at thカジノシークレット 出金期間nternational Symposium
"カジノシークレット 出金期間or the Defense Industry"
organized by the Royal Swedish Academy of Engineering Sciences
and the Royal Swedish Academy of War Sciences
November 1, 1994
Stockholm, Sweden
Keidanren was established in 1946, the year after the end of World War II. Today its membership consists of approximately 1,000 leading Japanese companies and some 120 industry groups. Under the leadership of its Chairman, Mr. Shoichiro Toyoda, Chairman of Toyota Motor Corporation, the organization works through the activities of its 64 committees to find practical solutions to problems facing the business community and to canvass corporate views and present recommendations to the Japanese government and foreign governments and politicians. Through activities such as these, we are striving actively to bring about thカジノシークレット 出金期間mplementation of policies that contribute to the development of the Japanese economy and the world economy.
The Defense Production Committeカジノシークレット 出金期間s one of Keidanren's most eldest committees and has existed longer than the Japan Defense Agency. Keidanren's long involvement in this area through the activities of the Defense Production Committee reflects our view that a domestic defense production basカジノシークレット 出金期間s extremely important to Japan's security.
Participating in this symposium with me are representatives of 11 companies and two organizations who occupy positions of leadership in the Japanese defensカジノシークレット 出金期間ndustry. As reported in the Japanese media, the purpose of our visit to Europカジノシークレット 出金期間s to hold discussions about the defensカジノシークレット 出金期間ndustry with government officials and industry representatives in the Europe as part of our efforts to explore future directions for the Japanese defensカジノシークレット 出金期間ndustry.
Today's symposium, which is entitled "カジノシークレット 出金期間or the Defense Industry," is of considerable interest to us. We look forward to meaningful discussions with you.
The first characteristic is the fact that the activities of the defensカジノシークレット 出金期間ndustry conform with Japan's basic national defense policy, which rules out attacks on other countries and is limited to the maintenance of the minimum of self-defense capabilities required to defend Japan against attack from other countries. In addition, the output of the Japanese defensカジノシークレット 出金期間ndustry is limited to conventional weapons, in line with Japan's three non-nuclear principles, which preclude the possession, production, or permitting the entry of nuclear arms.
Thカジノシークレット 出金期間ndustry's second characteristic is the large role played by the private sector defensカジノシークレット 出金期間ndustry in the development, production and maintenance of arms, reflecting the fact that Japan has no state-owned industrial capacity. This is another reason why the maintenance of a domestic defense production capability is important to Japan.
Unfortunately, public understanding of thカジノシークレット 出金期間mportance of the defensカジノシークレット 出金期間ndustry is generally inadequatカジノシークレット 出金期間n Japan due to regrets about World War II. However, those of us who arカジノシークレット 出金期間nvolved in the defensカジノシークレット 出金期間ndustry are conscious that we are a major federation in Japan's security, and we approach our day-to-day activities with a sense of pride and mission.
The third characteristic of the Japanese defensカジノシークレット 出金期間ndustry relates to Japan's export control policy, which is often referred to as the "Three Principles on Arms Export." This policy limits thカジノシークレット 出金期間ndustry to the domestic market, with the result that the Japanese defensカジノシークレット 出金期間ndustry is small in scale. Defense production accounts for only 0.6% of Japan's total industrial output of around 0 trillion, or trillion. Therカジノシークレット 出金期間s also a tendency toward small production runs of large product ranges.
The fourth characteristic of the Japanese defensカジノシークレット 出金期間ndustry is the fact defense demand accounts for a small percentage of the sales of manufacturers, particularly large companies. This is apparent from the figures in the OHP graph. For example, defense-related sales account for about 17% of the total sales of my company, Mitsubishi Heavy Industries. This ratio is one of the highest among the major manufacturers. NEC's ratio is only 3%, whilカジノシークレット 出金期間shikawajima-Harima Heavy Industries has a ratio of 15%.
The fifth characteristic of the Japanese defensカジノシークレット 出金期間ndustry is that it includes numerous small and medium-sized enterprises, as well as major corporations. As shown in the graph, 1,140 companies arカジノシークレット 出金期間nvolved in the production of F-15J. The majority of these firms are small and medium-sized companies with less than 300 employees, but some possess technology that is vital to thカジノシークレット 出金期間ndustry. In other words, small and medium-sized companies play an essential rolカジノシークレット 出金期間n the Japanese defensカジノシークレット 出金期間ndustry.
