Tariffs are being used increasingly both to promote domestic production and as a bargaining chip, triggering a proliferation of policy responses and negotiations.
Will tariff-led industrial policy remain the reality in the long term and what measurable impacts is this having on global trade?
At Davos 2026, panelists argued that governments have shifted from “getting out of the way” to acting as “economic super agents,” with tariffs and industrial policy now central to geoeconomics. Japan’s Ryosei Akazawa framed the turn as a response to vulnerabilities exposed by neoliberal globalization, including critical minerals chokepoints, while insisting Japan must balance intervention with “free trade and the rule of law.” Canada’s finance minister François-Philippe Champagne described a world defined by the “speed, scale and scope of change,” where policy is moving “from reliance to resilience” and where critical minerals may play the role “oil played in the last century.” He argued predictability is still achievable if “rules are clear and fairly applied.”
Kathleen Claussen explained U.S. tariffs have become “the lead foreign policy tool,” enabled by broad domestic statutes, with legal uncertainty hinging on upcoming Supreme Court rulings and the durability of “deals” that may be mere “term sheets.” Business leaders reported uncertainty-driven behavior: more scenario planning, costly redundancy, and investment delays. Bob Willen warned abrupt shifts freeze capital allocation, while Sunny Mann emphasized diversification and that “overreliance…is a vulnerability,” making rule of law essential to navigating national-security-driven regulations. The takeaway: states will intervene more, but outcomes depend on clarity, institutional capability, and credible commitments.
Good piece.
Smart. Yeah.
Good morning. Welcome to everyone in the room. Welcome to everyone who's following us online to this one of the first panels at the 2026 World Economic Forum annual meetings. It's shaping up to be a very exciting week. And I'm very happy to be moderating this panel. I'm Martin Sandbu from the Financial Times. The title of this panel is Governments as Economic Super Agents, which I think is a very exciting title because we used to have the Washington Consensus, which, if we dumb it down a little, was basically governments should take care of macroeconomic stability and property rights and get out of the way for the rest. And we're very much not in that world anymore. Everyone has seen how China's state led development model has had huge successes in terms of growth and industrial development over the past decades. And by now, with all the crises that have been happening in the world, pretty much every government has adopted some some form of interventionism, industrial policy, certainly an acknowledgement that the state has a guiding role to play in shaping economic growth. So that's what we're here to talk about today, to hear about experiences from from governments, to hear how the private sector reacts, to understand challenges, risks, opportunities. We have a wonderful panel. So I'll very rapidly introduce you. To my left is Jose Akazawa, Japan's Minister for economy, Trade and Industry. Next is Francois-philippe Champagne, Canada's minister of finance. Directly opposite me. Bob Whelan, global managing partner and chair of the global consultancy company. To my right, Sunny Man, global chair of Baker McKenzie, the international law firm. And last but not least, Kathleen Claussen, professor of law at Georgetown University. So a very high powered, very high powered panel. So let's just launch straight into it. We have ridiculously, ridiculously short amount of time. So I apologize in advance if I cut any of you off to to make sure everyone has time to speak. And we really do want some of the people in the room to be able to ask questions towards the end. So. So let's go. Before China, there was Japan. So I'm going to turn to you First Minister Akazawa. I'm just about old enough that when I was in school, I would learn about Japan as the example to look at in terms of a country that got industrial policy right. And, your ministry, I guess maybe it was Miti, then Meti now was the core of the secret sauce. And then, you know, maybe Japan went a little bit off track, but is now coming back strongly. So what I'd like to ask you to do to get us started is to just explain to us how Japan is now getting that legacy, using that legacy to rethink the role of the Japanese state in industrial policy and economic growth. Minister Akuzawa, please. And I should say the minister will speak in Japanese. So you all have translation headsets on your chairs.
Hi.
