Considering a Japanese Version of Foreign Military Sales

For many years, limits on Japanese exports of arms and arms technology have weakened Japan’s defense industry, which has relied on the Ministry of Defense (MOD) for production contracts but now faces a globalized defense industry in which international joint development and production of defense equipment have become mainstream. Although the Foreign Exchange and Foreign Trade Act of 1949, as well as the Three Principles on Arms Exports and Their Related Policy Guidelines introduced in 1967, effectively imposed a total embargo on arms exports, exceptions emerged over time, starting with the licensing of arms technology to the United States in 1983. On April 1, 2014, the government of Japan introduced the Three Principles on Transfer of Defense Equipment and Technology (hereinafter referred to as the “Three Principles”) to replace the original Three Principles, allowing arms exports only when they contribute to the active promotion of peace and international cooperation, as well as Japan’s national security. The new principles included the Strategy on Defense Production and Technological Bases—which shifted away from the previous policy of maintaining all defense production and the technology base domestically to a policy of allowing some international joint development and joint production. The government has been working on defense equipment transfers under the new Three Principles ever since, but there has been only one transfer of a complete system: the sale of an air-defense radar system to the Philippines.

If this trend continues, Japan’s defense industrial base will continue to decline. How can Japan reverse this trend and increase exports of defense equipment? This paper explores possibilities for Japan by comparing the defense export systems of other countries, including the U.S. foreign military sales (FMS) program, and assesses whether Japan needs its own version of FMS.

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