Consumer Buycotts and Supply Chain Diplomacy:Japan’s Responses to China’s Seafood Ban

August 24 marked the one-year anniversary of Japan commencing the discharge of ALPS treated water from the Fukushima Daiichi nuclear power plant into the Pacific Ocean.¹ Despite a positive report from the International Atomic Energy Agency (IAEA) in July confirming that the release continued to go to plan in compliance with international safety standards,² the date passed with little celebration in Tokyo. Instead, Prime Minister Kishida Fumio spent the day at a local fish market in Iwaki, Fukushima consoling representatives from the Japanese seafood industry on a day of mourning following “a year of constant nervousness” brought about by one of the greatest economic shocks that they have faced in recent decades: the complete loss of their most valuable export market, the People’s Republic of China (PRC).³

Within hours of the water discharge commencing in 2023, the General Administration of Customs of China (GACC) announced the immediate suspension of all imports of seafood products from Japan.⁴ Despite numerous appeals to reconsider that decision, including a direct request from Kishida when he met with President Xi Jinping on the sidelines of the APEC Summit in November 2023,⁵ the barrier remains in place. Waking up to such a blanket ban is a nightmare scenario dreaded by policymakers from a growing number of countries around the world with large, politically influential domestic industries that rely heavily on trade with the PRC market.⁶ What might they learn from the Japanese seafood industry’s experience? After 12 months of adjustment—complemented by varying levels of support from the Japanese government, individual consumers, and other actors both within and outside of Japan—the sector appears to be faring better than many originally feared.

However, while responses to the seafood ban have been the subject of detailed media coverage and analysis in Japan, they have received relatively less attention in foreign press and commentary. One reason for this may be that the aggregate value of disrupted trade is low compared to other recent episodes in which China has restricted trade during political disputes.⁷ Nevertheless, we posit the case is ripe for analysis. In an era where states are increasingly preoccupied with achieving “economic security” and reducing their vulnerability to potential economic coercion, Japan is often pointed to as a model worthy of admiration if not emulation.⁸ Tokyo’s effective policy response to a 2010 political dispute during which China appeared to disrupt exports of rare earth elements, for example, is a common starting point for discussions about how states can reduce overreliance on single sources of supply.⁹ In this piece, we look back on the past year and seek to identify new insights from Japan’s most recent efforts to resolve the inverse challenge: overreliance on a key source of—and gateway to—demand.

We begin with a discussion of the introduction of the ban in China and how it was interpreted within Japan, before turning to look at the macro impact on Japan’s seafood exports. Finding some evidence of successful adjustment to the loss of the China market, we then seek to unpack what made it possible, detailing the adjustments made by actors across the seafood industry and how these were complemented by different forms of support from the Japanese government, consumers, and other parts of society. After evaluating the overall efficacy of those responses, we conclude the analysis by highlighting several lessons that can be drawn from Japan’s experience and the implications that they have for policy and scholarship on the political economy of responding to economic sanctions.

Interpreting the Ban

In introducing the import restrictions, PRC officials cited concerns about “radioactive pollution,” with GACC declaring a ban necessary to “protect the health of Chinese consumers and ensure the safety of imported food.”¹⁰ On the eve of the first anniversary, Foreign Ministry Spokesperson Mao Ning maintained that line: “The precautionary measures taken by China and some other countries in response to Japan’s move are aimed at protecting food safety and people’s health. These measures are entirely legitimate, reasonable and necessary.”¹¹

The consumer protection rationale encountered significant scepticism in Japan. The ALPS water discharge had received approval from the IAEA, which established a taskforce to monitor and support Japan’s initiative in 2021 and found that the process was consistent with international safety standards and “would have a negligible radiological impact on people and the environment.”¹² That approval was widely accepted by the international community, with just three jurisdictions besides the PRC introducing new restrictions on Japanese seafood after the discharge (Hong Kong, Macao,¹³ and Russia).¹⁴ Analysts and officials considered Beijing’s failure to present new or contrary scientific evidence as undermining the credibility of its apparent safety concerns.¹⁵ Those concerns were further undermined by the fact that Chinese fishing vessels continued to operate in the same waters as their Japanese counterparts off the coast of Japan, despite the ban and alleged concerns about “nuclear contamination.”¹⁶