Well, thank you for the kind introduction and Davos Economic Forum 2026. This session with the government's economic actors. Thank you so much for inviting me. And I have read the CV's of the panelists. So powered panelists, I'm very honored to be here. And Mr. Sandhu asks the question. Thank you. And from the way you talk about the questions that I think, do you understand very well of economic history back in 1985, as you can recall, the agreement of plaza agreement of the semiconductor have been striking, including Japan and the United States. And around that time, that was one of the peaks that we enjoyed as Japan, Japan as number one. That book was published in the US, and our GDP was almost half of the US. And the US started to see us as rivalry. And one of the hegemonic countries of the United States kept us in check. And trade friction occurred after that. And that was around 1985. And around that same time, and the new neoliberalism has started to appear. And then the politics shouldn't wane in those economy. And industrial policy is not favorable. In order to protect the country, the government shouldn't interfere those economy. And that's kind of the trend we started to see there back then. Now the United States try to keep Japan in check. And also industrial policy is not necessarily favorable. And without protecting country, we need to open the market. And WTO comes to prominence and we need to lower tariffs. And that's a development we saw. And that neoliberalism. Is the without taking care of those that we purchase, the things where the cost is lowest and sell those products where the products can be sold. But then what President Trump is thinking about it is that manufacturing of the United States went out of the country, and we need to restore those jobs. But one of the hegemonic countries stance have been rattled, and neoliberalism is not necessarily favorable for the world economy. That's one of the problems, awareness, problem awareness that President Trump has, I think. And the vulnerability started to appear. And the rare earth and key minerals supply started to be suspended by China. And oral cannot be manufactured with those raw materials because of China's policy. Under neoliberalism, the development of China goes on, as ever has been. Is it really okay? We need to ask questions to ourselves. And then in that context, we started to review the industrial policy. I can understand what the US stance, but the method itself is pretty wild. And, we need to be able to respond to that while the method. But at the same time, the free trade and the rule of law, those are very important principles. Japan advocates. We need to take a good balance between the two. So that's one of the struggles we have to deal with at the moment. And as Mr. Sanjo asked the question, the Miti leads industrial policy and Meti has had so much power back in 1985, and US call the Meti as a notorious Meti now, yes, we were meeting now Meti. We were Meti now, and most efficient, most effective ministry is and I'm and the minister in charge of the ministry. So the robust industrial policy need to be led. So in order whenever we go on export import, the stable supply is one thing we have to be mindful of. So that's the time. So we are under at the moment and I would like to lead the economy forward.
Thank you very much. You're quite right actually to remind us of the of the 2010 move on rare earths limiting exports of rare earths from China to Japan, because it reminds us that in so many ways, Japan has been facing some of the challenges everyone else is facing first. So I think we can all do to look to Japan to see how they've navigated. Also, some of the macroeconomic challenges we had over the last ten, 20 years. Minister champagne, your country, Canada, in this period that we were just talking about, was really putting all in on integration with the US and has recently, it seems, determined that you might not want to put all your eggs in one basket. Given that the panel here is about the role of the state in the economy, I think we'd really like to hear from you how you as a government, think about facing this challenge of, well, the structure of our economy may not be what we would like it to be. How do we get it from one place to another? Because again, this is a break with the previous sort of hands off thinking that prevailed in places like the World Economic Forum for many years. So tell us how your government, what is your strategy? How do you actually go about reshaping restructuring an economy from the top down?
Sure. Well, first of all, thank you everyone. Casa was delighted to be with you. Distinguished panel. Thank you, Martin, for having all of us. Thank you for all of you to show up. I know it's early morning, but hopefully champagne will will fire you up a bit this morning. I must say, the first thing I'd say, Martin, is that the the second quarter of the 21st century that we have already entered is not going to look like the last 25 years. And I think if you need a reminder of that, we're only the 20th of January. And I think some would say already feel that we have had a number of things to do. I can tell you, as a G7 finance minister, there was already one meeting and another schedule, and we're just 20 days in the year. So that's just to give a sense of perspective to colleagues as to where the world stands. And for me, I think it's the trees, which is really what colleagues may comment. But just to put that in a frame and I'll come to Canada, but it's the speed, scale and scope of change that is really rattling the world. And it goes from geopolitics, supply chain geoeconomics, which is basically the word that I've heard the most from chairs. Now. Geoeconomics, I've come here since 2009, I think. So I've seen different, different discussions in Davos. But I think this is a momentous time because we're entering the second quarter of the 21st century and how are we going to shape? And it's not just geopolitics supply chain, but it's the the speed, scope and scale of technology, AI and quantum. And if you put all that, I'd say for our citizens it's a lot at the same time, let alone for governments, let alone for corporate leaders to adjust to that new reality, which is going to shape clearly the second quarter of the 21st century and beyond. I would think, particularly when you match quantum and AI. So if you're Canada in this new world, how do you look at the world? Well, you were right. I think the world is moving and I'm very close to our Japanese friend as well. We're moving from reliance to resilience. I think in many parts of the world, you've seen supply chain going from global to regional, more emphasis, and you'll hear from colleagues talking about, you know, people are more about resilience than pure efficiency. We're moving from a different model. Remember the Just in time, which was very talked about in places like Davos? I think now people.
