The US-Japan Industry Forum for Security Cooperation (IFSEC) was founded in 1996 to promote dialogue between the two countries' defense industries and provide advice to their governments on matters that affect defense industrial cooperation. Dialogue among the industry participants on both sides resulted in agreement on an IFSEC Joint Report, the primary element of which was a "Statement of Mutual Interests" that included recommendations for the promotion of effective defense equipment and technology programs. This IFSEC Report was presented to Japan Defense Agency (JDA) and US Department of Defense (DoD) officials at the Systems and Technology Forum (S&TF) meeting of January, 1998.
Dialogue among IFSEC participants noted the great changes for defense industries brought on by the end of the Cold War. The need to maintain viable defense industrial/technology bases in the face of advancing technologies, reduced procurements, and rising costs underlined the importance of mutually beneficial cooperation in the acquisition of defense systems. IFSEC members also recognized an evolution in the nature of US-Japan defense industrial cooperation, from supplier-customer ties to the growth of partnerships in development of future defense systems. It was also clear that this growth of defense partnerships meant that collaboration must go beyond marketing and procurement to consideration of common needs for future defense equipment.
Conditions affecting US-Japan cooperation on defense programs have continued to change since release of the original IFSEC Report. Developments noted during recent IFSEC discussions include:
These factors suggest that future US-Japan cooperation on defense programs will feature more long-term planning, greater collaboration on systems development, and increased interaction among defense industries. Government-government dialogue is already evolving to reflect these conditions; industry discussions with government officials as well as with each other should do the same.
The 1998 IFSEC Report concluded that closer defense industrial cooperation would benefit the manufacturing/technology bases of both the US and Japan, support interoperability, and thus strengthen Alliance cooperation. The Report discussed various matters that affect US-Japan cooperation in defense programs, such as:
Organizational structure and culture were seen more as conditions to be managed than problems to be solved. On the other hand, national security and industrial policy concerns were viewed as matters that must be adjusted to accommodate changing circumstances. In all cases attitudes could be improved through informed dialogue and the accumulation of positive experience.
Based on these observations the IFSEC Report made several recommendations for facilitating US-Japan defense industrial cooperation:
Developments since the release of the IFSEC Report confirm the validity of its basic conclusions. Some of the original recommendations also remain valid, while others need to be reconsidered in light of current circumstances. Based on extensive discussions of current US-Japan security relations, defense acquisition policies, and defense industry trends, IFSEC members offer the following thoughts and recommendations for promoting effective defense industrial/technology cooperation between the US and Japan.
When IFSEC first convened, defense industrial cooperation was focused largely on selling and licensing US equipment to Japan. R&D on defense-related technologies was undertaken as the exception, on a largely ad hoc basis with little thought to operational requirements. Since then increasing US-Japan interaction on regional security interests has placed greater emphasis on cooperative defense operations, which has in turn underlined the need to bring consideration of operational requirements into the forefront US-Japan defense program planning and implementation. This change in view can be seen in such current government activities as:
In a trend seen worldwide, defense industries increasingly draw on global and commercialized technology bases while major defense programs are implemented through multinational consortia. Policy, operational, and industry developments thus combine to emphasize the need for more timely discussion of future defense interests among interested industry as well as government parties.
Industry dialogue can only be as effective as governments permit through their laws, policies, and regulations. Unfortunately, government practices still reflect the conditions of earlier times, restricting industry dialogue to a level well short of that needed for enlightened US-Japan cooperation on defense programs. US companies must go through elaborate "marketing license" procedures before they can even discuss the concepts underlying potential cooperative programs with Japanese counterparts. Japanese companies are not authorized by their government to undertake studies with US industry that are not part of established government programs. This combination of government policies and procedures actively discourages US and Japanese industry from even exploring possibilities for cooperation.
IFSEC members recognize that industry must respect government direction, but also note that industry must take initiatives in informing governments, as well as each other, of opportunities for cooperation. Like industry-industry dialogue, government-industry discussion must be open and two-way. One idea for encouraging more open dialogue, already being explored in Washington as part of the recent Defense Trade Security Initiative (DTSI), would be the conclusion of government MOUs to facilitate industry discussion in specified mission or product areas.
Restrictive US practices on releaseability of information as well as inefficient export licensing procedures remain serious concerns for defense industrial cooperation. Recent policy initiatives like DTSI encourage the increased use of the "integrated product team" (government, industry, customer) approach to international programs. IFSEC believes that this practice should be more thoroughly applied to US-Japan programs to facilitate information disclosure and the processing of export licenses.
IFSEC members also recommend that the US government adopt a flexible approach toward the actual procedures used for US export sales. Foreign Military Sales (FMS) or Direct Commercial Sales (DCS) procedures should be used in whatever combination most effectively ensures required government support, while also encouraging necessary dialogue among government and industry participants. Such decisions should be reached through consultations among the two governments and their involved companies.
Meanwhile, IFSEC members are encouraged by evidence of a more practical approach by Japanese government officials to designating "military" vs. commercial items for export. This progress has diminished the concern over military/dual-use distinctions expressed in the original IFSEC Report. On the other hand, highly restrictive interpretations of Japan's "Three Principles" policy on arms exports remain a major obstacle to more effective defense equipment and technology cooperation. IFSEC members agree that a general relaxation of this policy is not feasible. Rather, a more flexible interpretation of the Three Principles policy should:
The original IFSEC Report raised concern with chronic DoD-JDA disputes over the designation of "derived" (from the US) or "non-derived" (indigenously developed) technologies embedded in Japanese defense programs. While such disputes have become less visible in recent years, increasing activity in joint development as well as upgrades of current equipment ensure that technology ownership will remain a critical issue in US-Japan programs. The IFSEC Report recommended that the US and Japan address industry concerns over intellectual property rights (IPR) through conclusion of an agreement that includes generic definitions of derived vs. non-derived technologies. IFSEC members believe that this remains a valid recommendation.