A second reason for scepticism stemmed from Beijing’s reputation for citing alleged risks to human, animal, or plant health in order to justify terminating trade links in the context of bilateral political disputes.¹⁷ That practice is now well documented in numerous cases. Amidst political tensions, fruits from the Philippines and Taiwan were said to have pests,¹⁸ Lithuanian beer, dairy, and beef allegedly had inadequate health or phytosanitary documentation,¹⁹ and Norwegian salmon, Australian lobsters, and even South Korean lollipops were confiscated or held up for extensive sanitation tests due to apparent concerns about potential defects.²⁰ Given the timing—just days after Tokyo had angered Beijing by doubling down on its expanding cooperation with Washington and Seoul at the Camp David Summit—some considered the import restrictions merely the latest example of Beijing’s “informal” sanctioning.²¹

Many in Japan declared the ban a veiled form of ‘economic coercion’ (keizaiteki iatsu, 経済的威圧) including journalists,²² academics,²³ and government officials, including—at least after the ban was first introduced—the Economic Security Minister Takaichi Sanae,²⁴ and several MPs from the Economic Security Promotion Headquarters of the Liberal Democratic Party’s Policy Research Council.²⁵ That interpretation was shared by officials from some of Japan’s partner countries, perhaps most vocally US Ambassador Rahm Emanuel.²⁶ Applying the “coercion” label implies that China’s motivation was not to protect domestic consumers, but to cause some behavioral change in Japan—such as a reversal of the water discharge decision, or some other foreign or strategic policy concession.²⁷ Yet, whether or to what extent coercive goals may have underpinned the ban was unclear given Beijing did not explicitly make removal of the ban conditional on any specific concessions from Tokyo.²⁸ Given the Japanese government’s strong commitment to proceeding with the release of the ALPS treated water and the extremely high political stakes involved in the decommissioning of the Fukushima Daiichi plant,²⁹ some have queried why—if Beijing really wanted to apply the sort of meaningful pressure that might make Tokyo reconsider—they would only disrupt exports that represent a fraction of Japan’s international trade and have little bearing on the wider Japanese economy.

A third interpretation is that the main intended audience for the ban was not policymakers in Tokyo, but everyday citizens in China. According to this interpretation, Beijing imposed the restriction in order to simultaneously signal to domestic audiences that it was responding decisively to a move by Japan that had attracted significant criticism within China,³⁰ and to diffuse domestic discontent about the poor state of the Chinese economy by diverting attention to international issues.³¹ Such arguments align well with a strand of political science research which emphasizes that trade restrictions and other economic sanctions are often imposed not for the instrumental purpose of changing a targets behavior (as is often assumed), but rather as a means of signalling to different domestic and international audiences.³² Indeed, more recent comments by Japanese officials on the political motivations behind the ban describe it in slightly more neutral terms as a (de facto) “economic sanction” (keizai seisai, 経済制裁), rather than necessarily a coercive measure,³³ and it is notable that the Kishida administration has pivoted to describing the ban as simply an “import suspension” (yunyū teishi,輸入停止).³⁴ Most likely—like many economic sanctions—the ban serves multiple purposes, and regardless of the specific label applied, what is clear is that the majority view in Japan is that the import restrictions are primarily motivated by politics rather than any concern about the promotion of health and safety within China. We now turn to their consequences for Japanese trade.