Are.
Saying, I'll tell you one thing, I was with a CEO and he said, you know what I like about Canada? If things go bad, I can send the truck across. If it goes really bad, I'll go myself, pick it up. Because, you know, proximity is everything. So if you're a country like Canada, in a world like that, you certainly want to diversify. And I think this is what you're seeing new alliances being formed, new supply chain being developed. If you talk about the largest, maritime companies, you'll see new shipping lanes being established, new ports. I mean, we're the world is redesigning that in order to be more resilient. And obviously, when you're Canada, you've been blessed by geography. Obviously, we're we're close to the United States of America, our largest trading partner. And I like to remind them, by the way, we're the one of the largest customer of the United States. We buy more from the US than China, Japan and the UK combined. So we are quite a big customer. Two thirds of the states have Canada as their first export market. But in a world like that, you say, what do you have that the world needs? And I think Canada ensures that, you know, we're still a very big magnet for talent. And, you know, in this really place, we have always said demography is destiny. And I think we've seen that, you look for countries which have strong industries, you know, a basic industry. I think. Akazawa San was talking about industrialization and reindustrialization. So building ships, building cars, building planes, critical minerals, as Akazawa San was mentioning, is the name of the game. I can tell you it was the key topic at the last G7 Finance Minister. Imagine now critical minerals are talked at the G7 finance ministers meeting. It just tells you that today, people see better the nexus between food security, energy security, economic security and national security. I have never talked as much as national security since I've been Minister of Finance, because all these things now go to to national security. And then critical minerals, I would say, will play a key role like oil played in the last century. Then you're looking at energy, which obviously everyone will need to to to do that and Canada's abundance. And lastly for us, they said we're the only G7 country with a free trade agreement with all the other G7 nations. So you will never talk. You will never see me talk about Canada as a country of 40 million people. But I'd say this is a country which gives you preferential market access to 1.5 billion people. And that is not lost on the on the mind. And you'll hear from colleagues from the corporate world. But when you talk to CEOs today, what do they want? Stability, predictability and the rule of law? I would say it's in short supply and Canada has an abundance of it. And therefore I think that is going to be a differentiating factor in this 20, you know, in the second quarter and beyond, I think of this 21st century, but the world has changed. The nostalgia is not a strategy. And I think you have to accept the world for what it is today. And together our role is to shape a better world. But let's not look back and assume that what we have lived and we're about the same age, although you don't have as many white hair. But what we have lived through our life is not going to what we're going to experience in the future. That's a different world, but it's a world that if you do the right thing and look at the IMF and others, you can take structural policies, like you said, support the economy. If you have the fiscal capacity, invest in housing and infrastructure, productivity, competitiveness, and you can win in that new world.
I'm glad to hear that. The note of optimism, because boy, do we need it these days. So thank you for that. Kathleen, I want to turn to you because you're a professor of law. You're an expert on trade law, but you also used to work at the office of the US Trade Representative. So you've seen trade policymaking from the inside. Now, I mentioned the Washington consensus. It's probably been more comprehensively rejected in Washington than than anywhere else. But it strikes me that when the US, the Trump administration thinks about a new role for the government in the economy, it's almost always about tariffs. The words hammer and nail come to mind, at least to my, my mind. So I just want to ask you what what is it that trying to achieve? How can you you understand trade policy. What is going on here in terms of trying to use tariffs? It seems as a tool for everything.
Everything. Well thank you, Martin. And great to be here, especially with ministers and distinguished colleagues. I think you hit the nail on the head, if I may say, Martin, in the, saying that tariffs are the tool for everything. They are the lead foreign policy tool more than just the foreign commerce tool. And that's a distinction that matters both practically as well as legally. And so you see partners coming to the table in our at our so-called deals, deals that cover much more than just trade deals that are now the focal point for much of our foreign policy. And they're quite diverse at that. So what do we take away from this? Maybe I'll make three points, if I may. The first, these are sort of about surprise, because I think there's a lot of surprise at what is happening. But I submit to you that maybe not all of it is that surprising. First point is not surprising that the president would use tariffs in this sort of central way. He already threatened to do so in the first term, especially under the International Emergency Economic Powers Act, which is the the law that he's using to put the tariffs on products from all over the world. So he threatened to do that. Then he used other tools at that time. At the same time, you had this sense that the WTO was not sufficient for meeting our trade needs. Already when I was in government, as you said, Martin, at that time, there was this sense that it wasn't the place to go for the trade irritants that we had. It wasn't sufficient. The laws did not accommodate our concerns, particularly with China, but also beyond. So that moved us into looking at these alternative tools. Once you say, I want to use these alternative tools for the trade problems, why not use them for other problems? So here we are. That brings me to my second point. The second point is, what is often surprised observers is that much of this is legal under U.S. law. We have a number of statutes on the books with broad berth, allowing the president to impose tariffs on trading partners for a broad range of economic security reasons. Now, today may be the day we hear from our Supreme Court as to just how far that goes.
