook medical and herschel laboratories and that list goes on and on as well. just to name a few that you are familiar with. they are helping that collaboration and they are helping drive innovation and job

creation, on both sides of the pacific. and as a matter of fact, right here in the heart of the heartland, indiana has the largest amount of japanese investment per capita of any state. that is a source of real personal pride but as i just mentioned, the supply chains that come with leading oems like honda and toyota and subaru starts to become obvious, why we've been able to obtain that ranking, and not only obtain it but hold onto it and grow it. they are not only helping us drive our economy and our manufacturing sector forward, but their leadership and

mobility industry really does put us on the front lines of cutting edge advancements, much more broadly. i always think about -- it was mentioned that we value basketball more than racing. i think about the indianapolis motor speedway. back in 1909, it was created as a test track for engines. now you see -- over a century later -- we are still testing technology at that track, and you have the first japanese driver to win the indy 500 not only once but twice. whenever we get together for a race, that invitation still stands. it is fascinating to not just be

pulled into the thrill of the competition but it is fascinating to see all of the testing that is going on, and all of the innovation that is occurring but maybe does not look so obvious to every fan that is there. as indiana looks into the future, buying and investing in those innovations, by investing in initiatives that attract electric vehicle production and battery plants, battery recyclers, the whole ecosystem, we are ensuring that our two regions remain the world's leaders in that very future of mobility, where both rnd and

production intersect and then launch into the market, because the bottom line is our industries are only as strong as our two way trade framework holds up. that calls in a necessity for trust and experience, being there for a friend, a friend in need is a friend indeed and you have to back that up time and time again, in the good times and the challenging times, and that means up and down the supply chains both in importing and exporting as the chains themselves face the stress and strain, not only in terms of the just-in-time delivery but also ensure the just in case delivery can be met due to unforeseen threats or interruptions.

a barge knocks out a bridge in baltimore, or putin invades ukraine or etc. the list goes on, but our ecosystem, our different sectors and the supply chains that go with it have to be able to respond to those occurrences and those shocks to the system, which is one thing that i am proud of and one thing that makes indiana stick out. i can assure you to and from indiana, our supply chains are strong and they continue to adapt and mature to make sure that we can continue to be strong in imports like computer and electronic components and machinery and metal products. all help support industries like those that are booming and our

semiconductor production and life science innovation investments that are growing in this state, the state of certainty, the state of stability and predict ability -- predictability that offers a lot of continuity. i go back to my predecessors and the trajectory of trade and capital investment is almost like a hockey stick now, that momentum, that earned momentum is a real positive force for good and progress and we are benefiting from that right now and indeed trade is happening on a competitive national scale, and 2022 a couple years ago, the united states as a whole,

exported over $84 billion worth of goods while importing from japan. -- which accounts for a disproportional $2 billion share of those u.s. exports. we may be geographically a small state but we are packing a powerful punch. the fact that indiana's relationship with japan extends far beyond the business investment and create -- career creation communities, the influenced contributions of the shared friendship can be seen in

our governance in our policymaking and our educational system. critical college and university partnerships and record student enrollments and asian enrollments at purdue, at indian university, with 30 privates and of course publics and we are seeing those enrollments continue to take up and get a world-class education and our goal is to make sure we are sticky and they stay in indiana. in our decades long people to people relationships, our sister state relationship and our

relationships that's -- all over our state really do hold dear, they are built in to the committee cultures. you can see it in our global partnerships with the japanese government, and you can see it in our five japanese language saturday schools and continuous educational exchanges between indiana and japanese universities. you can see it throughout the communities where japanese investments took hold and a narco commitment to advancing quality and quality of place initiatives, and the opportunity

for toyota -- investing millions of dollars back into hoosier communities in their region, they are funding youth development initiatives in southern indiana, down in princeton. just one example. like the ymca. coming together in terms of place making initiatives, housing, etc., to be part of the collaboration and the partnership, to improve and raise up that quality-of-life for their teammates, but also for people who don't work at toyota as an example. and you can also of course see it in our commitment from a state perspective, from our indiana economic development corporations perspective.

we have a branch office in japan for the last 40 years, and it is busier today than ever. it is obviously no surprise, we are on a roll and there is a lot of momentum, so it is natural that our long close friend is helping drive that good and busy schedule. you can see it because we have created such a solid foundation for these relationships over the last 40 years, limestone, bedrock, to help build much of d.c., including the pentagon. and we will continue to build on

that foundation for the next four years and beyond. i'm quite confident that the ties indiana and japan share our strong and storied and i believe they are working again, better than ever, because we are working together. it is kind of exhibit a, and this is so important and it is not taken for granted for one nanosecond. i would just say that it is at a premium. we live in these very unsettled times globally and i think that unsettled is the right word because these are still good times in many ways even though we see these threats around us, at home and in other parts of

the world and here is where our company with many others in american elected or public life today, i do not believe that these unsettled times and rising threats will push the united states into economic isolationism. we simply can't allow that. we can't afford that. indiana is exhibit a, on the alternative. it works. earlier i alluded to the fact that this robust two-way trade, robust investment and our relationships with our allies serve as one of our american superpowers and my childhood recollection suggested