Japan’s Seafood Exports Before and Since the Ban

Japan is a net importer of seafood products.³⁵ While there had been a moderate increase in exports over the previous decade, in the five years prior to Beijing’s ban exports typically made up just 15% of the country’s total seafood trade. In 2022, for example, Japan imported approximately $15 billion in seafood products while exporting some $2.5 billion.³⁶ Although making up only a miniscule fraction of the total value of all Japanese exports—less than 1% in 2022—the trade provided a lucrative source of income for the local seafood industry, particularly producers of niche products like scallops and sea cucumbers, for which exports made up a majority of annual sales because domestic consumption was relatively low.

China was Japan’s largest market for seafood exports. In 2022, it was the destination of approximately 25% of all exports. Accordingly, the introduction of the import restrictions had ripple effects across the entire industry. In a national survey of 42 prefectural fishery cooperative associations undertaken in early 2024, approximately 80% of respondents reported experiencing difficulties since the water release which were overwhelmingly attributed to China’s ban.³⁷ At a macro level, this is clear in the available trade data. Comparing the 11 months after the ban was introduced (August 2023-June 2024) with the previous comparable period (August 2022-June 2023), the total value of Japan’s seafood exports declined by 32% from $1.73 billion to $1.17 billion. Excluding China, while exports of some products increased to certain markets (as will be discussed in greater detail below), the total value of exports to the rest of world also declined 7%, from $1.24 billion to $1.15 billion (see Figure 1).

Figure 1.Seafood Exports to China, World and Rest of World (ROW)³⁸

The most valuable trade tied up in the ban was scallops, which made up some 20% of Japan’s total seafood exports and more than 6% of the value of Japan’s total $9.8 billion agricultural, forestry, fishery, and food exports in 2022. In the years leading up to the dispute, China accounted for 50-60% of all scallop exports. The PRC market was important not just as a source of end consumer demand, but—critically—also as a central processing hub in Japan’s wider global scallop export supply chain.

Several Japanese export markets, most notably the United States, strictly regulate imports of raw (unprocessed) shellfish. Scallops must therefore be exported in processed form, as the firm, white adductor muscle only. However, Japan’s domestic processing capacity has been constrained by several factors, including a shortage of labor in scallop landing areas (primarily in northern Hokkaido and Aomori prefectures) and limited experience with processing scallops into “wet” form—for which there is significant demand abroad, but which are not traded domestically in Japan where “dry” scallops (which can be consumed raw) prevail.³⁹ Accordingly, a supply chain emerged where shelled scallops were exported in bulk from Japan to China for “wet” processing before reexport to the United States, Europe and other markets.

The ban therefore disrupted not just Japan’s exports to China, but also exports to third markets that previously passed through China for processing. Scallop exports to China fell to and have remained at zero since September 2023, with the effect that the value of total world exports in the eleven months after the import restrictions were introduced (August 2023-June 2024) declined by 45.3% compared to the same period in the previous year (August 2022-June 2023), from $594.7 million to $325.3 million. However, the value of exports to the rest of the world (excluding China) in that period increased 9.1% from $290.5 million to $317.1 million, with notable increases to the United States (+90.8%), and to Thailand (+90.1%) and Vietnam (+420%) which—as is discussed further below—emerged as alternative processing hubs.

Figure 2.Scallop Exports to China, USA, Thailand, Vietnam, and ROW⁴⁰

Japan’s second most valuable seafood export to China in recent years had been sea cucumber, a luxury food item that is traded at very high prices in several markets in Northeast Asia but has little demand elsewhere in the world.⁴¹ In 2022 China was the destination for 46% of total exports, worth approximately $74.2 million. Since the ban, exports have declined to zero. The value of total world exports in the eleven months after the import restrictions were introduced (August 2023-June 2024) declined by 51.2% compared to the previous comparable period (August 2022-June 2023) with few indications that trade has been redirected to alternative markets (see Figure 3). Unlike scallops, where China’s role in processing introduced a novel twist, the impact on sea cucumber exports was simply a function of the relative inability of Japan to substitute for the loss of mainland demand. Trade did, however, continue with the next largest market (Hong Kong, albeit at lower prices), and there was a noticeable (if modest) increase to Macao. ⁴²