It could be today.
It could be today, it could be today. It could be any time between now and June, end of June. So we're all waiting. All the lawyers are waiting, watching, watching to see. But as Ambassador Grier said yesterday, it's very easy for the administration to pivot to other statutes, other legal tools that would allow them to keep many of the tariffs in place. The question will be, how far can they go? Is there a bridge too far? Or maybe I should say, is there a big Arctic island too far for our laws to accommodate? So that will turn Martin on how the Supreme Court writes the decision, not necessarily what the decision will be. Last third, final point here is about what is open to surprise. And I think that's the deals. Or should I call them term sheets? Deal is not an end game, so it may be a stopgap, but in this context we'll have to wait and see how they're implemented. And even then, there is certainly not a lot of certainty where the deals are concerned.
In a moment, I'm going to get back to Minister Akazawa because as I understand it, you negotiated the Japanese deal with the US. But let me bring in the other panelists first. Bob Whalen as chair of, of the consultancy, you talked to a lot of businesses. Just give us a picture of what businesses make of this change, because they they used to approve of the sort of hands off attitude from governments that we had for 20, 30 years. How do they like this new world?
Well, I think the first word I would use is uncertainty. Right now, I think corporates around the world are faced with uncertainty in so many different ways. And I think as we started this discussion, Martin, we kind of put this a little bit in historical perspective, which I think is useful. Tariffs get the headlines today. But there's been a growing, really implementation execution of trade related interventions all around the world over the last dozen to, you know, 20 years or so. And we're starting to see that more and more. I think global trade alert tracks trade interventions. It's double what it was just seven years ago. I think we also see, heard last night the volume of trade that goes through most favored nation status has gone from 80% to almost 70% in the last couple of years. What corporates face, though, is uncertainty. And as much as they want predictability as His Excellency said, what they see today is certainly not that, they see not only tariffs, they see different subsidies, interventions, of different kinds that all have to be taken into account. And I would use as well, you know, in the Chips act in the US was actually put in place by the Biden administration. It wasn't a Trump policy. Trump continued it. But where Trump then went further, he made a direct investment in Intel. Right. So it's really taking what had already started and actually doing something very different. And again, this is the sort of thing we're seeing around the world for corporates though, faced with this uncertainty, what we see I would I would categorize into three areas. One is certainly, there's more analysis that's going on around global trading patterns than ever before, scenario planning, you know, risk assessments of different kinds, trying to understand, you know, the macro environment and what it could mean for operations. You know, that is something we're seeing repeatedly everywhere in the world. The second area and His Excellency talked about resilience. I mean, that is probably the operative word for so many of our corporate clients trying to build redundancy and resilience into their systems. It might be with multiple supplier relationships. It might be diversifying manufacturing footprints to have alternate sources. So, you know, that is really playing out. And I think one has to ask whether that's always the most economic argument. After many years of going to perhaps the most cost effective location, now you're seeing active trades by corporates to really create resilience. And that also has a cost to it. The last thing I would say, and this is perhaps more ominous for the global economy, is we see a lot of delay, you know, faced with uncertainty. If you're making a decision about where to locate a new factory, hundreds of millions of U.S. dollars to put in a location, you know, while all this analysis going on, one we see it very often is the simplest thing is to delay, wait six months, wait 12 months, the picture will become more clear. And regrettably, it doesn't really become more clear. Yet. I think that still is a natural reaction of corporates to hedge, to wait, you know, to hold back. And that's not great for the global economy either.
That's really interesting and.
I agree with all that.
I want to pick up or continue with that theme. Because sunny, sunny, you're the chair of Baker McKenzie, the international legal firm. I mean, you think about how businesses navigate this sort of new, uncertain, unpredictable environment. So what are you seeing in terms of, you know, this sounds a bit like business are just getting on with it, but is there any alternative to delaying decisions and just kind of stepping back? How do you actually deal with a more perturbed world?