superheroes don't give up their superpowers when they need them the most and neither should the united states. as push starts coming to shove in tough neighborhoods around the world, this will become more and more important to have these exhibit a's if you will, like indiana. out in the opened and obvious as the other way, to counter short-term and long-term benefits. you should know, indiana before me, and i'm sure after, we are not going to give that up. on that much i can assure you. the facts just speak for themselves and back me up as to

why. i will say quickly that since 2017, my frame of reference, when i raise my hand and took the oath to serve, our indiana gdp has grown by over $115 billion. our private sector employment is up 200,000 to an all-time high, while unemployment numbers out today from the fed, our state unemployment remains at historic lows, lower than the federal average. last year we brought in through the indiana economic bill, over $28 billion in capital investment to indiana which was an all-time record and to put this in context, three years ago our all-time record was $8.7 billion.

a year later or two years ago, we were at $22 billion and last year we were at $28 billion, so from $8.7 billion to $28 billion in the matter of a couple years speaks for itself and of that $28 billion, 20 billion, just over 70% was foreign direct investment. i always say to those who question or criticize, do you really want to lily -- to leave 70% on the table? it lead to careers and new opportunities and a future economy that we want to be a part of, and that means more homes and ownership and more kids in school, etc.

building population and talent density. it is not just cap ask but what it means to contribute to the health and vibrancy of our state, and do i and inbound investment from abroad had something to do with this? it speaks for itself, so that is what i counter to these critics who may say my time could be spent better here at home. it is being spent here at home, and we have to work 24/7, it is a small world made smaller by technology, every day and in japan, trade and investment you better bet plays a huge role in our state's health. in closing, please consider

indiana as exhibit a in the case against economic isolationism. the mutual attraction of open innovation driven markets -- market oriented societies is powerful for the simple reason that one plus one between such societies equals much more than two. we are stronger together as you say. there truly is out of many markets, one stronger one. this is true across the atlantic, it is true across the pacific, it is evident between the u.s. and australia and india and south korea, taiwan and of course japan proves it every

day. people to people, government to government, business-to-business. whether the state of indiana is directly involved or not. japan represents a brighter future for indiana, more stable, more certain, more addictive will and the markets like that and they like more of it. if we are as a nation, estates, prepared to seize more of it, between the u.s. and more countries. in africa and latin america as well. to put it mildly, the source of mutually beneficial relationships are not in the cards for our geostrategic adversaries, the likes of iran and north korea and russia. their systems don't work that way. so thank you for maintaining our superpowers.

through the valuable work that you all do and guys like me are paying attention. your willingness to facilitate and discuss the on ground benefits of investment and trade is because for my optimism in and of itself. thank you for doing more than your part in keeping america's bond with japan unbreakable, and now i look forward to dodging any of your tough questions. [applause] >> let me just say, those remarks really were extraordinary. i do consider myself a hoosier. it is where i stopped being a student and became an adult and i see tom donohue in the

audience, former head of the chamber of commerce who was on the hudson board in those years. mike pence was here the other night, you have some extraordinary predecessors and i see that their seat is being held by an extraordinary individual in case anyone doubted that. those remarks were truly enlightening. me throw two questions out to you and then we will open up to some from the audience. one of the things that really interested me was you talked about talent density, careers and talent density and in the mobility sector and elsewhere. that clearly is a factor in both japanese investment into indiana, a factor and other foreign direct investment into indiana, and it is frankly

something -- it has been a transformation of the educational system as well. how critical has this foreign direct investment made the talent density possible? you are on mute. >> the most important factors when businesses are making a decision, where to grow and go. i would say one is because companies maybe before they sit down with us, they have done their homework, they are like someone looking for a house or a realtor that is out there looking at a neighborhood and before the even call the owner, they know what the taxes are, so companies usually today, and this has changed somewhat over the past 10, 15, 20 years.

if you were getting further looks, they know but how much it will cost them is certainly a factor. you offer great sites to grow. we checked that box but the access to high talent is the relationship of what allows investment to become a forever or a long-term investment, one that can endure the transitions.

when you look at the auto sector, we also have stellantis and other foreign investors and general motors in different parts of our states, a very competitive auto industry in our state with that very entrenched elaborate supply chain that goes with it. now as we look at the market needing to drive the scale and scope, the speed of the auto industry transition, we are seeing major investment close to those plants be a tv or hybrid, -- be it ev or hybrid. the ability to have talent pipelines directly in from -- if

you are talking about semiconductors which we just had -- it has been a good week at purdue by the way. we just had an announcement a couple days ago, almost $4 billion -- advanced packaging chips, manufacturing and semiconductors, battery production is needed, we are seeing those investments come but what is important is these auto manufacturing plants are not the auto plants of my grandfather and it is much easier to attract and to keep phd's or college graduates coming out, it is easier to keep

those graduates if they are working on something that is future looking. hermann khan talked about it. not in what you may envision 40 years ago, this auto plant, when you go to kokomo, indiana we have about $6 billion coming in from south korea to make batteries. i asked them about what s them up at night, what barriers do i need to bust so they can scale up, is workforce a concern , and they were excited, i would say and heartened by the fact that they are developing these direct pipelines with our universities to work on things

