Appendix A

Summary of Past Studies on U.S.-Japan Defense Technology Cooperation

BACKGROUND

During the 1980s, the Defense Science Board (DSB) conducted several studies analyzing international cooperation in the research, development, and production of weapons systems and military technologies. The first report, International Coproduction/Industrial Participation Agreements, centered on the U.S.-NATO cooperative relationship and was released in August 1983. The follow-up report, Industry-to-Industry International Armaments Cooperation, Phase II —Japan, was released in June 1984 and addressed similar themes with respect to Japan. A third study, Defense Industrial Cooperation with Pacific Rim Nations, was published in October 1989 and represented an attempt to update the earlier reports and integrate growing economic and competitiveness concerns into the policy planning process.

DEFENSE TECHNOLOGY COOPERATION WITH EUROPE AND JAPAN

The original NATO and Japan studies were chartered by the U.S. Department of Defense (DoD) in 1981 to address issues related to international arms collaboration programs, which were becoming increasingly common. DoD planners recognized that the rationale for collaborative initiatives between the United States and its NATO and Japanese allies had changed and that a new policy framework and criteria for assessing programs were needed.

The first major cooperative armament ventures between the United States and its allies were in the late 1950s and early 1960s, when American fighter aircraft and antiaircraft missiles were coproduced in Europe and Japan. These arrangements were perceived to have distinct advantages for the security of the United States and its allies, including providing modern equipment to allied forces, enhancing standardization, establishing second production sources, and tying coproducers to the U.S. militarily. The coproducers themselves were often motivated by economic factors, including the generation of employment, creation of a defense industrial base, acquisition of advanced technology and management techniques, and improvement of their balance of payments. Cooperative arrangements therefore became common throughout the 1960s and 1970s, encompassing a wide variety of weapons and components.

By 1983, however, international arms collaboration programs had created certain dilemmas for U.S. policymakers. The NATO and Japan studies sought to reexamine and redefine U.S. interests as they related to coproduction and codevelopment. European defense industries had matured, and European military technology was comparable in many respects to that of the United States, which at least in principle, allowed for a two-way flow of technology. The difficulties associated with the Japanese relationship were more complex. While the bilateral



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Maximizing U.S. Interests in Science and Technology Relations with Japan: Report of the Defense Task Force Appendix A Summary of Past Studies on U.S.-Japan Defense Technology Cooperation BACKGROUND During the 1980s, the Defense Science Board (DSB) conducted several studies analyzing international cooperation in the research, development, and production of weapons systems and military technologies. The first report, International Coproduction/Industrial Participation Agreements, centered on the U.S.-NATO cooperative relationship and was released in August 1983. The follow-up report, Industry-to-Industry International Armaments Cooperation, Phase II —Japan, was released in June 1984 and addressed similar themes with respect to Japan. A third study, Defense Industrial Cooperation with Pacific Rim Nations, was published in October 1989 and represented an attempt to update the earlier reports and integrate growing economic and competitiveness concerns into the policy planning process. DEFENSE TECHNOLOGY COOPERATION WITH EUROPE AND JAPAN The original NATO and Japan studies were chartered by the U.S. Department of Defense (DoD) in 1981 to address issues related to international arms collaboration programs, which were becoming increasingly common. DoD planners recognized that the rationale for collaborative initiatives between the United States and its NATO and Japanese allies had changed and that a new policy framework and criteria for assessing programs were needed. The first major cooperative armament ventures between the United States and its allies were in the late 1950s and early 1960s, when American fighter aircraft and antiaircraft missiles were coproduced in Europe and Japan. These arrangements were perceived to have distinct advantages for the security of the United States and its allies, including providing modern equipment to allied forces, enhancing standardization, establishing second production sources, and tying coproducers to the U.S. militarily. The coproducers themselves were often motivated by economic factors, including the generation of employment, creation of a defense industrial base, acquisition of advanced technology and management techniques, and improvement of their balance of payments. Cooperative arrangements therefore became common throughout the 1960s and 1970s, encompassing a wide variety of weapons and components. By 1983, however, international arms collaboration programs had created certain dilemmas for U.S. policymakers. The NATO and Japan studies sought to reexamine and redefine U.S. interests as they related to coproduction and codevelopment. European defense industries had matured, and European military technology was comparable in many respects to that of the United States, which at least in principle, allowed for a two-way flow of technology. The difficulties associated with the Japanese relationship were more complex. While the bilateral