Okay. Well great. Great to be here. And I should add, I've been global chair of Baker McKenzie all of two months. When I came into the role, I looked around the shelves and the cupboards thinking, there must be some instruction manual here. And I think there is no playbook for the world that we're navigating today. So in response to what you're saying, I would like to make three brief points. Martin and I speak not only as a new leader within an organization, but also as a trade lawyer who has been advising clients on geopolitical disruption, geoeconomics and trade disruption for for over two decades now. I think the first key thing is, if you look at what is playing out, the only constant today is change. Think about the last ten years. It started off with themes like Brexit and then you had Russia, Russia's invasion of Ukraine, you had global tariff wars playing out. You've got the Middle East, you've got Iran, you've got Venezuela, you've got Greenland today. And the pace of change is incredibly intense. We at Baker McKenzie surveyed 600 clients on what are the themes that are keeping them up at night? Geoeconomics geopolitics, trade disruption is the number one reflection coming out. Which then leads into my second point. It will be familiar. Given what my colleagues here have said, it is the need for divergence and diversity as well. So if you think about, how markets and companies have done business over the last few decades, it's been a sense of overreliance on a handful of partners. What we now understand is overreliance, whether from a state's perspective or a corporate perspective, overreliance on any single market, any single supply chain or customer, or where your data resides or where your funds flow. It's a vulnerability. So we're seeing this play out in terms of countries negotiating many more FTAs, but we're also seeing it in terms of where companies are now focusing in terms of diversifying their customer base and their supply chain. Which then leads me to my third and final point. And I'm not just saying this as a lawyer, but I think we should all, as citizens, feel a sense of, you know, collective protection for this particular point. But I was delighted to hear the two minutes to talk about the importance of the rule of law. You need the rule of law to ensure there is stability that Bob talked about. You need the rule of law to ensure that when you enter into an agreement, you enter into a contract. There is that sense of protection as well. So that is the third key point I've been making as well. Martin.
Is there a risk? Can I just follow up on this and ask anyone who wants to address it? Is there a risk that giving the government, the state a more active role in the economy has a trade off with the sort of predictability that the rule of law requires? I mean, is there a trade off here? Maybe the lawyers want to briefly comment first.
Please, you should go first.
Is there a trade off in having the the state.
An active state as an agent in the economy with the rule of law? Is there one? Does it have to be a.
Well, it depends on how your state behaves. I think that's that's easy to say, right? As I'm explicit as as I mentioned a moment ago, in this environment, as you've heard from colleagues as well, when you have a state that you expect to act in the way that it has in the past, then you're you're doing well on that score. But if you have one who's changing mind from one day to the next, it's difficult to say that that's working very well.
Because the reality is national security has woven its way into the business world. Right? It's dead center within business strategy now. And so when you have national security permeating things like tariff policy, sanctions, export controls, foreign investment regulations, ESG, the rule of law has to be critical as well, because how else can companies try and work out how to navigate these complex laws?
But I would say you need, I would say you can welcome the state of convention in many ways. I'll tell you. For example, when we were looking at reindustrialisation rebuilding supply chains, I'll tell you, for example, critical minerals, as the professors were saying, as long as the rules are clear and fairly applied, I think that serves national security and economic security. I was the Minister of Industry, just like I was saying before being Minister of Finance. And in Canada, we have the Canada Act, which is an act which I amended to include the concept of economic security within the national security analysis, because, you know, you look at critical minerals, for example, which is going to be essential to power the world. I think our citizens would expect responsible state who have these resources that are making available to our friends, our partners, our allies around the world to keep an eye on that. You know, a free market might not do it exactly the way that our citizens. Because remember, a number all of us here work for people, and people would expect us in a way to say, but what we needed to do, like I think we've done, we needed to provide predictability because I happened to be a lawyer as well. As long as the rules are clear and I think our friends would agree, business will adapt. You know, it's like us. They said we need clearer rules on permitting. What what was killing investment was the delays, the uncertainty. Once you provide more certainty, corporate will adapt. The finance world will adapt. Everyone is adapting. But what you need is rules and these rules to be fairly applied. And then I think you can have a win win win strategy with people with corporate and government. I've seen, for example, and people can look at that. But when we have onshore French short, however you want to describe that, you know, a number of things in North America, I think there was a role for government. I'll tell you, for example, on the on the EV side, and I think that can still I think it's still our North Star. It may be delayed, but I'm not sure these would have happened. You mentioned the Chips act at the time you mentioned. I can see in Canada the investment from our Japanese colleagues, for example, in electric vehicle and battery manufacturing. These things will not happen by themselves. I can write a book about that. But tell me, you know, not everyone I said to my colleagues, not everyone wakes up in the morning thinking about Canada. You have to go out and say, why would you be the right place? And I would say that applies to all the other countries. So I think there could be a really win, win win strategy that that I see the corporate colleagues and my colleagues from Japan and look at what they're facing now in critical minerals, I think I'm sure I can't speak for Japan, but I would expect their citizens would say, yes, we want the government to take a role in that. And obviously that's why we've partnered, for example, to make a strategic alliance on critical minerals.