that will determine things in the future. i think a low-cost environment, rational regulatory climate and talent really go a long way for us to seal the deal. >> that was critical in the deal you mentioned with purdue. our next question, just want to get your sense on the author and how you feel about it. >> you come from a state that is the number one steel manufacturer in america and i am proud of that. when we think about -- obviously

manufacturing is number one, manufacturing in america, proud of it. i mentioned briefly earlier, our hospitality industry, it continues to grow. i.t. and construction, when you think about our contribution and think about limestone, think about steel, these are industries that are going through transitions as well. both internally and due to external forces. i have always said, and we've got domestic and international steel production going on in the state of indiana right now, and i embrace it.

my bottom line is i want those steel manufacturers to be able to continue to supply this product to all of our growth and building, but to the rest of the world as well. i hope i've been over the top and clear about how we embrace japan as an ally and i want that production to continue. they have been, that company has been good for our country for a long time and we anticipate growing and growing, so i'm here as a governor to say that plan, i want it to grow and i want it to prosper and i want huge -- i

want hoosiers to continue to go work there and i don't want to because of other decisions move somewhere else or shutter or see layoffs. very appreciated of everything that is going into saving that company. >> we've got time for two questions. we were hoping the governor would be where he should be. >> i'm a professional staff member with the health committee on resources. as a former hoosier myself, i know it is not hard to see indiana as a deep relationship with japan, whether you are in fort wayne or bloomington, you see a lot of japanese, what -- companies, but this relationship

is not as readily apparent and it is really taken into account when crafting policy. do you have any recommendation on how congress and the executive can better support state initiatives? >> governor? >> i have a long list of recommendations but i'm not going to go to that list. my recommendations would be to -- this sounds rhetorical -- but it is not harder than this. it is to empower states to better control their own destinies as our country was structurally founded.

it is not to say that congress and our federal partners should just completely stay out of our business. i'm not suggesting that, but where we get slowed down, especially in this time of innovation where japan and america have excelled and where you are starting to see the silica and heartland, not just the valley, or austin or boston, really create life improving and lifesaving medicines as an example, what we need is the federal government to have a sense of urgency about them, to no longer accept that voting yes

or no is the job. the result is the job and what we need our efforts that are going to embrace this sense of urgency, whether it comes to addressing issues of national security that have a downstream effect on every state or economic security, to which you were speaking to, allowing states where the rubber meets the road to compete with one another. i love competing with other governors. i love the fact that i came into this job working for one of my predecessors, mitch daniels. and i'm proud of where we were

in 2005 when he raised his right hand, and i'm just as proud today that the decisions that were made, maybe the medicine didn't taste good going down, but it did get better. i think washington needs to focus on those things that will allow these state laboratories, these entrepreneurs of innovation, where it is really occurring, assist where they can, big kudos to passing the chips act. it had a profound positive impact on not just west lafayette but america and our allies. every which way the federal government and congress can remove barriers, have a sense of urgency about them, when it comes to probably three things,

one is the illegal side of immigration, inflation and insolvency of our federal government. how about focusing on your core missions and then removing the barriers for the states? i think there would be broad consensus with the states that truly want to compete, republican or democrat, if someone would step forward and say this is the plan. we are going to focus, get it right and let not just the risktakers but the ones balancing their books and hustling, take the lead. >> we have time for one last question.

i know you're going to be having this international trade fair right before the 500 and you want to say a little bit about that? >> two years ago we decided that we wanted to invite -- i wake up every day and say i want to bring the world back to indiana. it's a small world. we are reliant on one another, and we are going to grow and get there faster together. we said why doesn't a state like indiana in the heartland, where applied knowledge is put to use, where these discoveries are being made and have been before the indianapolis speedway became a race track, where these innovations are happening, whether it be on the family farm or the factory floor, why don't

we have nations, government to government again, business-to-business and some cultural people to people exchanges occur on a two day period where we talk about the future of energy and nutrition and manufacturing, etc. where the markets will pay attention to what is shared because the ceos spoke a couple years ago regarding ai and its effect in indianapolis and the role it would have in manufacturing. we have very high speakers for a two day period, panels, speakers that have to do with this year's theme as under the umbrella of

innovation, broadly speaking but we will have 33 as of last count, yesterday's count, 33 different nations, ambassadors, ceos, about 700 people in those delegations, 700 800 people, trying to keep tight quality over quantity, a large amount of people. but really the decision-makers, globally, and so it is not a mini-davos. this is all about applied knowledge and what is next. we will do that on the 23rd and 24th of may and then we will have a wednesday, a thursday and friday and we will have more of a fun day, more networking, scheduled networking deals can be done.

that was one of the biggest joys, watching folks meeting, get together and the good that comes from that and then of course sunday, the 26th is the biggest sporting event on planet earth every year, the indy 500 and that is truly an international gathering. it's a lot of fun on that sunday to say that you are working in indiana. >> there is no greater feeling in the world than being in the 500 and hearing back home in indiana and i really want to thank you, governor. the remarks were extraordinary, i know the people of indiana are going to miss you when your term ends and i know you will continue to make contributions both in public and private life

to the benefit of hoosiers and the rest of the country and it has been an honor to have you keynote and you set a high bar for the rest of our discussions and go boilermakers. >> boiler up, hammer down. [applause] >> thank you governor. let me ask the panelists to join us now for the first panel. thank you so much.

