| TOKYO, July 26
TOKYO, July 26 Japan's promised review of its
longstanding ban on arms exports, as part of a push for a more
robust military, could help make its defense contractors more
globally competitive by reducing costs and expanding markets.
The Defense Ministry said on Friday it would review a
decades-old self-imposed ban on arms exports and take action as
needed. Media reports have said Japan could issue new guidelines
to replace the ban, which has already been eased several times.
A lack of clear guidelines on what arms gear could be sold,
and to whom, by firms such as the builder of the wartime Zero
fighter, Mitsubishi Heavy Industries Ltd, submarine
maker Kawasaki Heavy Industries Ltd and licensed Apache
helicopter maker Fuji Heavy Industries Ltd, has held up
efforts to translate the policy shifts into actual deals.
"To improve the technology of our production base from the
viewpoint of strengthening our international competitiveness, we
will aggressively promote joint international development
production with the United States, Britain and other countries,"
the Defense Ministry said in an interim report on its review.
The moves form part of Prime Minister Shinzo Abe's review of
the nation's long-term defense posture in the face of perceived
threats from China and North Korea.
Allowing more arms exports and joint production could help
Japan to forge a stronger military as its budget for new
Japan's defense spending has remained at around 1 percent of
GDP for decades, but swelling maintenance costs have shrunk its
procurement budget by a third over the past 20 years.
PAYING A PACIFIST PREMIUM
Industry sources say Japan often pays up to three times more
for military gear than other nations, because of the small
volumes its manufacturers, unable to sell overseas, produce.
A wider customer base for Japan's military suppliers,
particularly in the United States, where defense spending is ten
times more, could help lower those costs and give the nation a
bigger bang for its yen.
But Japan is unlikely to find foreign customers lining up to
buy its weapons, defense industry experts warn.
"The Japanese will find that exporting into the world
defense market is going to be tough sledding for most, if not
all makers," said Lance Gatling, an aerospace and defense
consultant at Nexial Research in Tokyo.
"It is an increasingly globally competitive market, and new
entrants in Israel, Singapore, Korea, India, and East Europe
make increasingly competent equipment at attractive prices."
Instead, Japan may seek a place in the global supply chain
of bigger global defense contractors, in the same way that
Mitsubishi Heavy, Kawasaki Heavy and others are already major
component suppliers for Boeing Co commercial aircraft.
Lockheed Martin Corp, which helped Japan build its
F-2 fighter and will supply it with F-35 fighters assembled
locally by Mitsubishi Heavy, wants to widen its supply chain to
Japan, in a move to cut costs amid tighter defense spending at
home, through access to a larger pool of potential suppliers.
With fewer restraints on exports, Japanese firms could be
ready to become suppliers to the whole F-35 program within four
years, Richard Kirkland, Lockheed's executive in charge of
international business development, told Reuters in October.
But fitting the Japanese into the global consortium that
builds the fighter would mean taking work away from others.
"We understand Japanese industry has the quality and has the
processes to be an integral part of this, should they decide to
participate," Kirkland said.
Also interested in Japan as a supplier is Raytheon Co.
, which is seeing revived demand for its Patriot missile
defense system. Tapping firms that make the system in Japan
under license, with Mitsubishi Heavy as the prime contractor,
could help keep down production at the U.S. company.
The same logic could work for Boeing, too, as it revamps its
twin-rotor Chinook transport helicopters. The aircraft, deployed
by Japan's Self-Defense Forces, is built locally by Kawasaki
The government's immediate goal is to hash out guidelines
for military exports, said Nexial's Gatling, perhaps to allow an
upgraded ship-based SM-3 missile to be sold to third countries
beyond the United States and Japan.
Designed jointly by Raytheon and Mitsubishi Heavy, it is
meant to take out intercontinental ballistic missiles at the
edge of space as part of a defense shield Japan is deploying to
counter any potential threat from missile-armed North Korea.
To begin with, however, Japanese firms may find it easier to
hawk dual-use technology to overseas military buyers, equipment
they already sell, competitively, to commercial customers.
Japanese components, such as cameras in surveillance drones,
communications equipment, and other electronic gadgets are
already in common use by military forces worldwide.
The U.S. army and British armed forces have already taken
Panasonic Corp's logo to the battlefield, using its rugged
Toughbook PCs, acquired through third-party vendors, rather than
directly from the company, to guide surveillance drones.