Advancing US-Japan Cooperation on Digital Economy Development in Latin America: Three Recommendations

Smart City Tumisu / Pixabay

The benefits of information and communications technology (ICT) in Latin America and the Caribbean (LAC) are numerous, ranging from innovative solutions to health, social and economic problems to improving society’s access to information and enabling communication. ICT can also play a key role, as witnessed in recent weeks, in addressing numerous public health challenges. However, the delivery of key ICT equipment and services in LAC faces numerous technical, social, legal, and policy obstacles relating to interoperability, radio spectrum, bandwidth, security, privacy, regulation, protectionism, and skill gaps in the workforce, among other issues. While not unique to LAC, these challenges must be all addressed to enable the full breadth and reach of digital innovation.

Enhanced Japan-US collaboration would do much to advance the delivery of ICT platforms across the region. Although the US and Japan maintain their own priorities for development and economic cooperation, both countries are already working together through recently developed platforms to support digital economies in the Indo-Pacific region, including on ICT infrastructure development and capacity building initiatives, based on a common commitment to open and secure networks.

Efforts to extend this cooperation to the LAC region, whether on the delivery ICT infrastructure projects, joint consultation with host countries and standards setting bodies, or through new co-financing arrangements will be of growing importance in the coming months and years. Work to leverage existing resources and partnerships is especially critical as all parties grapple with the unprecedented economic and social consequences of Covid-19. The global pandemic will severely limit available resources, but it has also highlighted the critical need for enhanced digital capacity, whether in logistics, streaming services, healthcare, education, and businesses continuity, among other applications.

The following three recommendations for enhanced Japan-US collaboration on ICT delivery in LAC are based on takeaways from “Japan’s Technological and Infrastructure Engagement with LAC: Toward Stronger Ties?” an Inter-American Dialogue event held in December 2019, and ensuing author discussions with public and private sector representatives from the US and Japan.

Recommendation #1: Expand existing US-Japan digital cooperation to focus more extensively on the LAC region.

Much attention has been focused thus far on US-Japan digital cooperation in the Indo-Pacific region, often as part of the Free and Open Indo-Pacific Initiative (FOIP), an umbrella term encompassing a range of shared US and Japanese interests. However, though largely focused elsewhere to date, many of the existing initiatives and frameworks for US-Japan tech cooperation can easily be expanded to address areas of mutual Japanese and US interest in the LAC region.

The Japan-US Strategic Digital Economy Partnership (JUSDEP), an initiative developed under the FOIP and the US-Japan Policy Cooperation Dialogue on the Internet Economy, is among the more prominent examples of US-Japan digital cooperation. Through the JUSDEP, the US and Japan have committed to developing digital economic projects in third countries. Recent examples of this collaboration include joint work toward digital infrastructure development, such as the Japan-Guam-Australia Fiber-Optic Submarine Cable System Project[i] and cooperation on smart cities development, including through the Global City Teams Challenge (GCTC), a public-private program sharing smart cities best practices.

Although the partnership hasn’t focused specifically on the LAC region, JUSDEP maintains a global focus, as articulated most recently in the partnership’s working groups in March, April, and August 2019, and supports wide-ranging US-Japan tech sector engagement. Assuming continued US and Japan commitment to the JUSDEP, the platform could easily facilitate eventual joint work in Latin America toward a digital economy environment that is “open, interoperable, secure and reliable.”

Another platform, the US Digital Connectivity and Cybersecurity Partnership (DCCP), mostly promotes US government coordination on overseas capacity building in the tech sector. The partnership facilitates workshops and other knowledge-sharing opportunities while also encouraging public-private sector collaboration, including through trade missions and by supporting financing for development of the digital economy. The DCCP is neither formally inclusive of Japan nor particularly active in Latin America at present, but there is considerable possibility for more engagement with both.

Like other platforms developed under the FOIP, the DCCP has primarily focused on the Indo-Pacific region to date. For instance, as part of the DCCP, the United States Agency for International Development (USAID) is working with US tech companies and universities to enhance digital and cybersecurity skills among private enterprises and civil society in Southeast Asia. USAID and the Association of Southeast Asian Nations (ASEAN) are also partnering within and among ASEAN member states to facilitate expanded e-commerce through the adoption of international standards that foster cross-border digital trade, especially for small and medium-sized enterprises (SMEs).

However, according to recent reports, the Trump administration’s recent development of the America Crece Initiative—“a whole-of-government effort to catalyze private sector investment such as in infrastructure, digital economy and energy in LAC,”[ii]—has reportedly stimulated enhanced DCCP focus on the LAC region.[iii] And author interviews suggested the forthcoming allocation of DCCP financial resources toward LAC projects. To the extent that US and Japanese interests intersect, it makes good sense to leverage US and Japanese resources, whether through DCCP or other platforms. Combined efforts in targeted areas would do much address enduring obstacles to investment in ICT, advance both countries’ work to build capacity in the LAC region’s digital economy, and promote key US and Japanese technologies.

There is also the possibility for enhanced Japanese and US public and private sector cooperation in other existing forums, including Latin American regional organizations such as the Organization of American States (OAS), the Americas Business Dialogue, part of the Summit of the Americas, or the Pacific Alliance, for instance. In the Indo-Pacific region, the two countries have already collaborated on workshops and events promoting of the APEC Cross Border Privacy Rules (CBPR) system. The US Chamber of Commerce has also recommended US collaboration with like-minded G20 partners across a range of digital policy matters to develop strong common positions on key issues.[iv]

Regardless of the platform, it will be critical to leverage the many resources that Japan and the US have allocated toward digital sector development in the LAC region. Work through the DCCP, JUSTEP, existing regional organizations, or other mechanisms would ideally boost the region’s capacity in key industries while also supporting US and Japanese private sector engagement and advancing shared values on ICT. 