Figure 3.Sea Cucumber Exports to China, Hong Kong, Macao, Taiwan and ROW⁴³

Overall, the available trade data suggests the ban had a significant negative impact on Japan’s exports. Adjusting to the loss of the China market was always going to involve friction. There is no liquid, global market for Japanese seafood products that could facilitate relatively seamless redirection of exports to alternative markets in the way that there is for some widely traded bulk commodities like oil or coal.⁴⁴ Instead, for highly differentiated Japanese products like scallop, sea cucumber, and certain fish (mackerel, yellowtail, et cetera), shifting to alternative markets required exporters to navigate the specific demands of consumers in different markets as well as considerable variation in national regulation. The fact that losing the China market disrupted the processing supply chain for scallops only complicated things further. Yet, despite those challenges, there are some positive signs in the data, with some exports increasing to several new and previously minor markets. How was that achieved? We now turn to unpack the responses of Japanese industry, and how these were complemented by support from government, consumers, and other actors within and outside of Japan.

Japanese Responses: “Turning a Crisis into an Opportunity”? ⁴⁵

Seafood Industry. Market actors adjust to economic sanctions in the same way that they adjust to any other exogenous shock: by seeking to reduce their losses. In the short-term, the most obvious solution for the seafood sector was to redirect trade to alternative markets. Internationally, industry actors worked closely with the Japanese government to expand supply to new markets and find alternative processing hubs (as is discussed in greater detail below). Simultaneously, many companies reorganized their activities to better service the domestic market in what some company presidents described as a “drastic change” in strategy.⁴⁶ Previously, the strong orientation towards exports meant that many companies had not invested in domestic consumer-facing platforms. That has begun to change, with many firms launching domestic e-commerce websites to service Japanese shoppers—with apparently positive results. Seafood processing company Kyuichi, for example, was reportedly so overwhelmed with orders when they launched their service that they had to announce delivery delays.⁴⁷ Other companies reported using their new online presences to begin developing connections with different domestic retailers, including restaurants and hotels.⁴⁸

To service the domestic market and offset the loss of China as a processing hub, companies also began investing in greater domestic processing capacity. One leg of this effort involved increased recruitment of foreign labor in scallop landing areas, including—somewhat ironically—trainees from China.⁴⁹ Companies also invested in new technology and infrastructure, including sorting machines,⁵⁰ freezing equipment,⁵¹ and tools to assist with the automation of deshelling.⁵² In June 2024, the Hokkaido Fisheries Association announced it would begin construction of a new scallop factory in the northern city of Wakkanai later in the year, which would be equipped to meet the hygiene and other standards required to service the US and European markets.⁵³ Meeting those standards and acquiring hygiene certification has become an urgent priority for companies, but doing so can take time. At the time of writing, only one scallop processing firm had announced the successful acquisition of the standard international food hygiene certification (FSSC 22000), a goal it had been gradually working towards since 2016.⁵⁴ Some companies even reached out to new international partners, with seafood exporter Kyokuyo announcing a new joint venture—“Pacific Scallops”—with Canada’s Clear Ocean Seafood, in which the Japanese company hoped to draw on the latter’s experience processing and exporting shellfish to North American markets.⁵⁵ Finally, with more processing occurring domestically, companies also explored ways to extract additional value, including by putting crushed scallop shells to use as a substitute for gravel in concrete production.⁵⁶