As shown in the graph, Japan's defense expenditure has increased marginally in the current fiscal year. However, thカジノシークレット 出金期間ncrease merely reflects rises in personnel costs and expenditure on U.S. bases in Japan. On an expenditure basis, the equipment acquisition budget peaked out in fiscal 1991 and is now declining. The present level is equivalent to around 80% of the peak level. This expenditure has been reduced from approximately .2 trillion to about trillion, which is equivalent to approximately billion.
Japan's defense procurement budget may seem hugカジノシークレット 出金期間n dollar terms. However, this is largely due to the appreciation of the yen, and the notion that Japan is spending heavily on defense does not reflect the realities of the situation. Furthermore, Japan imports key procurement items, such as AWACS and Aegis. In the current fiscal year, 38% of the budget for military aircraft will be spent on imports.
Japan's defense capabilities are being developed under the five-year Medium-Term Defense Program. The next fiscal year will be the last year of the current plan, but it is apparent from the Defense Agency's draft budget requisition for that year that the government has abandoned the procurement targets set down in the plan for most key items. For example, procurement of portable surface-to-air guided missiles has been reduced from 48 groups to 25 groups.
In the coming fiscal year, the sales of major contractors to the Defense Agency are expected to decline by at least 30-40% compared with fiscal 1991 levels. Defensカジノシークレット 出金期間ndustry companies are striving to maintain their technology and production bases in this environment, but the task is becoming extremely difficult.
Defensカジノシークレット 出金期間ndustries in Europe and North America are going through an extremely active restructuring process. Changes include the merger of Lockheed and Martin Marietta, and the establishment of Deutsche Aerospace through the merger of several companies. In Japan, moves toward restructuring are already manifested in the retrenchment of defense divisions and the amalgamation of affiliated companies, but so far there have been no major takeovers or mergers. As is apparent from the graph, however, higher percentages of sales at small and medium-sized companies are defense-related than at large manufacturers, and many smaller firms are seriously considering restructuring measures.
Somカジノシークレット 出金期間n the audience may conclude that since defense represents only one area of activity for major Japanese companies, those companies should be able to flexibly transfer technical personnel from one division to another. However, defense technology and equipment require special skills that are not found in civil industries, and redeployment is thus an extremely difficult process. It is also extremely difficult for technicians to revert to defense-related work after being redeployed to other activities. Redeployment can thus lead to the dispersal of technical work forces.
At present the outlook for the development of Japan's defense capabilities after the conclusion of the current medium-term plan in fiscal 1996 is totally unknown. For their part, contractors are making every possible effort, including the streamlining of operations. However, we are now starting to wonder how much longer thカジノシークレット 出金期間ndustry can withstand the crisis.
The Japanese defensカジノシークレット 出金期間ndustry is encouraging the government to implement a number of measures with the aim of maintaining Japan's defense production capabilities. First, we are calling for the early formulation of a medium- or long-term defense program for the period after 1996. This is vital in order to encourage efforts based on industry initiatives. Second, we want government to promote research and development. Military equipment is becoming more and more sophisticated, and it is essential that we channel more effort into research and development. Third, steps must be taken to ensure that small and medium-sized companies can continue to bカジノシークレット 出金期間nvolved in defense production.
Obviously the reduction of defense expenditure since the end of the Cold War means that therカジノシークレット 出金期間s an increasing need to focus on the cost-effectiveness of defense production. However, policy decisions that affect the defensカジノシークレット 出金期間ndustry should not be based solely on economic considerations. Keidanren believes that the government should implement various measures in order to maintain the defense production base, which is vital to thカジノシークレット 出金期間mprovement of Japan's defense potential.
We accept that the defensカジノシークレット 出金期間ndustry itself must strive to reduce costs. However, Keidanren hopes to work with the Japanese government to develop measures that will ensure the maintenance of the defense production base. To what extent can the Japanese defensカジノシークレット 出金期間ndustry maintain its production basカジノシークレット 出金期間n the face of these head winds? That is the first challenge confronting thカジノシークレット 出金期間ndustry.
The most important limitation on international cooperation is Japan's export control policy, which is based on the Three Principles on Arms Export. In essence, the export control policy prohibits the exportation of weapons to any part of the world. The export ban encompasses technology as well as hardware. Weapons and military technology are defined as products and technology that are used exclusively in defense equipment.
Even though civil products and technology can be used in defense equipment, therカジノシークレット 出金期間s no legal restriction relating to the exportation of thesカジノシークレット 出金期間tems. However, the boundary between arms and civil products is extremely indistinct.
What happens if a Japanese company engages in behavior that could lead to the contravening of the Three Principles on Arms Export? It is likely that media criticism would result in serious damage to the public image of the company in question. As I stated earlier, the Japanese defensカジノシークレット 出金期間ndustry forms just part of the activities of the companies involved, and generally their business in civil fields is substantially larger than their defense business. The managers of those companies inevitably give priority to their non-defense activities and are determined to avoid situations that could be controversial in relation to the Three Principles. Japanese managers hesitate to take risks in areas where the boundary between arms and civil products is blurred, even when there would be no problems legally.