Recommendation 2: Further develop and more clearly articulate shared values to Latin American constituencies.

The US and Japan profess common values as concerns overseas ICT investment. The US is committed to pro-competition policies, light touch, flexible regulatory environments that are technology neutral, and to multi stakeholder participation in standards setting and regulatory processes, as noted in official statements and policy documents. The US and Japan also support the free flow of data, industry led standards, and protection of intellectual property as top priorities in ICT industries. In addition, both countries publicly promote their companies’ trustworthiness, commitment to privacy and security, and attention to quality high-tech investment. Regarding 5G infrastructure, Japan and the US highlighted the value of “a transparent and open architecture to support security and vendor diversity” in a joint statement at the conclusion of the 10th US-Japan Policy Cooperation Dialogue on the Internet Economy in Tokyo in October 2019.[v]

It will be critical to better communicate these shared priorities to partner nations in the coming months and years, including through joint activities in the LAC region. This is best done not just through policy pronouncements and engagement with key stakeholders, but also through concrete examples of successful and inclusive ICT projects in the LAC region. Demonstrated, on-the-ground commitment to stakeholder engagement, knowledge-sharing, privacy and security, and project quality will do much to shape LAC opinions of US and Japanese investment in the region’s tech sectors.

Advancing proof of concept investments in LAC will help to ensure the competitiveness of US and Japanese activity in the region. Everis, a subsidiary of technology firm NTT, has sought to showcase its “smart city in a box” concept in Chile and Colombia, in collaboration with Microsoft and the Inter-American Development Bank (IDB).The e-Kakashi project, introduced by Softbank group PS Solutions and supported by IDBLab and Ministry of Internal Affairs and Communications of Japan, which works to catalyze innovation for inclusion in LAC, also highlights Japan’s capabilities and commitment to finding innovative solutions to regional challenges. First deployed in Colombia, the AI-enabled technology aims to maximize efficiency in the use of natural resources for agricultural production.[vi] Japanese firm NEC has also worked to introduce key Japanese technologies to the region for more than two decades, including through the deployment of facial recognition systems at airports throughout the region and the promotion of secure smart cities projects in Argentina, Chile, and elsewhere.

The perceived value of US and Japanese investment is also considerably improved by the co-creation of solutions with local investors and/or consumers. During the Inter-American Dialogue’s December 2019 event on this topic, Toshiyuki Yasui, Japan’s executive director at the Inter-American Development Bank (IDB), stressed Japan’s focus on co-creating social innovation and inclusive growth through a range of IDB initiatives.

Recommendation 3: Collaborate on project identification and financing.

In order to ensure new financing for enhanced ICT engagement, the US and Japan must first identify bankable projects in LAC and other regions. Information sharing on projects of interest will better enable the US and Japan to leverage private sector investment with government resources. The so-called “deal teams” that the US is forming in US embassies throughout the region will reportedly work to establish a pipeline of viable investments and even to share those findings with Japanese counterparts, according to author interviews. Information sharing on viable projects will also help to create collaborative opportunities with regional institutions such as the IDB. At present, IDBLab only intervenes between the proof of concept and go-to-market stages of a project’s development, so looks for scalable and financially viable solutions.

Co-financing by the US International Development Finance Corporation (DFC) and JBIC could would also do much to advance shared objectives. Already, memorandums of understanding (MOUs) between OPIC and Japan Bank for International Cooperation (JBIC) have expanded US-Japan collaboration on financing in the Asia-Pacific region. Partnership on financing in areas of mutual competitive advantage, such as on 5G use cases and other technological solutions or on the provision of cybersecurity services, could be of great benefit a range of stakeholders.

Sources

[i] “Factsheet: Recent Efforts of Japan and the United States in Energy, Digital and Infrastructure sectors toward achieving a ‘free and open Indo-Pacific’,” Japan Ministry of Foreign Affairs, https://www.mofa.go.jp/files/000482895.pdf

[ii] US Department of State, “Growth in the Americas Initiatives, Frequently Asked Questions,” August 2019, https://www.state.gov/wp-content/uploads/2019/11/America-Crece-FAQs-003-508.pdf

[iii] US initiative strengthens economic growth in the Americas, ShareAmerica, https://share.america.gov/u-s-initiative-strengthens-economic-growth-in-the-americas/December 23, 2019

[iv] Comments on Energy, Information and Communication Technology, and Infrastructure in the Indo-Pacific Region” submitted by the US Chamber of Commerce to the US International Trade Administration, January 4, 2019.

[v] “Joint Statement on the 10th US-Japan Policy Cooperation Dialogue on the Internet Economy,” US Department of State, October 11, 2019, https://www.state.gov/joint-statement-on-the-10th-u-s-japan-policy-cooperation-dialogue-on-the-internet-economy/

[vi] “SoftBank Corp.’s AI-powered ‘e-kakashi’ Solution for Sustainable Agriculture Adopted for Smart Rice Farming Project in Colombia,” SoftBank Corp., October 28, 2019, https://www.softbank.jp/en/corp/news/press/sbkk/2019/20191028_02/



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