Government. Just as sanctions prompt industry actors to adjust to minimize their economic losses, they often serve as a catalyst for government to take actions to ensure that the economic pain sustained by firms does not become politically costly. There were four main pillars of the Japanese government’s response. The first was an effort to promote domestic consumer demand for seafood products affected by the ban. Such initiative is not without precedent. When China banned Taiwanese pineapples in 2021, a campaign encouraging consumers to buy “Freedom Pineapples” was widely reported to lead Taiwanese shoppers to order an entire year’s worth of pineapple exports in just four days. Japanese policymakers have sought to replicate that success by mobiziling their own “sanction-busting shoppers”.⁵⁷ Very shortly after the ban was introduced, the Ministry of Agriculture, Forestry, and Fisheries (MAFF) launched a “#Let’s eat Japan!” campaign.⁵⁸ Holding up a placard that read “#Taberuze Nippon! (#Eat Japan!),” the MAFF Minister Miyashita Ichiro appealed for every Japanese citizen to eat five scallops and support regions affected by the ban.⁵⁹ As part of its wider efforts to promote products from the Fukushima area, the government-controlled Tokyo Electric Power Company (TEPCO) held promotional events at supermarkets and department stores across the country, where on an almost weekly basis different seafood products were marketed, including by its so-called “Scallop Cheering Squad” (hotate ōen-tai, ホタテ応援隊).⁶⁰ Simultaneously, it worked with the Ministry of Economy, Trade and Industry (METI), the Reconstruction Agency, and MAFF to vigorously boost a recently established public-private partnership—the Sanriku Joban Mono Network—which seeks to disseminate seafood products by connecting companies to potential demand from the industry, local governments, and other central government agencies.⁶¹ Kishida and other senior ministers have promoted the network’s bento sets, and were often shown eating them during lunch meetings.⁶²

Local governments also played a role. The town of Mori in Hokkaido Prefecture, for example, began purchasing scallops from local companies affected by the ban and distributing them free of charge to schools all over Japan for student lunches.⁶³ Officials elsewhere in the northern prefecture also appealed for Japanese citizens to support the local seafood industry through a novel Japanese tax mechanism: the “hometown tax program” (furusato nōzei, ふるさと納税), which allows for Japanese taxpayers to “donate” to independent producers in rural municipalities in exchange for a tax deduction and a “thank you gift” from recipients (in this case, local seafood products).⁶⁴ A special webpage was set up to link Japanese taxpayers up with such offers from affected businesses.⁶⁵ Local governments in areas affected by the ban reported dramatic increases in donations: Betsukai in Hokkaido, a city famous for its scallops, received double the previous year’s support after a 3-4x increase in donations specifically requesting scallops as a return gift.⁶⁶ Hirauchi in Aomori, another scallop producing city, reported an 8-fold increase,⁶⁷ and there have been reports of up to 12-fold increases in donations for seafood products at different times since the ban.⁶⁸

A second pillar sought to support the seafood industry more directly. To ensure local fishers keep casting their nets, Tokyo established an emergency fund of around a ¥100 billion to provide different forms of support, including direct financial assistance.⁶⁹ By the first anniversary, the government reported that subsidies had been issued to 128 different business and local governments to cover costs incurred by businesses adjusting to the ban, including for new processing equipment, storage fees, and expenses related to expanding sales channels.⁷⁰ At one point the government floated the idea of deploying prisoners to work in processing facilities, but this plan was cancelled after it became apparent this was not compatible with rules in several overseas markets prohibiting the importation of goods made with prison labor.⁷¹

The third and fourth pillars are internationally oriented. First, working together with industry, the government devoted significant energy to supporting export diversification by negotiating market access and seeking to develop and expand demand in new and existing export markets. At the forefront of government efforts has been JETRO, which was instructed to establish an emergency taskforce for supporting the seafood industry in September 2023. That taskforce has been busy. Shortly before the one-year anniversary, JETRO reported that it had supported 170 events to promote Japanese seafood products and support business negotiations in more than 70 cities in Japan and abroad.⁷² Promotional events at which more than 900,000 servings of different Japanese seafood products have been served have been held in cities all over the world, ranging from India,⁷³ to Stockholm, Sweden,⁷⁴ to the United Arab Emirates,⁷⁵ to numerous cities in the US.⁷⁶ Those activities reportedly supported JETRO linking over 400 companies from the Japanese seafood industry with over 700 different overseas buyers. JETRO has also coordinated with the Japan Food Overseas Promotion Center (JFOODO) to promote Japanese seafood in overseas markets via traditional foreign media outlets,⁷⁷ as well as through new mediums including social media ‘influencers’ from Japan and abroad.⁷⁸ Finally, the agency has also negotiated with foreign customs agencies to secure clearance for Japanese seafood at more facilities, such as Denver Airport (exports previously had to first transit through Los Angeles).⁷⁹

