TOKYO — Almost five decades after it banned international arms sales, Japan is gradually returning to that market as it looks to strike a deal with the U.K. that could lead to joint weapons research and development, according to a senior Japan industrial source.
London has offered Japan a deal to cooperate on six projects for joint research and/or co-development of arms, said Satoshi Tsuzukibashi, with Nippon Keidanren (Japan Business Federation), Japan’s most powerful industrial and business lobby.
In an exclusive interview with Defense News, Tsuzukibashi said Japan will formulate its counterproposals and framework that will allow the two countries’ leading defense makers to work together.
“It may be a couple of months or at least several months before it is official, but I think Japan and the U.K. are going to announce something regarding cooperation,” Tsuzukibashi said. “The Japan side has its own ideas, but the main need is to draw up a framework about how to do it.”
Tsuzukibashi, who was part of a weeklong trade mission to the U.K. that included top representatives from 17 of Japan’s top defense contractors, said he was not at liberty to discuss any of the six proposals but said the Japanese government would be suggesting a framework for cooperation after discussions with the UK Trade & Investment Defence & Security Organisation and other players.
A spokesman for the U.K. Defence Ministry also declined to go into specifics.
“We have had discussions with Japanese officials on a range of potential opportunities for cooperation between our defense industries,” the spokesman said in a statement. “We are keen to progress this work, and our companies are fully supportive of the prospect. For commercial reasons it would be inappropriate to disclose what these are at this point in time.
The move is the first tangible result of an April 2012 intergovernmental agreement between U.K. Prime Minister David Cameron and his Japanese counterpart, Yoshihiko Noda, to look into future partnering in the defense and research sector between the two countries.
It also comes just as local media announced that Japan is considering allowing exports of Japanese-made parts for the F-35 Joint Strike Fighter. Japan will partially produce the parts domestically following a December 2011 agreement between Japan and the U.S. to purchase 42 of the fighters.
Also in December 2011, Japan lifted a 1960s-era ban on the development or production of defense equipment with international partners — with the exception of the U.S. — in the hope of stimulating a sheltered and uncompetitive domestic defense industrial base used to producing small batches of equipment for Japan’s military.
Still, Japan maintained stringent limitations that included a ban on exports that could fuel international conflicts while maintaining strict control over transferring parts to third countries.
If, as is reported in local media, Japan has determined that exporting F-35 parts will not contradict guidelines, the news could herald a new willingness by the Japanese government toward arms sales, Tsuzukibashi said. Many in Japan object to the idea that exporting to certain nations involved with the F-35 project, most notably Israel, would violate the export principles.
“If it’s true, it’s big, it’s a big change, but we will still need to look at what to do about Israel and third countries,” Tsuzukibashi said.
The news comes following a pledge by the conservative Liberal Democrat Party (LDP) administration, led by Shinzo Abe, which returned to power last December after three years in opposition, to encourage international arms development and sales to revive Japan’s flagging defense industrial base.
Most analysts agree that Japan’s defense industrial base is too small and uncompetitive to succeed in the international market. But with Japan’s overall high level of technological and manufacturing prowess, the base has a lot to offer partners in joint research and development (R&D) projects leading to business later.
Narushige Michishita, director of the Security and International Studies Program at Japan’s National Graduate Institute for Policy Studies, said Japan has three potential areas of focus — joint R&D, competing in the international market and subsidizing equipment sales to favored partners — and will likely focus on the first.
One potential market is Southeast Asia. As a pointer to the future, last July, Japan sold 12 new patrol boats to the Philippine Coast Guard.
Since returning to power the LDP has launched a broad diplomatic offensive to promote more trade and cooperation across Southeast Asia. A series of high-level missions being mounted in recent weeks includes visits by Abe to Vietnam, Thailand and Indonesia; Deputy Prime Minister and Minister of Finance Taro Aso to Myanmar; and Foreign Affairs Minister Fumio Kishida to Australia, Brunei, Singapore and the Philippines.
“We have a pretty good capability to produce high-quality components and some smaller weapons systems; this is not about selling arms on the international market,” Michishita said. “We will start with low-key products, like patrol boats, life vests, protective gear and defensive weapons systems.”
A defense industry official said that while Southeast Asia is a big potential market for Japan, Tokyo will tread warily to avoid antagonizing China, which fears isolation and encirclement.
“Being friendly with Southeast Asian countries is important to us. But China is important too. We have to be careful,” the official said.
“It will be a long, long time before we could deal with anything bigger than patrol boats,” Michishita said.
Yuzo Murayama, a professor at Doshinsha University’s business school and an expert on Japan’s defense production industry, said reviving the sector would take a concerted effort and strategy lasting years. Murayama, who sat on a panel created by Japan’s Defense Ministry to look into how to revive Japan’s defense industrial base, said Japan needed to develop an international R&D and export strategy.
“Japan has the possibility of exporting defensive technologies using dual-use technologies, but the issue of the defense industrial base is probably a mid- to long-term issue for Abe,” Murayama said. “Abe’s priorities are Okinawa, North Korea, China and so on; therefore, although he realizes the necessity of changing polices in the defense industrial base, it would be slow for him to tackle this issue, not an immediate priority.”