Defense industry of Japan
Furthermore, the 1954 Mutual Security Assistance Pact allowed Japan to receive military aid in the form of funds, materials, and services from the United States.
[1] In July 1970, then-Defense Agency director general Nakasone Yasuhiro established five objectives for the defense industry:[2] By the late 1970s, indigenous suppliers had developed and produced aircraft, tanks, artillery, and major surface and underwater naval combatants for the JSDF.
The mid to late 1980s saw an increase in indigenous production and joint development with the U.S. as larger portions of the defense budget were allotted to procurement.
In 1988, a secret memorandum circulated among defense contractors estimated that lifting the export ban would result in Japan capturing 45% of the world's tank and self-propelled artillery market, 40% of military electronic sales, and 60% of naval ship construction.
Two of the most important reforms for the defense industry included the lifting of the self imposed arms-export ban in 2014 and the establishment of the Acquisition, Technology & Logistics Agency (ATLA) in 2015.
[1][3][4] Despite producing and supplying arms to one of the most powerful and expensive military forces, Japan's defense industry remains to be a small sector in the nation's overall manufacturing output.
[3] Japan's re-entry into the international arms market would allow Japanese manufacturers to establish more customers to further increase revenue and lower unit cost.
The X-2 made its historic maiden flight on 22 April 2016, cementing Japan as the fourth country in the world to fly their own stealth jet.
[10] For Japan, the benefits of exporting arms to another country includes improving economy of scale in the defense industry, lowering unit cost of the product and strengthen international relationships.
One issue Japan faces when exporting arms is the product's high unit cost and unique domestic requirements that might not be favorable for outside customers.
[8][11][14][15] There is also hesitation for Japanese companies to participate due to arms sales representing a small amount of revenue and/or fear of reputation damage at home by being labeled as "merchants of death".
The project, worth A$50 billion to replace Australia's ageing fleet of Collins-class submarines, could have been Japan's first major arms export since lifting the export ban in 2014, but it ultimately lost to French firm Direction des Constructions Navales Services (DCNS) with their proposal on a conventionally powered variant of the Barracuda-class submarine.
Initially, Japan enjoyed an advantage over other competition (with some speculation that the Sōryū-class has been pre-selected[citation needed]) because of the close relationship between then-Australian Prime Minister Tony Abbott and Prime Minister Shinzō Abe to bolster Australian-Japan strategic relationship and U.S. backing on selecting the Japanese submarines.
[citation needed] Ultimately, Japan's loss highlighted the country's over-reliance on political support from Tony Abbott (which ended with Malcolm Turnbull replacing him), inability to appeal to the Australian public, and inexperience exporting arms, allowing overseas production and modifying domestic weapons for foreign customers.