>> those really were extraordinary remarks by governor holcomb. it would have been nice to have him here but i'm going to come to the podium. he is 6'7", i'm not sure that we could have the podium on the ground. now we are going to have a discussion on economic security, and we have three very distinguished speakers with us today.

we are first going to hear from tokyo. nishikawa-san is the principal director for economic security policy at the ministry of economics, trade and industry. he has had a three decade long career in public service, running the commerce and information policy bureau, he was director of the i.t. division where he covered semiconductor and digital strategy, ran health, created strategy and policy planning, and he also worked in the defense ministry and defense policy and the cabinet office on the guidelines for u.s. defense cooperation, and this is a sign of the growing importance of economic security and hard security.

he now holds this post, a graduate of the school of law in the university of tokyo with many noted japanese public servants. he has a -- from oath northwestern and georgetown university law schools. it is my pleasure to turn it over to you. thank you for joining us at this very late hour. >> thank you, carried you here we -- can you hear me? >> yes. >> first of all, i appreciate the opportunity to explain what is going on with our objectives insecurity in japan and how important u.s.-japan cooperation is to implement security. -- country by country and time

to time. -- by meeting to save the economy. president clinton used economic security to mean trade, wto's, all over the world. but these days, especially in japan, and i think the u.s. as well, what we are trying to do, economic security as -- unfortunately there is trouble in the world, we have to defend our infrastructure from threats. we have to maintain -- we have

to maintain a stable alliance and supply chain autonomy. please see the next page. in order to do that, what the meti and the administration have done is first, we include trade, economy and technology as a very important pillar of the national security strategy. -- to include economy and trade and technology as a very important pillar of the strategy.

since last year, we are in the implementation phase of economic security. -- to advance our technology reality. -- national security but also the -- biotech. next-generation computing, -- these things are very essential for national security issues right now and therefore together with the countries is very keen

to not falter in this area. simultaneously, we have to defend our supply chain autonomy against so-called over dependency -- over dependency structure and strategy. -- dominated by countries and companies. some kind of overdependence structure tends to be used as weaponization tools. for example, let's say gallium, these kinds of minerals are essential to create iphones or

fighter jets. these critical minerals are very difficult for us to acquire. because of the overdependence strategy, we have to diversify, in order to avoid over dependency structure. whether it is to advance or to diversify our procurement, we need japan-u.s. cooperation. thinking about the semiconductor thing, for the last three years, -- with the cooperation with the

united states. two years ago, we were in new york, and washington, d.c. to -- for semiconductor cooperation. five years ago, -- about that semiconductor. but this time, japan and the u.s. -- to strengthen our joint capability of semiconductor as well as the supply chain. japanese companies 20 years ago

and u.s. companies like ibm or other companies jointly created semiconductor innovation hubs in new york, albany. after 9/11, the two countries established a new innovation -- since the last 20 years, innovation came from that place in albany as well as the semiconductor. ibm and japanese businesses jointly tried to create a new type of semiconductor company together. using 20 years of innovation. by doing that,by doing that, wea

lot together, to advance. currently, japan generals achieved reliance of the supply chain. japan, u.s., korea, taiwan, european union, like-minded companies should produce together, to provide a future of national security approach. finally, i would like only one thing. in order to implement economic security, we need stabilization

between government and industry. the player assets of the security owned by industry. so therefore together with our national security signatures, defense, and other ministries of ability, to invest, to implement economic stability. together with allies and the recommended companies, the most important country is the united states. thank you for the opportunity. thanks a lot. >> thank you very much, nisha kawa-san, for those opening remarks.

i think each of us will present. everyone will present, and then i will direct questions at each of you. i would ask question is david, formerly from the office of the secretary of defense, across the defense innovation unit, the office of strategic counsel and are procured he was deputy director of global investment and economic security of dod, foreign investment, trade, and industrial policies and other issues under the purview of to be us. though he is a young man, he has had a very distinguished career already working in the u.s. army, working at the rand corporation, j.p. morgan, he holds more graduate degrees th an, you know, i can't think of

anybody who has more degrees than you do, and you are currently completing one at the university of cambridge, a doctorate. you just became a father again on tuesday, and we are especially grateful to your wife. [applause] >> yes, a round of applause. kenneth: for allowing you to be here, it shows your dedication to economic security. david: yes. my wife is not watching this, but -- connect: it is on c-span for your wife to watch. [laughter] david: that is right. my comments will be kind of short to say the department and specifically the united states is entering a new relationship, this understanding relationship between capital and national security, as we get really serious about economic security.

