Industrial Policy & Trade Monitor· 2666 actions· ✨ 90 recent

Japan's Diet passed the Foreign Exchange and Foreign Trade Act (FEFTA) 2026 Amendment on 29 May 2026; the law was promulgated on 5 June 2026. The amendment represents the most significant overhaul of Japan's inbound FDI screening regime since FEFTA was first applied to national-security transactions in 2019. Three structural additions: (1) indirect-acquisition screening — extends mandatory prior-notification to acquisitions of Japanese sensitive-sector companies effected through intermediate holding structures or offshore parent vehicles, closing the principal gap exploited by Chinese and GCC SWF investors via SPV chains; (2) call-in powers — grants the Minister of Finance authority to open a review up to ten years retroactively where an acquisition was not pre-notified or where circumstances have materially changed since clearance, directly analogous to CFIUS § 721(b)(1)(D) retroactive jurisdiction; (3) cross-ministerial "Japan CFIUS" consultation framework — formally institutionalises a standing inter-agency committee (Finance, METI, MoD, NPA, MIAC) modelled on the US CFIUS committee, replacing the prior ad-hoc inter-ministerial process. Cross-ministerial and indirect-acquisition provisions entered into force immediately on promulgation (5 June 2026); remaining Cabinet-Order-level implementing provisions to follow within one year.

Japan's Cabinet approved an amendment to the Cabinet Order on Inward Direct Investment under the Foreign Exchange and Foreign Trade Act (FEFTA) on 1 April 2025; the order was promulgated 4 April 2025 and entered into force 19 May 2025. The amendment introduces two new investor categories — Type-A (investors legally or contractually obligated to share information with foreign governments) and Type-B (investors effectively in a comparable position without formal legal obligation) — and eliminates or narrows exemptions from mandatory prior-notification screening for both categories. The primary driver is concern over minority-stake acquisitions by Chinese investors in Japanese listed companies operating in sensitive sectors including cloud computing, telecommunications infrastructure, semiconductor equipment, and advanced electronics. The reform is structurally distinct from the outbound FEFTA catch-all controls overhaul (2025-10-09) and from the Economic Security Promotion Act (2022-05-18); it is the inbound FDI-screening complement to that framework.

Japan's National Diet enacted the Cyber Response Capability Enhancement Act (重要電子計算機に対する不正な行為による被害の防止に関する法律, Law No. 42 of 2025) on 16 May 2025, together with companion arrangement legislation. Commonly known as the Active Cyber Defense (ACD) Law, the statute authorises (i) government monitoring of foreign-origin internet traffic transiting designated Japanese communication infrastructure for national-security threat indicators, (ii) pre-emptive access and neutralisation operations against attacker infrastructure abroad by the National Police Agency and the Self-Defense Forces under unified command, and (iii) mandatory cyber-incident reporting and government cooperation duties on critical-infrastructure operators. Implementation is phased through November 2027, with the NISC reorganised into the National Cybersecurity Office (NCO) under the Cabinet Secretariat from July 2025.