JUNE 2025
Gains from Digital Services
Imports in Japan
A Case for Open Digital Trade
By Kati Suominen
Introduction
Japan is a long-standing champion of an open, rules-based international trading system and has
pioneered the creation of regional and multilateral agreements to promote digital trade. In recent
months, following the Japanese government’s expression of concern about the country’s trade decit in
digital services in its 2024 Priority Policy Program for Realizing Digital Society, there has been growing
discussion in the Japanese media about a “digital decit.” The digital decit concept has been framed
as a negative: Foreign digital services providers are “draining” Japan. To be sure, Japan is seeking to use
the concept to promote the export of Japanese digital services and local digital services start-ups.
However, the concept can also be viewed as promoting protectionist trade policies and in that
respect could be rethought, as suggested by many Japanese experts and academic studies. After
all, data strongly indicates that access to imported digital services helps promote Japanese rms’ and
exporters’ competitiveness.
This paper will discuss the digital decit concept in light of the critical importance of open digital trade
for the millions of Japanese rms that import such services, and in light of the strong growth of Japan’s
digital services exports in the past few years. The ve main ndings are listed below:
▪ Concerns about a “digital decit” appear to be overstated. Since 2014, Japan has had
a trade decit in telecommunications, computer, and information services sectors, and its
magnitude, as this paper will discuss, has during most years remained at 0.2 to 0.3 percent of
gross domestic product (GDP). Japan runs much larger trade decits in goods, other business
services, and insurance and pension services, for example.