there is of course supply chain security, minerals are a very important when feud our ability to have enough capital coming into pay for aircraft carriers down the road. in some areas we are doing better. and of course, most importantly, keep the free flow and movement of capital goods, people around the world. the japanese have been tremendous colleagues in this, partners in this, thinking about the interplay between markets and national security. i kind of rank these in two buckets. president trump, president biden, congress, really signaling we have to do something to think about this. we have to put the infrastructure in place to, you know, positively influence

markets to our nationally economic benefits. the challenge is they do what they want a lot of times. thou shall not, you know, illegal activities, but the markets are going to flow how they want. the trouble is how you can bracket those two things. foreign investments, export control on the "thou shall not" side, you have the creation under secretary austin, no longer saying we are going to invest in defense, we need surgical and strategic ways that to drive outcomes that are beneficial to the united states, korea, japan, around the world. in the 1980's, 1990's,

2000's, where our specialties were engineering, but we have a lot of bankers and others, we have really thought about this relationship, and then, again, working with partners like japan on this, not trying to push the market in an unfavorable way that the japanese were have to respond to. so my comments on the new state of play in the last few years. kenneth: great. last but not least, tom do sternberg -- duesterberg, senior fellow, was chief of staff to senator dan quayle, assistant secretary of commerce for international trade, holds a phd, taught at stanford, and really has a deep knowledge of america's manufacturing base,

and also, i always refer to this one, tommy, 1997, senior fellow at hudson institute, saying japan would not be allowed in the wto can explain why, holy hell rained down on tom. some people disagree with him in those years in the capital, but that op-ed real as well today as it does today, and tom right. those who work against that of the beginning later admitted that tom was absolutely right you do look forward to hearing your insights. tom: thanks, ken. it is a pleasure to be here with a lot of my old friends as well. the last few days has been a sea of u.s.-japan cooperation here at hudson. yesterday, i was in nashville, tennessee with senator hagerty. we did a similar event, made the

same remarks as governor holcomb. governor holcomb is also home to a massive amount of -- tennessee is also home to a massive amount of japanese investment and other sectors. on the subject of china, too, senator hagerty revealed he does not talk about this much, but the economic development director for the state of tennessee before he became more active in politics. and one of the interesting decisions he made, in fact come around 2010, 2011, as economic developer of the state of tennessee, was to close down their development office in shanghai. so he saw the light as well, i think. china was going to be a competitor rather than a source

of cooperation. i would like to just quickly go through what i think are some data points on how u.s.-japan cooperation, in the interest of maintaining economic vitality in the face of chinese aggressiveness and chinese use of mercantilist policies, to try to dominate industries in the future, dominate some in the manufacturing sector. four or five different areas, which nishikawa mentioned, and we need to be aggressive about

expanding this. one of the things i worked on a lot in the last 10 years was telecommunications, and there was this quest to find an alternative to huawei. there is a technology called open radio access networks, which is really a western-developed, u.s.-developed technology that i think has a lot of promise. even though the technology has been pioneered here in the united states, it is the japanese who have implemented it. major japanese companies, one just very recently has implemented a nationwide system using open ran, open rand echo

system experience, or orec, that they will help other telecom operators, so that is one area i think we need to continue cooperating. ishikawa mentioned rare earth, and we are very dependent on rare earth and the process in china, and now china, as mr. ishikawa mentioned, things like

advanced magnets, semiconductors for certain green technologies, japan has been looking into deep sea mining as a source of getting raw materials that we need. united states is stepping up its efforts to build profits, capabilities, in large part to the department of defense , darpa, so this is an area that we need to continue to operate. mr. ishikawa also mentioned the whole echo system of the semiconductor industry, that we need to continue. my way of thinking, there is somewhat of a danger of competitive industrial policies undermining the cooperation. we passed c.h.i.p.s. act, the

competitive effort to localize production in europe. i wrote the chips act, so to speak, none of which is enough to change it. if you feet current echo system vibrant, japan makes memory chips, europeans are good at semiconductor equipment, the united states is good at software, semiconductor equipment, thanks to our investor policy, will become a producer again of fabrication plants. the auto industry is much in need of them in the news today, a danger of chinese electric vehicles taking over markets in europe and the united states,

but i think there's been a little bit probably too much focus on pure electric vehicles. japanese automakers have been world leaders. they control 30 percent or 40% of the market share in the united states based on production, mostly based on production in the united states but they are pioneers and have perfected hybrid technology. my view is that hybrid technology is going to be probably the leading edge transition technology to the time when we can get to more electric vehicle market. we did not have the infrastructure, the electricity production or transmission infrastructure to build in the time frames we are talking about , a vibrant ev industry.