The fourth pillar is specifically focused on supporting the scallop industry to reconstruct its export supply chain. In particular, the government has vigorously engaged in supply chain diplomacy to support seafood companies to identify alternative processing hubs. In January 2024, JETRO, together with METI, MAFF and the US Embassy in Japan conducted a research trip to Vietnam where they inspected numerous processing facilities.⁸⁰ Twelve Japanese companies participated, and some have now reached business arrangements with Vietnamese companies. Labor costs in Vietnam are reportedly only 20-30% of what they are in Japan, and several Vietnamese facilities have experience with “wet” processing as well as international food safety standard certifications necessary to re-export to other markets, so the country has emerged as a logical substitute for the role previously played by China.⁸¹ A second initiative has focused on Mexico, where JETRO has sought to link Japanese seafood exporters up with processing companies in Ensenada, Baja California, which are well-equipped to facilitate trade with the US including via existing cold chains that can transport higher value “dry” scallops to major consumption areas—such as Las Vegas and Los Angeles—within 24 hours.⁸² To support this, JETRO has supported missions in which Japanese companies have visited facilities in Mexico,⁸³ and in which Mexican companies have visited facilities in Japan,⁸⁴ and businesses on the two sides are now working together towards realizing a new distribution channel. In addition to Vietnam and Mexico, the Japanese government—with support from the US Embassy in Japan—has linked domestic companies up with facilities in Thailand and Taiwan which have appropriate processing facilities and existing certification (such as registration with the US Food and Drug Administration) to re-export to major markets.⁸⁵

Consumers. On the back of vigorous encouragement from the government, everyday Japanese consumers have further complemented the ability of the seafood industry to mitigate losses. During his press conference on the anniversary, Kishida emphasized that domestic consumption had increased by 50%.⁸⁶ This has been attributed to a widespread campaign of so-called “support purchasing” (oengai, 応援買い) or “support consumption” (oenshohi, 応援消費),⁸⁷ or what is sometimes known as a “buycott” in Western countries.⁸⁸ While there are many anecdotal reports of business owners reporting increases in domestic sales,⁸⁹ unlike for international trade, there is no single repository of data on this type of consumer support.⁹⁰ One way to gauge the extent of the activity, however, is to look at data in the monthly national surveys the Japanese government conducts on household expenditure, which include data on scallops (see Figure 4).

Figure 4.Average National Household (Two or More People) Expenditure, July 2020-June 2024⁹¹

Consistent with Kishida’s comments, reported household expenditure has been as much as 59% higher year-on-year since the ban.⁹² This corroborates some of the anecdotal evidence, and marks a clear reversal in the downward trend that had been occurring in previous years. Increased domestic sales, together with the gradually increasing exports documented above, are said to have prevented any dramatic declines in domestic wholesale prices (see Figure 5).⁹³

Figure 5.Average National Household Expenditure, Retail Price, and Wholesale Price of Scallops 2020-2024⁹⁴

Expanding domestic sales for sea cucumbers has, however, apparently proven more difficult. This is not entirely surprising, given they are a seasonal delicacy that is primarily consumed on special occasions during the winter months (such as the new year) in northern Japan. While the government does not collect data on household expenditure on sea cucumber, traders have complained that domestic consumption has not increased meaningfully since the ban.⁹⁵