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Maximizing U.S. Interests in Science and Technology Relations with Japan: Report of the Defense Task Force relationship with Japan was accepted as extremely important, cooperative arrangements between the United States and Japan had evolved differently than those with Europe. There was no established policy or overarching framework for technological cooperation with Japan, which NATO provided for Europe. In general terms the DSB task force was concerned with the lack of a cohesive overall U.S. strategy toward Japan that would integrate defense and economic interests. One of the primary conclusions of the 1984 DSB study was that, although Japan might become a competitor for defense exports, the strategic value of closer cooperation outweighed the potential drawbacks of competition. It was believed that Japan would develop the capability to become a major defense exporter within 10 to 15 years, especially in aerospace technologies. Therefore, technological cooperation with Japan could prove costly in the long run. However, the importance of the bilateral relationship was paramount, and defense technology cooperation was seen as a means to strengthen that relationship. The DSB task force added the reservations that any initiative for cooperation must involve a two-way flow of technology, must serve the U.S. national interest, and must be integrated into a broader economic and security policy toward Japan. The DSB task force recognized that Japan had developed comparable or superior technologies in several fields. While it believed that few of Japan’s narrowly defined military technologies were of interest, certain commercial and dual-use technologies could prove extremely valuable to U.S. defense industries. However, no comprehensive assessment of Japanese technology had yet been made, and it was believed that the United States knew relatively little about Japanese achievements and capabilities in most fields. The DSB study advocated a “positive but tough approach” toward defense technology cooperation with Japan. Efforts should be broadened, but the United States should maintain a firm requirement of reciprocity and develop a means to assess the balance of technology exchange. Industry-to-industry initiatives were to be encouraged so long as they served national interests. The DSB task force recommended codevelopment of two significant military subsystems to gain experience with the difficulties and benefits of cooperation, with a DSB group meeting periodically to evaluate the net value of ongoing initiatives. With regard to Japanese technology, the task force recommended initiation of a comprehensive program to rapidly translate Japanese technical and policy documents. It also suggested the application to Japan of recommendations made in the earlier NATO study. These included a presidential policy declaration that the United States was committed to global leadership in important military and commercial technologies, and a commensurate increase in national investment in defense and civilian research and development (RżD). The task force suggested that DoD initiate a comprehensive interagency study on an overall economic and defense strategy. DEFENSE TECHNOLOGY COOPERATION WITH THE PACIFIC RIM The 1989 DSB study on cooperation with Pacific Rim nations constituted a follow-on to the earlier NATO and Japan reports. First meeting in March 1988, the Pacific Rim task force sought to update those reports and incorporate increasingly important economic considerations. It also recognized the continued importance of defense technology cooperation. The stated U.S.

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Maximizing U.S. Interests in Science and Technology Relations with Japan: Report of the Defense Task Force objectives for cooperation were essentially similar to those outlined in the earlier reports—increased interoperability and standardization, an enhanced overseas logistics base, reduced duplication and RżD costs, and strengthened allied capabilities through the sharing of advanced weapons and military technology. However, the task force also identified concerns related to defense industrial cooperation, which were largely understated or dismissed in the earlier studies. The 1989 report clearly recognized a decline in U.S. manufacturing competitiveness and technological superiority and sought to closely link economic and military security. Specifically, the task force cited a “lack of balance in many defense industrial cooperation arrangements where U.S. military gains have sometimes entailed economic penalty.” The major findings of the 1989 DSB study concerned the changed economic relationship between the United States and its Pacific Rim allies and the impact of this change on security concerns. The task force concluded that national and international developments had overtaken existing policies and that a thorough review was necessary. Contemporary U.S. policies were oriented toward NATO armaments assistance and were inadequate for actual technological cooperation with Pacific Rim countries. The task force was critical of the strategic planning of U.S. defense industries. It found that U.S. firms often engaged in technology transfer in pursuit of narrow, short-term company goals and without regard for national or industry-wide interests. In addition, U.S. firms underinvested in long-term RżD and failed to take advantage of foreign science and technology, especially Japan’s. The task force felt that addressing these issues would improve the overall balance of technology flow. The 1989 study drew several conclusions from the FS-X experience. It was felt that the FS-X controversy dramatized the need for an integrated strategy combining technology, economics, and security. The United States needed to take a pragmatic approach to cooperation, carefully considering long-term mutual benefits and recognizing the importance of dual-use technologies and their likely impact on the U.S. technology base. The active participation of Congress and several executive branch agencies was deemed necessary to develop broader, more coherent policies. The task force’s recommendations were broken into two categories—policy and managerial. With regard to policy, it was suggested that the Office of the Secretary of Defense (OSD) and the National Security Council establish a high-level group that would work to link defense and economic interests as they related to cooperation. Similarly, it was recommended that OSD develop a broad, long-term national technology vision to be formalized and implemented through a presidential statement. The task force felt that the United States should only participate in cooperative initiatives that were mutually beneficial (reciprocal) and clearly served both security and economic interests. Finally, the study recommended greater cooperation in basic science and technology collaborative projects, possibly in coordination with the National Science Foundation. With regard to managerial issues, the DSB recommended (for the third time in as many administrations) a series of reorganizations the would seek to change the policy emphasis from defense industrial assistance to cooperation. The task force recommended that DoD develop a more structured cooperative framework for interacting with Pacific Rim nations and evaluating cooperative ventures and that several small demonstration projects be initiated. It was suggested that industry take the lead in initiating cooperative projects. Finally, the task force recommended