the defense sector, i'm being a little bit audacious here, with mr. rader on the panel, but joint production between japan and the united states, aerospace is one area. i would note that boeing has long produced, reliance on japanese manufacturers for things like advanced materials, the airframes for the major planes are largely made in japan. 21% of the 777 planes made in the united states by boeing are with products from japanese makers. kawasaki, producing helicopters,

mitsubishi heavy producing fire plans with u.s. produced technology. i think all of this is good. one area we need to look at, with more cooperation with japan, is in shipbuilding, where we have this immense deficit in our ability to produce not only what we need but will need to compete with china. and finally, a little bit out, of the pure manufacturing, technology sphere, we need to cooperate more with japan a. japan is very good at producing infrastructure. japan, little-known, ranked number three and overseas development assistance among western nations. here again, we are competing with china, one of the negative effects of what the chinese are doing is they subsidize their

way through the belt and wait -- belton road program, to control a lot of the minerals, both rare-earth, abundant minerals like lithium, copper, around the world because they are willing to put more money into overseas aid been we are. announced by the tokyo g7 for a $900 billion commitment to overseas development aid, which i think needs to be followed through. looking at the way we compete with china is i think something we need to take more seriously. let me stop there. kenneth: great. well, thank you, tom. i think it has been a very interesting set of presentations.

let me turn first to nishikawa-san. how significant is it to you, as you see it? mr. nishikawa: thank you. unfortunately, it is very central to the japanese government. it goes in the, you know, as i said, the world is becoming a little bit unstable, so we have to have the supply chain on the basis. we need to find the risk and threat for the supply chain, with our allies. so therefore, the consolation to economics pretty, that our

security and the supply chain come a lot of technologies, cannot. that is the most fear, i can say that. kenneth: let me add to a follow-up, it used to be that businesses, the price of quality, straightforward, now there's a third element of economic security, which obviously raises the cost of activities, even over the long term, it means that supply chains will be less threatened by the economic coercion. how does that change things in the private sector and in business government interactions. how much pushback do you see in this area? mr. nishikawa: to be blunt, the important point or we have to, the economy, free-trade,

therefore the economic security, in other words, it should be exceptional. the policy is very important. so in this regard, whether we discuss, like with policy, just as i said, we are very keen to define. while we have to, you know, the business market of free trade, because of risks caused by constellations, therefore the government really is part of it. put otherwise, we cannot predict the threat, the government has

to reframe. but some countries, i don't want to designate that, but some may, how can i say that, adjust a policy major. so we would like to define the threat and risk, industries in japan. kenneth: thank you. given your experience both at the defense innovation unit and capital, when investments are being made, how much -- you

wanted to make investments overseas, you know, what percentage and what role does japan play in those two units? david: in the traditional economic markets, competitive advantage. not every country is graded everything. some countries are graded everything. the j.p. morgans, black rocks of the world, they are great at spotting. capital partners and providers are already flooding there. it seems to matter to our country that the u.s. government cannot sufficiently do. it is really in those directions, so chips is a perfect example. ok, we have an insufficient

domestic production of chips at home, and if you go to any bank and say you need a help, all of our feud is year he duties, shareholders, investors, we are trying to match the doubt to say, you need to help, because this is important for the long-term sustainability of your economy, the things we enjoy, but also a true national security mandate, and i'm making of numbers, we have to have us by tomorrow because we have to subsidize it, it is not a healthy relationship for the market. i would argue can someone agree. this is where we're going. we are trying to integrate the supply chain and demand signal into ones so that the market, $2 trillion of dry

powder currently in the market, $46 trillion of capital in the u.s. economy and the investment space, really starting to angle in on that thing. oh, this matters more than the other stuff. it is not to neglect others but it is really to say, oh, these critical technologies, these are going to matter most, and we will work with you to do that. some are within the office of strategic capital or defense innovation unit, really good information sharing between end-users and capital partners. so we can say we want these kinds of drones to do these kinds of things in this kind of place, and i don't think we've done that before. it really focuses on kind of solidifying that in terms of -- that is the messaging cycle, blending that altogether, capital partners play a role.

in the political backdrop of this, the partners, collaboration, coordination with the japanese and other allies, we think interoperability is going to be huge for the deterrence, and if unfortunately it were to occur, we see to that. we cannot just build things and sell them to people. we have to be lockstep development and design, makes and years, so that is our priority right now could we want the market to be there with us as we really try to increase scale and manufacturing and really mature its market presence. kenneth: in terms of the focus on japan in particular, are you seeing japanese -- when the signals are being sent, are you cohen vesting with the japanese as of yet, or is that something you see as a potential? david: the potential is real,

and it is recognized. we are working with closely. the director does that. the secretary, constant need of engagement, to really narrow on the chief of the prospects. but it is very specific, we know it takes a place in the market, and we can use it together. this is not just about collaboration, it is about true partnership in a very narrow. kenneth: very interesting. tom, let me ask you, you brought up the ev example as opposed to hybrid, and japanese decided hybrid was the future, and then there would be, i would say, policy pressures in the u.s. and elsewhere that has led to kind of a major government incentive on ev's. when you make the kinds of decisions that david is talking about, how do you think through

those kinds of decisions, to make sure you don't sort of -- i mean, you know, obviously the big thing with ev's is dependence on china, with regard to critical minerals, and china is running low in the ev battery market. how do you make sure that you are seeing far enough down the line that when you make a decision that you think will be critical to the future of your economic security, that you are not, in essence, becoming more dependent as a result? tom: well, that is obviously the problem with too rapid forced adoption of ev's in this country , because the chinese are poised to enter these markets. someone was saying the other day, the vehicle that looks exactly like one of the advanced

