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Japan set to enter military equipment exports market

Japan has relaxed its self-imposed decades-old ban on military equipment exports in a move that will open up new markets to its defence contractors and help it squeeze more out of its defence budget.

world Updated: Dec 28, 2011 01:16 IST

Japan has relaxed its self-imposed decades-old ban on military equipment exports in a move that will open up new markets to its defence contractors and help it squeeze more out of its defence budget.

The rule adopted in 1967 banned sales to communist countries, and those involved in international conflicts or subject to United Nations sanctions. It later became a blanket ban on exports and on the development and production of weapons with countries other than the US, making it impossible for manufacturers to participate in multinational projects.

The government's security council agreed to the relaxing of the ban to allow Japan to take part in the joint development and production of arms with other countries and to supply military equipment for humanitarian missions, chief cabinet secretary Osamu Fujimura said.

"The new standards [on weapons exports] are a result of the government considering measures that required attention amid recent changes to the environment surrounding international defence equipment," Fujimura said, referring to rising arms costs that could put strain on government, with public debt twice the size of its economy.

The relaxing of the rules does not mean Japan will begin openly selling its military products to the world. Exports will be limited to strategic allies like the US. However, the lifting of the ban just before the state visit of Japanese Prime Minister Yoshihiko Noda opens up the possibility of defence technology collaboration between India and Japan.

The new policy could still allow companies such as Mitsubishi Heavy to join the development of Lockheed Martin's F-35, which Tokyo picked last week as its next frontline fighter, planning to buy 42 machines at an estimated cost of more than US$7bn.

Although Japan is the world's sixth-biggest military spender, it often pays more than double other nations for the same equipment because local export-restricted manufacturers can only fill small orders at a high cost. Removing the ban will stretch Japan's defence purse further as military spending in neighbouring China expands. This year Beijing raised military outlays by 12.7%. That included money for its own stealth fighter, the J-20, which made its maiden flight in January.

In contrast Japan's defence budget has been shrinking in past years as ballooning costs for social security and servicing its growing debt pile squeeze other spending.