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Maximizing U.S. Interests in Science and Technology Relations with Japan: Report of the Defense Task Force the declaration of global leadership in defense and commercial science and technology as a national goal and that the United States should make the RżD investments necessary to meet this goal. Common Themes The 1984 and 1989 DSB reports made many similar recommendations (see Table A-1). The reports shared the same fundamental conclusion—the United States must insist on a more balanced flow of technology when cooperating with its allies. The primary difference was the 1989 report’s heavy emphasis on commercial competitiveness and economic well-being. This emphasis allowed the Pacific Rim task force to make more specific and focused recommendations regarding future defense technology cooperation. Follow-up to the Defense Science Board Studies To a large extent, the recommendations of the two DSB studies were not implemented. Recent administrations have issued statements on the importance of U.S. technology leadership and have launched initiatives to encourage technology investments by industry.1 However, a number of the specific recommendations related to U.S.-Japan cooperation have not been acted on. DoD has reorganized somewhat but not to the extent recommended in the 1989 study. A clear policy for integrating economic and security interests in defense collaboration has not been issued. 1   President William J. Clinton and Vice President Albert Gore, Jr., Technology for America’s Economic Growth: A New Direction to Build Economic Strength, 1993.

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Maximizing U.S. Interests in Science and Technology Relations with Japan: Report of the Defense Task Force TABLE A-1 Recommendations Specific to Both Defense Science Board Reports Related to Defense Technology Cooperation with Japan Industry-to-Industry International Armaments Cooperation, Phase II –Japan (1984) Defense Industrial Cooperation with Pacific Rim Nations (1989) President should declare technological superiority a national goal. The United States should develop a national technology vision to be implemented through a presidential statement. DoD should invest in research and development to meet national goal. The U.S. government should emphasize commercialization of technology and technical education and provide incentives for industrial investment in critical technologies. The Under Secretary of Defense for Research and Engineering should develop means for assessing the balance of technology exchange and the overall benefit. The Under Secretary of Defense for Acquisition should establish procedures and guidelines to achieve stated mutual benefits from cooperation consistent with security and economic concerns. DoD should make a joint high-level statement with the Japanese government encouraging industry-to-industry technology cooperation. DoD should encourage industry-to-industry collaboration, and consult with industry before and during negotiations on program memoranda of understanding. DoD should stimulate the initiation of a comprehensive interagency study on overall defense/economic strategy. The Secretary of Defense and the National Security Council should establish policy and evaluate defense/economic linkages and trade-offs related to cooperation. The United States and Japan should expand cooperation in basic research. The Under Secretary of Defense for Acquisition should coordinate increased cooperation in basic research with National Science Foundation programs. The United States and Japan should undertake codevelopment of two significant subsystems to gain experience. DoD should initiate several small programs with Pacific Rim countries to serve as models. SOURCE: Compiled by Office of Japan Affairs staff.