porsche all electric cars, and the porsche was, like, $125,000, starting, and the other was, like, $35,000. we simply, at this time, cannot make these vehicles to compete with the chinese. so i think, as we adopt public policy, we should not try to move things faster when the production capacity, efficient production capacity, manufacturing industry will allow, so in the case of ev's, it's why i brought up the idea of, which the japanese recognized long ago that hybrid technology can get us partway to where we want to be, in terms of our environmental objectives, and they

perfected the technology. by the way, ford i think this week made the announcement that they are going to start producing hybrids all up and down the product line. i think that is a little but of a change, because they pulled back on their battery, electric vehicle production quite a bit. so, to me, the question is really, don't try to force things faster than our manufacturing economy can actually produce those in an efficient way and in a way that the market accepts the product. we may have to comply with the additional question, what are we going to do about china? i think we are going to have to challenge them, because we all know, including at long last,

the europeans know that the chinese have heavily subsidized their electric vehicle industry, and we need to do some countervailing duty, to get the party started. the counter would be disastrous for the industry. kenneth: david, let me ask one more question, and then i will go to the audience. our colleague did on open source intelligence in ukraine, and one of the reason he chose these zones that the iranians had built, and now we are building in russia, the ukrainian strike on the saudis a few days ago,

some of the most dramatic things in the briefing, more than half of the guts of these zones, a lot of it comes from the states, the components may be used in consumer goods. i'm asking you this more in your former cfius capacity than in your darpa capacity. how can you stop it? components can be used for cutting edge and highly dangerous weaponry. david: this is a constant problem. you know, my first talking point used to be export control analysis on these products,

especially as the market is so much faster than government can. now these components are telling you that sort of stuff, ai, machine learning specifically. we are working hard on trying to educate companies, yes, if an alternative can be used to do these things, before you think, what do i care? we are looking at a lot at the education out there, expert enforcement, and then hopefully we can incentivize middle-market actors to not make that last day on that last transit for making it up the value chain, u.s. to canada, canada to poland, poland two country x, and country x using the finished product to harm us. to really narrow in on the points to say if we could just turn left instead of right, then we can stop a little bit more of that.

but to your point, because of the core, it is really, really tough to clampdown on. kenneth: on that note, let's open it up to questions for our panelists. please identify yourself. >> thank you so much. yeah. thanks a lot. david parker from the national graduate institute of policies in tokyo. first, i want to commend nishikawa-san and the national sec. in japan for what i think is a model of clear thinking on economic security, the leadership you have done, the leadership in the issue. i want to talk about what dr. do sternberg -- duesterberg had

talked about, products, factories going to the ground, producing banks, but in many ways, these are strategic gambles. some may succeed, some very well may fail. how do we ensure to put in mechanisms today that over the long term we will be developing in the u.s. and japan complementary capabilities rather than capabilities that ultimately cancel each other out and then exceeding leadership to adversarial states, such as the people's republic of china? tom: well, that is a tough, tough thing to do. in our haste to get to, you know, an ev battery, ev world, i think we have, frankly, move much too quickly. and be at which provides

subsidies, which are pretty open-ended for production and consumer subsidies are going to end up costing us quite a bit. so there could be some built into the system so far. i like the model that has haphazardly, to a certain extent, involved in south korea, and europe, for that matter, and auto industries, where europeans make high-end stuff, we make trucks, suv's, the japanese have been leaders in passenger automobiles, but now in the hybrid sector, i would be

perfectly content with, you know, the term french shoring -- friend shoring is a broad one, but let's define it to include production inside and outside of the united states. i think we need to admit that we cannot do everything efficiently on our own, and we have to develop this ecosystem of friends. and i think, you know, at this point in time, we sort of know who they are. but we have to develop that and depend on a sort of competition that governor holcomb talked about between states, continue to operate at and international level, and that is some form of economic

efficiency. by the way, we need to cut china out of that system, because they do not play by the same rules. >> thank you for introducing me. hi. you were talking about incentivizing the private sector, and i think a lot of people watching this are interested on that sort of process of incentivizing, sending signals to the market. and this week we have janet yellen in beijing, we had a number of american ceo's in china most recently. so how do we encourage that sort of signaling that we would prefer, right? moving private capital out of china, encouraging officials within, you know, the white house to maybe be, you know, signaling that we don't want the investing going in and china as much as we want, we want the

partnering in japan to be expanding domestically between our two countries, not, maybe, a third country, for example. david: yeah. the undeniable truth is that has grown, kind of flatlined a little bit, but in general, we they have a significant market presence we cannot ignore. we don't want to partner with iran economically because of their coercive nature, their challenge and our position in the world, and the way they view the world. so the "thou shall not," it only goes so well. there are going to be safir limitations to his efficacy. i say this playfully. lawyers and bankers are smarter than policymakers and regulators, a function of incentive, not because they are smarter. the banker can get a deal close

