Japan’s Arms Export & Defense Production Policy

By Heigo Sato

A Japanese Sōryū-class diesel-electric attack submarine under construction in 2012. Source: Wikimedia user Hunini, used under a creative commons license.

A Japanese Sōryū-class diesel-electric attack submarine under construction in 2012. Source: Wikimedia user Hunini, used under a creative commons license.

In April 2014, the second Shinzo Abe administration announced new principles for the transfer of defense equipment and technologies. These new principles are a departure from a decades-long ban on arms trade, which prohibited virtually all Japanese arms trade. Under the original three principles of arms trade, the Japanese government enacted self-imposed restrictions on the trade and transfer of ammunition, the transfer of defense technologies, investment in defense industries overseas, and military-related construction.

In reality, the original three principles were merely an administrative guideline of the Foreign Exchange and Foreign Trade Law. However, the Liberal Democratic Party (LDP) believed that being labeled an anti-pacifist or anti-constitution party was political suicide, so the LDP exercised close control over the transfer of armaments and related technologies, which contributed to the establishment of the myth of an arms export ban. The Japanese government gradually relaxed the three principles in response to policy requirements. As early as 1983, the Japanese government made a statement of exception of the application of the three principles to allow transfer of defense technologies to the United States without amending the principles or the legislative and ministerial decrees.

The new three principles are historic for Japan’s security policy. Together with the establishment of the NSC, the enactment of the Act of Protection of Specially Designated Secrets, and the decision to change the constitutional interpretation on exercising the right of collective self-defense, the second Abe administration has changed the basic structure of Japan’s security policy mainly by streamlining the system and restructuring and modernizing the work of the government. However, the new guidelines for defense equipment transfer established under existing law are consistent with legislative and administrative decrees to date, and do not significantly alter existing measures outlined in past exemption statements. In fact, these new guidelines reconfigure existing arrangements to permit security cooperation through relaxation of regulations rather than complete amendment. Even the number of the principles (three) has been inherited.

Renewing the system and policies on defense equipment transfers is of special necessity and urgency because of the changing defense production environment. In this new defense environment, Japan had to consider whether it was realistic to continue its relatively closed domestic defense market or to rely on domestic defense production while receiving a majority of production licenses from the United Sates. The traditional formula became difficult for two reasons. First, the domestic defense market was too small to keep the defense production base necessary to produce defense equipment of the quality required for the security needs of the SDF. Second, countries with major defense companies, like the United States, became reluctant to provide the production licenses for major defense equipment to foreign countries

Issuing the new three principles should not be an end in itself; rather, the Japanese government must deal with as yet unanswered issues. Regarding administrative issues, the Japanese government must avoid an inter-ministerial battle between the government institutions involved. In this regard, Japan should establish a permanent council within the National Security Council or, preferably, the Prime Minister’s Office to make decisions on arms trade and the direction of defense equipment development and production. The members of the proposed permanent council must come from business and academia, and be influential on technological and industrial policy.

As for a political/societal issues, there are several separate but interrelated questions. First, many outside observers’ analyses of these two documents suggest a comprehensive relaxation of Japan’s defense trade. Open debate must be conducted both to address the anxiety among the Japanese public on the development of the defense trade, and to relax tension among Japan’s defense production companies, which are alarmed about facing public criticism. Inquiries must be properly handled through channels that are open and transparent and be judged based on strategically feasible decisions. Furthermore, in order to support the government’s decisions, there should be a network of government-related institutions that support marketing, risk analysis, post-shipment verification, and end-use monitoring.

With regard to Japan’s relationship with the United States, there are several issues that have to be sorted out. For example, production licensing will likely become an issue of public debate in Japan. The new principles clearly state that licensed production items can be transferred back to the United States, but the principles do not address the transfer of these items to third parties. The Japanese government has multiple tools to deal with issues related to the transfer of defense equipment and technology. It now has to think positively and constructively, especially with the United States, on how to develop and formulate a policy that is flexible and adaptable to the changing strategic and technological circumstances.

Dr. Heigo Sato is a Professor at the Institute for World Studies at Takushoku University in Tokyo, Japan. In 2015, he was a Visiting Scholar with the Japan Chair at the Center for Strategic and International Studies in Washington, D.C. Dr. Sato’s essay is part of CSIS’s Strategic Japan Working Paper Series featuring Japanese scholars addressing pressing issues in Japanese foreign and economic policy.

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