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News | Feb. 27, 2017

Facilitating Japan’s Participation in Multinational Defense R&D: A Japanese Approach to Strategic Management of Technology Transfer and Intellectual Property Rights Issues

By Masahiro Matsumura Visiting Fellows


1. Introduction: Defining a Research Objective 

In 2014, Japan made a high-profile policy reversal toward the export policy of major most technologically and militarily advanced nations, that permits the export of defense equipment, articles and services, involving technology transfer.1 Since then, however, Japan has made little substantial progress to date, except several bi-national research and development (R&D) projects for individual element technologies as well as some limited legal-administrative instruments thereof.2 For several decades, Japanese defense firms have produced arms mostly for domestic use, with some under manufacturing agreements of U.S. defense contractors. Unsurprisingly, Japanese arms do not sell well overseas, due to their low international price competitiveness consequent upon the nature of domestic defense markets that are generally closed, highly monopsonistic, and comparatively small-sized; and due to the total lack of battlefield operational experience and combat-proven performance that results from the postwar pacifist constitution. 

The veiled rationale of the reversal, therefore, lies in facilitating multi-national R&D for a major weapon system, without which major Japanese defense firms will suffer further technological atrophy. Also, the reversal aims at sharing financial burdens and technological risks with project partners as well as at outcompeting emergent arms-export rivals, such as South Korea. The rationale makes sense when Japan under perennial fiscal austerity faces rapidly growing regional security uncertainties and threats, both present and potential. Thus the current state of affairs does not satisfy a high priority on multi-national R&D as set by that three major policy documents: the first full-fledged Japan’s National Security Strategy of 2013,3 the Strategy of Defense Production and Technological Bases of 2014,4 the Three Principles on Transfer of Defense Equipment and Technology of 2014. This circumstance constitutes a typical policy failure. 

This study aims to identify underlying impediments to Japan’s participation in multi-national defense R&D and then specific measures to remove or at least alleviate them toward the successful formation and implementation thereof.