Overall, the support for scallops and other seafood products likely helped mediate the impact of the ban on traders. A rough, back of the envelope calculation for scallops is indicative. Prior to the ban, the value of Japan’s exports to China were approximately $320 million annually. Average reported annual household expenditure in the 12 months before the ban was ¥936. With approximately 27 million households with two or more people in Japan,⁹⁶ that adds up to ¥25.2 billion (or $172 million) annually. A 50% increase in household expenditure would mean an additional $86 million in domestic sales—making up for roughly one quarter of the loss of the China market.⁹⁷ On top of those domestic sales, there are several reports of expatriate Japanese communities abroad placing special orders for Japanese seafood products, providing an additional layer of consumer support.⁹⁸

Other actors. The above support for the seafood industry has been facilitated by initiatives by several other actors. Complementing efforts to increase domestic consumption, major retailers like Aeon and Ito-Yokado conducted special sales of scallops, with the latter making a show of support and increasing their inventory by 150% compared to previous years.⁹⁹ Convenience stores assisted too. Shortly after the ban, Seven Eleven announced a limited-time-only special onigiri (rice ball) and cream gratin using Hokkaido scallops,¹⁰⁰ while Lawson conducted a special sale of products using domestic seafood under the banner of MAFF’s “Let’s eat Japan!” campaign.¹⁰¹ Even conveyor belt sushi chain Kura Zushi took action, introducing a new domestic scallop item,¹⁰² while the parent company of popular discount chain Don Quijote announced special plans to buy-up Japanese scallops and sell them from their overseas outlets in countries like Thailand and Malaysia.¹⁰³

Numerous institutions also looked to include affected seafood products in workplace canteens. Keidanren—Japan’s leading business federation—called for all of its members to serve Japanese seafood at their company canteens and business meetings,¹⁰⁴ and some prominent national companies such as Yamaha have done similarly.¹⁰⁵ Moreover, schools across the country added scallops and other items to their menus, ranging from elementary schools in prefectures like Saitama and Kanagawa,¹⁰⁶ junior high schools in prefectures like Gifu and Fukui,¹⁰⁷ senior high schools in Hokkaido,¹⁰⁸ and even universities.¹⁰⁹ Some government agencies did so similarly, including the Japan Coast Guard (a special curry with scallops from Monbetsu in Hokkaido)¹¹⁰ and the Maritime Self Defence Force.¹¹¹

Finally, the support from Japan’s international partners has also played a role. Particularly notable has been the activism of US Ambassador to Japan Rahm Emanuel, who attended events to promote Japanese seafood affected by the ban and called on Americans to be “good neighbors” by increasing consumption of those products.¹¹² The ambassador also announced the US military would be placing large orders for Japanese scallops beginning in October 2023. The first of those orders, for 1,000kg, however represented only a fraction of the lost trade with China (95 million kg in 2022).¹¹³ As mentioned earlier, the US Embassy in Tokyo also took proactive steps to link affected Japanese businesses up with existing FDA-registered processing facilities in Taiwan, Thailand, and Vietnam in order to facilitate continued exports to the US and other international markets.¹¹⁴ More symbolic support has also been shown by other embassies in Japan, many of which have promoted the consumption of Japanese seafood products, including the European Union Delegation Ambassador Jean-Eric Paquet (who visited Aomori to enjoy local scallops),¹¹⁵ and members of the Australian Embassy (who enjoyed ‘Fukushima fish and chips’).¹¹⁶

Lessons for Countering Economic Sanctions

In his comments on the one-year anniversary, Prime Minister Kishida claimed that alternative sales channels had emerged to make up for approximately half of previous seafood sales to China.¹¹⁷ Looking at the gradual increases in exports and the apparently meaningful increases in domestic sales, our assessment is that the claim is quite plausible. On balance, given the size of the hole left by the loss of the PRC market and the friction involved in redirecting products that are not necessarily in wide demand in alternative markets, this is a significant achievement,¹¹⁸ and one which offers several potential lessons about the ability of industries—indeed, whole societies—to respond to the disruption generated by economic sanctions.