Let's hear from Mr. Akazawa.
Oh, hi.
Yeah.
The Minister champion pointed out the very important point, I guess. And. Approximately 200 countries have been imposed of tariffs by President Trump, and somehow he wants to lower tariffs for the other countries, too. As far as Japan is concerned, Japan never compromise on tariff. And as the US to lower their tariffs against Japan. And that was a negotiation that went on. And let me spend a few minutes talking about what happened. But what's important for the business is that predictability. As Mr. Champion said, we need to secure the predictability. So when I had a deal with the president, Trump was significant over the deal.
Is that.
For Japan?
I mean.
For the United States perspective, the important supply. chain will be built in the United States and Japan. Japan is very special partner. So Japan will be, well, most favored nation. And the $4 trillion economy and, the great trade condition can be secured for the European Union, which is $2 trillion economy that was significant for Japan. Now the global challenge is at the moment is that China try to secure and dominate the key minerals. And President Trump said America first and want to put in place on the industrial policy. And that has so much repercussion on other countries. Now, in that context, how we can secure predictability, that's one of the top agenda. We need to think about the first number one economy. Number two economy. The method was they were very wild and statement wise, they are very casual to. So we have struggle and we will struggle on how to address it. But predictability is one of the key points we need to be mindful of. And also as Kristen said, tariff is not just.
A tool.
Tariff is not only a tool. That was the thing that the US, Japan agreed and we were asked to lower tariff on the United States. We said, well, we will never we will never lower tariffs, but we will do that. That's something that for the sake of the US, meaning that building the supply chain, $550 billion will be invested for the United States. And I'll appreciate if everybody understands what that stands. And big, bold, amazing proposal. That's what the United States call. And then the proposals by Japan was a game changer. That's what it was called. And the secretaries of the of the United States is a strategic investment initiative, have been a great, segway for the EU and the Korea. So in order to secure the predictability, the government has to do everything we can. And as I said, not only tired, but we need to have a broader perspective. How bilateral and multilateral win win can be created. That's the important perspective. And I have a little opportunity to speak up. I would like to talk a little bit more of the policies of the government of Japan. I mean, it's not my intention to say it's opposition talk, but I think Japan is a by so by Nomics. Our prime minister is Anaya Takeuchi. As a new prime minister, I would like to be brief in talking about three points. Number one. I mean, we are short on talents. We are short on talent because of the super aging society. So we don't have to worry about rising unemployment rates across the countries outside Japan is very unique, and trillions of dollars have been invested for the energy saving artificial intelligence. For better efficiency. We don't have to worry about the rising unemployment rate at all. So we are very unique position. And that's what one of the efforts the Prime Minister has preceded. That's number one. Second, as far as industrial policy is concerned, that we are leading Ministry of Transport, trade, Industry meeting, and that was called as a notorious meeting from the United States. And, I mean, the the evil has a power all the time. I mean, we have to pursue the winning strategy, artificial intelligence multiply by big data. And what's the winning strategy for Japan? That is a crisis. But the super aging society and the disaster prone nation that that enables us to be, having a winning strategy, that's one of the characteristics that we can enjoy, the super aging society and the disaster. So big data multiplied by artificial intelligence, that's one of the tools we can tap on. What kind of the big what kind of data sets we have, what kind of business we have, utilizing those we need to create a strong economy, for example, healthcare for the senior people, very meticulous, elderly care plan can be created by AI. And as far as the disaster is concerned, for example, tsunami, earthquake, rubbles, and in which prompt and accurate manner and safely, we need to develop a robots to save lives. And also for senior people. I mean, big data has been a must in Japan. That's one of the tools we have. So we need to continue to invest in that. And big bet on that. And then fusion, artificial intelligence, quantum and those are various technologies we like to utilize going forward. And the development of the AI itself is concerned. I mean, it's not something that we can easily catch up on the US and China, but we can play a game on data. And the AI wise, the Japanese robotics has been really highly appreciated. But components are related to the life saving, including the aviation components are really credited across the globe. So we need to have a track record best case, and so that we can utilize that lesson for the next sector, like artificial intelligence. And that's where we are going to make an investment so that we can lead the global economy. That's our philosophy around the government. Just only one thing to go.