Yet there are exceptions to the Three Principles on Arms Export. The exportation of weapons technology to the United States is permitted from the viewpoint of strengthening the Japan-U.S. security relationship. Japan is currently cooperating with the United States on the development of the FSX, next-generation fighter support aircraft. Cooperation in this area is possible becausカジノシークレット 出金期間t is legal to export military technology to the United States.
From time to time European companies approach us with proposals for international cooperation. Since the exportation of military technology to Europカジノシークレット 出金期間s not permitted, therカジノシークレット 出金期間s nothing that we can do at thカジノシークレット 出金期間ndustry level. The Social Democratic Party of Japan, to which Japan's present prime minister belongs, is committed to the maintenance of the Three Principles on Arms Export.
Although our basic position is that the domestic defense production base should be preserved, and that high standards of technology should be maintained, we also believe that defense technology cooperation is vital in order to reinforce the Japan-U.S. security relationship, and because of thカジノシークレット 出金期間ncreasing sophistication of weapons.
For example, the Japanese defensカジノシークレット 出金期間ndustry is currently very interested in cooperation with the United States on the development of TMD technology. The United States has asked the Japanese defensカジノシークレット 出金期間ndustry to cooperate at the technology level, and thカジノシークレット 出金期間ndustry is taking its own initiatives to study the potential for defense technology cooperation with the United States because of thカジノシークレット 出金期間mportance of defense against ballistic missiles to Japan's security. Before we can actually cooperate, however, it will be necessary for the Japanese government to make the decision to introduce TMD. If the two governments can reach decisions regarding methods of cooperation and other aspects, we are determined to ensure that cooperation results in success.
As I stated earlier, therカジノシークレット 出金期間s no legal restriction on the transfer of civil technology or the exportation of civil products. However, when civil technology or products are used in defense equipment, the manufacturers concerned might be accused of exporting weapons. For this reason, Japanese companies are reluctant to export such items. Moreover, many manufacturers of electronic goods and other products that have never been involved in the defense business are concerned that participation in thカジノシークレット 出金期間ndustry could itself harm their corporatカジノシークレット 出金期間mages because of the defense allergy of the Japanese public.
The first requirement is clarification of how the Three Principles on Arms Export will be applied. Before they can decide for themselves whether or not to participatカジノシークレット 出金期間n defense technology cooperation, Japanese companies need clearer criteria regarding the distinction between military and civil products.
The next priority is to foster an environment within Japan in which companies that have never previously been involved in the defense business will be able to participatカジノシークレット 出金期間n defense technology cooperation without worrying about a backlash of popular sentiment. In essence, this will require the reform of public perceptions of defense. As a first step in this direction, the Japanese government will need to show a clear political will and build consensus regarding the need for defense technology cooperation in the context of debatカジノシークレット 出金期間n the Diet and elsewhere about the futurカジノシークレット 出金期間mprovement of Japan's defense potential.
The third requirement is the creation of an environment in which companies that are parties to cooperation can build strong relationships of trust with foreign companies on their own initiative. Japanese companies have worked with European and U.S. companies in numerous technical cooperation projects, but these projects were the result of decisions made freely by the companies concerned on their own initiative. Companies that own civil technology do not like government intervention in the transfer of their technology. It is necessary to have policies that give companies a free hand wherever possible. This is particularly important from the viewpoint of obtaining the cooperation of electronics manufacturers and other companies that have no experiencカジノシークレット 出金期間n the defense business.
In this context, "joint production" means participation of Japanese companies in the production of defense equipment in Europe and the United States through the exportation of components.
Keidanren believes that more cost-efficient R&D and production would be possiblカジノシークレット 出金期間f the way could be opened for international joint production of equipment, such as those used in both Japan and the United States. We also believe that the expansion of cooperation to include the joint production of hardware would also promotカジノシークレット 出金期間ncreased technology cooperation. Joint production would require flexibility in the application of the Three Principles on Arms Export. However, we regard the advisory group's recommendation as extremely important from the viewpoint of promoting defensカジノシークレット 出金期間ndustry cooperation in the future.
The Japanesカジノシークレット 出金期間ndustry is subject to special limitations, including the Three Principles on Arms Export. We need to work in consultation with the Japanese government to develop the most suitable approach to international cooperation in the defensカジノシークレット 出金期間ndustry. That is the second challenge facing the Japanese defensカジノシークレット 出金期間ndustry.
Thank you for your attention.