First, the case is a reminder that there will almost always be unexploited economic opportunities that can be drawn on when an industry is under pressure. Although many companies (and indeed governments) may convince themselves that certain existing trading arrangements are “irreplaceable,” that assessment is more likely a product of complacency than careful investigation. To take one example, just as Japan’s effective response to the 2010 rare earth incident served as a reminder not to underestimate the elasticity of supply, the successful redirection of scallops to new international and domestic consumers suggests the elasticity of demand should not be discounted either. However, identifying and exploiting new opportunities may require a substantial amount of vigorous analysis, careful diplomacy, and sheer effort, speaking to the role governments can play to speed up otherwise autonomous market adjustments. It is doubtful that the seafood industry would have achieved quite the same success were it not for the extensive support afforded by JETRO, METI, MAFF and other government agencies which—compared to many other bureaucracies around the world—have significant capacity and experience to assist with the technical requirements of restructuring international trading relationships. JETRO’s actions—which are well documented on their website—may offer valuable insights to other government trade agencies hoping to emulate Japan’s example.

The case also highlights the importance of accounting for midstream vulnerabilities. Much of the emerging discussion about countering economic coercion envisages risks arising from overreliance on specific markets as either a source of supply (as was the problem for Japan in 2010) or a source of demand (as was the problem for Australia in 2020). However, the experience of the scallop sector underlines that disruption may arise at chokepoints along supply chains linking supply with end consumers—a challenge that calls for very different policy solutions. For Japanese firms, this required not only identifying companies in third markets with the necessary technical knowledge and infrastructure to provide processing services, but also partners that had the appropriate certification and registration to reexport to end consumers in third markets. While this appears to be the first incident in which Beijing has been able to leverage its own midstream position to impose costs on a target economy by denying their ability to re-export to third markets, a somewhat analogous situation arose in the Lithuania case when Beijing apparently threatened to refuse imports containing Lithuanian inputs from third countries—thereby seeking to exploit a chokepoint arising from Lithuania’s participation in global supply chains. Policymakers and firms ought to consider their own exposure to such risks and possible solutions should they suddenly need to be managed.

The third lesson concerns the importance of individual product and market characteristics in determining the viability of different forms of adjustment. The fact that scallops require labor and capital-intensive processing, for example, complicated redirecting trade to alternative markets. Even then, the fact that the processing requirements for sea cucumbers could be undertaken domestically did not give that product a great advantage because of its much narrower demand base—both domestically and internationally—as a seasonal delicacy. Scallops, on the other hand, could benefit from an upswell in domestic consumption because they are relatively widely consumed, affordable, and reasonably adaptable. Headlines over the past year showed scallops being incorporated into a wide range of meals, including curry, stews, ramen, onigiri, clam chowder, and even pasta. That said, however, one wonders whether domestic sales might have increased even more if scallops were as versatile as the Taiwanese pineapples that benefitted enormously from consumer support following a Chinese ban in 2021—which can be consumed with sweet and savory dishes and drinks whether fresh, canned, juiced, or dried. Any collective efforts to counter economic sanctions will need to be carefully tailored to the specific attributes of the products affected and the wider market structure and regulatory landscape in which they are traded.

This leads to our final observation, which concerns the overall complexity involved in responding to sudden economic sanctions. In many cases, even where alternative sources of demand (or supply) may exist, redirecting trade will not be a simple matter of signing contracts with new buyers. The successful adjustments in the Japan seafood case were the product of a multidimensional, whole-of-society response that involved numerous actors and the navigation of a wide range of policy instruments, including international food safety certifications, novel domestic tax mechanisms, and school lunch menus. Perhaps more than anything else, the seafood ban saga highlights just how great a challenge G7 members and their partners have ahead of them as they seek to develop new toolkits for countering sanctions in contemporary world politics. Operationalising such responses multilaterally will be no easy feat, but sharing and reflecting on Japan’s experience to develop a set of best practices is one place to start.