I'd like to get some questions from.
The audience. Well.
As I said, at the very beginning, around 1985, the United States saw Japan as a rival, and we are kept in check for the economic growth. But we become special partner for the United States. And the bilateral relations with the United States has been significantly changed because of the consultation and agreement with the tariff, and economic security will be secured in an agreement. In that sense, Japanese economy is a by so by signing Nomics.
Thank you. Thank you very much. That's an excellent sales job. I'd like to take a couple of questions from the audience. And they'll have to be very short. So there's one there, gentleman there is there. One more and we'll just take them together.
Yes. Good morning. Thank you very much.
A question and short, please.
Very quickly. My name is Simon Thamer from Saudi Arabia. Raises two bold questions when we see regulations made more than years ago by the largest economies. And now we see the regulations change because they do not suit the current economies. What does that say to you, Miss Claussen? Two when you have to put tariffs or subsidize or protect your products or your assets so you can compete globally, does it really solve the problem for you in the long term? What is the source? How can we have good rules and predictability when the rules are being changed by the largest economy?
Very good, very good question. Thank you.
Hi. I'm from the government of Bangladesh, and we've just recently concluded at negotiator level, free trade agreement, economic partnership agreement with Japan. And we're in the middle of an investment agreement with Canada. The point I'm making is if governments are going to be super actors in this new world, I know from direct experience how excruciating it is to just make sure that the government has capabilities to step up to the challenge. All of a sudden, you have been elevated to this role. How do we ensure that your government structures and your people and your processes are equipped so that you perform this role as a catalyst and not become a choke point for the private sector?
Very good. Question two. Bob, I want to turn to you first because I think you can address that last question, but I also wanted to pick up from the previous discussion, the politicians on the panel are telling us that the private sector will be fine. If the rules are clear, you can change them, but they need to be clear and then predictable. Is that what you hear from your private sector clients and partners?
I think.
It is comfortable with this new.
It's certainly a desire to have more predictable regimes and rules and certainly, you know, consistency in that regard. But I also think it might be a little bit naive to think that no changes will happen. Right? For many years, for many decades, governments have changed in order to create economic stimulus, economic development, sustained economic growth that I think is still the objective. So it's the rapidity of the change, the abruptness of the change, which is what creates the challenge. However, again, to use some examples, and I think you talked about the broader ecosystem that's necessary for sustained economic growth, whether it's dealing with the demographics of an aging population and the workforce. In order to sustain industry. I use the example in Canada redeveloping a naval shipyard in Halifax, you need not only the shipyard, you need an entire industrial ecosystem to support that growth in the Middle East. I think the example of the Middle East, you know, really creating diversification isn't about a single investment. It's creating industrial ecosystems at the same time. So again, we have to make sure we look beyond sort of a short term change, which for everyone is perhaps too much. But think about these broader ecosystems which lead to sustainable growth and sustainable economic development.
And both.
Of you.
Well, first, what the villain said includes two things, I believe. Two things were included in your statement. I think number.
One.
Minister, champagne and myself are in politics and the private sector philosophy should be different. Yes, from our perspective, politician, obviously the business in our own country and the business globally, predictability need to be enhanced and for which we are making an effort. But yes, for someone who are leading the businesses and obviously you can be you can be in trouble unless you have predictability. So yes, I get it. So without being afraid of changing, you should change yourself. That's kind of animal spirit. So those are the two things that can be balanced at the same time. But from politician perspective, we need to maximize our efforts to ensure predictability. But it can be perfect. So as much as we can, as much as you can, probably business should adapt to the changes. But one of the questions that one of the questions is that the Japan Saudi Vision 2030, I highly appreciate that that vision without depending on the on the oil economy, try to be aspiring to the exploring to the different areas and key minerals and others. And Saudi Arabia has great cooperation with Japan as far as industrial policy is concerned. That country doesn't have to worry about it because a big country can bring the history back. There are a lot of lessons they learn and try to protect the industrial policy. Unless you do that, you will be in trouble. But new industrial policy has been emerged. But it's not the protecting their own country or economy. but the national security is the one thing we want to secure. So once a suspending the critical minerals, our key sector wouldn't function. That's the kind of things we want to preempt. So President Trump, President XI are talking about things. And it sounds like they are projects in their own country, but versus what it has been in the past, the national security of the country, but the ability of the country and those need to be, plugged the gap. And that's the kind of policy that they're trying to take and for which we believe that we need to be resourceful for.