to him he could $15 million on it, versus someone and commerce who will make the same salary. they can find ways to get the capital they are to then grow for them for it we need to find a different incentive tool, which i would argue should probably come through tax incentives. cancel capital gains taxes or building out free-trade agreements, health countries maybe -- health countries maybe do tax and sin is on top of that. doing it into chips, the governor should be back here, he could answer better than i can. i'm not sure if people want to see the national debt grow to win industries back, but i think that would create creative tax livers that we have not pulled, to maybe shift the supply lines to a u.s.-japan line or u.s.-korea line that right now is quite desperate. tom: i would invoke sort of a

transparency principal. it has become clearer and clearer that even to the business community itself that operating successfully in china is becoming more and more difficult, as xi jinping and the p.r.c. criticized and make it more difficult or the private sector to operate, not only foreign firms but domestic firms as well. those investment opportunities that 30 years ago we all thought would be, you know, stupendous, and actually, let's admit it, investments of our auto companies come of the european auto companies into china were successful.

it's not as successful now as they once were, and that experience is being replicated. so just talking about openly how difficult it is to do business in china and what the tools that the chinese have to squeeze american and european, japanese companies in china itself, i think, would be a powerful incentive to cause second thoughts about investing in those markets, that market. kenneth: thank you. anything to add? mr. nishikawa: yes. kenneth: please. mr. nishikawa: thank you. i would like to add two things. whether japan or the united states, korea, we cannot hold the industries or the region to do something. therefore, we would like to

enlighten their mindset, what would happen if something happened? we recently have that, for example, this platform to exercise is usually down by, you know, u.s. forces, japanese subsidy forces, however, the industries, business, the first kind, it's just the many that the u.s. is doing, industry is doing, to experience that, you know, this is the one. and secondly, pressure from the investor sometimes is worse. for example, the esg square, to add the economy curve or

consolation to that, it made sense that the mindset to consider the more, you know, these governments or economic simulations. kenneth: thank you. a question over here? we will make this the last one. jim: thank you, can fit i'm jim lussier with capital partners. on a more fundamental level, i'm wondering what can the u.s. and japan do together to reduce our dependence on chinese critical minerals and their earths,

especially when 80%, 90% and china and perhaps also what could u.s. energy exports due to further build the economic partnership of u.s. and japan? david: i will leave the second part of the table. on the first side, the authorization at the end of the year. i imagine you would see some congressional intent come down to make them start investing in extraction, chains along the way. i know there are a lot of u.s. companies who are starting to recognize value in the space. cap parts, they may be more lucrative. also, as you mentioned, u.s. government and this, extraction at favorable sites. one of the distractions that

remain as you do not have a dedicated body to this mission. supply chain security is critical. everybody cares. energy, defense, it falls into the purview. what we need is someone present to own it, saying we care about cobalt, we are building out the supply chain, we are going to get it right, to make sure we don't get and make sure they are in the same boat and they remain reliant on china. and then we rely on foreign investment. i would say there are a lot of good agents who work on this. there's a lot of good public-private partnership on this. there is still room for incredible improvement and

some real checks to be cut by the u.s. government and other incentive packages to get the market into it. i can tell you on the bilateral, multilateral engagement piece as well as the public engagement piece, i have never seen a stronger in this area, the recognition of this as well as a real market mover, which is, you know, there's a ton of capital to be gained here that probably everybody has awoken to come of u.s. included. kenneth: jim, what was the question about energy? energy exports. jim: right, energy exports -- [indiscernible] tom: well, just to focus on that

question or comment, the unadulterated exploration of energy, including fossil fuel industries, they are much in demand around the world, including in the developing world. and the decision by the biden administration, to freeze lng exports, i think is a terrible mistake. as night follows day, the qataris doubled their plans for elegy capacity. by the way, the russians are taking advantage of the inability of the united states to export, to continue to grow

exports by selling, albeit at a discount, to many places around the world. our own export of fossil fuels versus the competitors we have, we ought to emphasize that as one reason to continue to support the production and export not only of fossil fuels but other products, chemical products derived from that, and to ease up some of the regulatory policies that we have, the efficient production and rapid coming to market of these products. kenneth: nishikawa-san, do you have anything to add on this? mr. nishikawa: yeah. two things.

one is the demand-side approach, usually the price, that price sometimes does not reflect the environmental culture, the future, you know, regulators. so therefore, we have to think about, to create a sustainable demand procurement rules, same in the u.s. and japan, and to stick to that, and to encourage business. and secondly, as was said previously, that third world countries or emerging economies, these economies have begun the

divestation for panels, so we need the japan to encourage the environment, emerging economies to create the diverse supply. kenneth: thank you very much, nishikawa-san. it is approaching midnight there in tokyo. we are really grateful. i think we are going to let you get some sleep. i really want to thank you for those very enlightening remarks. i want to thank tom duesterberg for coming back early from his enlightening remarks, and we want to thank david rader and especially mrs. rader, for allowing you to make your insightful remarks. we are now going to break for a very quick lunch, and then we will come in and have the second panel, which will look at the

impact of foreign direct investment in the united states. so, please, we will try to get this done as quickly as possible. thank you very much. which is responsible for its caption content and accuracy. visit ncicap.org] -- [applause] [captions copyright national cable satellite corp. 2024]

[inaudible conversations]