Thank you very much, Mr. Chair.
No, I was just reflecting. I mean, it's a great panel this morning. I was just reminding myself I was with Kristalina of the IMF recently, and just for people in the room and watching at home, the uncertainty Index, which is published by the International Monetary Fund, is today higher than in the financial crisis. So let's, let's, let's take that as a point because it's true for corporate leaders. As you say, change has always been there. But I go back to my trees. It's the speed, scope and scale of change. You know, change. You can adapt. I used to be here 20 years in this continent in business, but there was change at a marginal rate. Now it's like change is the defining factor and the level of uncertainty bigger than during the financial crisis is is quite significant. And I want to go back to, to both comment. What's interesting is that diversification requires bandwidth in the sense that it's not only just diversification from our economy or the Japanese, which we're working on with respect to critical mineral. But I just flew in from Qatar. I was in Doha yesterday, and I think about our Saudi friends and my friend, the finance minister there. Everyone is trying to diversify also in the Middle East. They want to diversify their economy. It's the same thing in Europe. The Draghi report, I mean, there's a lot of things going on. And and what we need to do now is that the speed and scale that we have not seen before. And to your point, I think you're right. I mean, government we need to adapt. You talk about the the Foreign investment Protection agreement, double taxation treaty, you know, all these barriers that I guess in the world. And I go back to our friend from A.T. Kearney where, you know, they were marginal impediment to trade in the world, which is like that today. They become real impediment because they just add they're planning on to things that already exist. So our role, I would think, Akazawa San and others in government is to try to level the playing field as much as we can, provide that kind of predictability in the changing world. As you said, nostalgia is not a strategy. So let's not assume that the next quarter of the 21st century will be much more calm than what we have seen. But I would say and you mentioned the G7, and I'll just finish on that because I know we're pressed for time, but, I can assure you that, we we said many times uncertainty cannot become the new certainty. We have a role. G7 is one of the international institutions which still, I would say is essential and function. Well, then you can add others. But certainly that's a core where you say growth, where you say providing a sense of stability. And you mentioned hope. And I want to finish with that, because we do have. to provide something of hope to our people because, I always say it's difficult for nations to be more hopeful than their leaders, in the sense that it's incumbent upon us to create that, that, that that framework that will allow for growth and obviously for people to be hopeful still about the future.
Thank you. We're running out of time. Kathleen, you were asked directly, do you want a one sentence, two sentence reflection?
Well, I think the answer to the question at the international level is that maybe the institution should change, and the U.S. is not alone in thinking that maybe just got there first. But that's maybe the answer to thinking about where we go forward.
Thank you very much. One sentence reflection I think.
I'm going to pick up on the idea of hope. There's a wonderful phrase used by my fellow Punjabis called Kala. What it means is when you face adversity and challenge, do it with a sense of resilience and unflinching optimism. I think it's a great concept that we as leaders in this room should be embracing.
I think it's also a very nice thing to end on, because I was thinking exactly that when Minister Okazawa spoke, that actually there is a sense that adversity can bring progress, can make you change in, in productive ways. One reflection that I kind of take away from this, to, to wrap this up, is that governments are also learning here, right? Governments are also learning how to be these super agents. So, you know, there'll be some there'll be some trial and error. But the word ecosystem has come up a bunch of times. So what is clear is that proper economic growth and broad prosperity does require a lot of things to go right together at the same time. And that's where the role of government comes in. And as somebody who was trained as an economist and knows that economists are trained to look at the economy as a mechanical system, what we're learning is that it's a little bit more like a garden, right? Sort of wild things can happen. You need to let some things happen organically. You also need to tend to it. Maybe that's the role of governments going forward. So I'll just finish by citing a great thinker who lived not very far from here, Voltaire said, we need to cultivate our garden.