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Japan, famend for its pacifist structure, is now setting its sights on the worldwide arms exports market.
Defense Minister Gen Nakatani earlier this month instructed Nikkei that he wished to advertise Japan’s protection exports, signaling a transparent shift within the nation’s arms coverage, which has up to now been largely restricted to catering to the Japan Self-Protection Forces, or JSDF.
Prime Minister Shigeru Ishiba has additionally signaled sharper give attention to the protection sector and have become the primary sitting prime minister to attend DSEI Japan, the nation’s largest protection exhibition.
Whereas the shift in stance comes at a time when global defense spending has been on the rise, Japan’s motivations are linked extra to its safety issues than cashing in on the surge in international arms demand, consultants instructed CNBC.
The largest motive behind this shift is to deepen ties and enhance interoperability of Japanese forces with allies and companions, mentioned Rintaro Inoue, analysis affiliate on the Institute of Geoeconomics, a Tokyo-based assume tank.
By exporting its arms overseas, a country is able to improve interoperability with the buying events by standardizing upkeep processes for {hardware} and creating joint coaching alternatives.
“This rationale has been the primary pillar after Prime Minister [Shinzo] Abe created the idea of ‘proactive contribution to peace’ in 2013 which goals to deepen cooperation with different Western international locations on this space, and particularly in safety fields,” he mentioned.
When the late Abe was in workplace, he led efforts to revise the interpretation of Article 9 of Japan’s structure to permit the JSDF to more actively contribute to worldwide peacekeeping efforts and defend allies.
Japan additionally needs to develop its protection industrial base, which had been in “very poor circumstances” earlier than the nation moved to extend its protection finances in 2022, Inoue mentioned. Exports will enable it to realize the economies of scale wanted to make home manufacturing extra viable.
As an alternative of investing in Japan’s home protection base, the nation has largely bought weapons from the U.S., such because the F-35 fighter jets and SPY-7 radar systems.
“This created a extreme scenario among the many protection business based mostly in Japan, and a number of other firms have left the business, particularly within the provide chain,” Inoue mentioned. In 2023, more than 100 companies were reported to have left the protection business previously 20 years.
Naoko Aoki, political scientist at U.S.-based coverage assume tank RAND, mentioned that Japanese protection companies have historically operated with restricted home demand from the JSDF. Having the ability to export protection objects signifies that firms would have an even bigger buyer base, serving to them develop manufacturing capacities, decrease prices and have extra flexibility.
“Even when the JSDF wanted extra of, for instance munitions, these firms wouldn’t be desirous to put money into new amenities to provide extra of them, in the event that they assume that could be a one-time request. If there have been extra steady demand at a better degree, nevertheless, they will justify the funding,” Aoki mentioned.
As of 2024, Japan’s arms exports stood at 21 million TIV — simply 0.1% of worldwide arms exports — in line with the Stockholm International Peace Research Institute. The TIV or trend-indicator worth is a measure of the amount of worldwide transfers of main standard weapons.
Compared, neighboring South Korea exported 936 million TIV in 2024, with 3.3% of worldwide arms exports, whereas TIV for China, the biggest Asian arms exporter from 2020-2024 stood at 1.13 billion, accounting for 3.9% of worldwide shipments.
Protection is enticing as a development sector, in line with veteran investor David Roche, strategist at Quantum Technique. “Demand will exceed provide for a decade,” he mentioned. So, constructing home capability is of paramount significance.
Roche mentioned that if nations similar to Japan keep depending on the U.S., the Trump administration’s extra transactional strategy will oblige them to pay for far more of their very own protection, or protection tools provided by the U.S.
Roche pointed to U.S. Protection Secretary Pete Hegseth’s speech through the 2025 Shangri-La Dialogue, earlier this month: “We ask — and certainly, we insist — that our allies and companions do their half on protection … NATO members are pledging to spend 5% of their GDP on protection, even Germany.”
“So it would not make sense for international locations in Europe to do this whereas key allies in Asia spend much less on protection within the face of an much more formidable menace, to not point out North Korea,” Hegseth added.
“In the event that they mistrust the U.S. to honor its treaty engagements, then particular person nations should guarantee their very own safety and spend some huge cash doing so,” Roche mentioned.
Easing restrictions
Japan in 1967 adopted “Three Principles on Arms Exports” that restricted arms exports, and later expanded these rules to a virtually impose an across-the-board ban on arms exports, aside from transfers of navy applied sciences to the U.S.
The nation relaxed this stance beneath Abe, with former Prime Minister Fumio Kishida easing the curbs additional in 2023.
The most recent changes enable protection tools manufactured in Japan beneath license from international protection companies, together with completed merchandise, to be exported to the licensing nation and from there to 3rd international locations.
For instance, Japan agreed in late 2023 to fabricate — beneath license — and export Patriot interceptor missiles to the U.S., whose stockpiles have been depleted after supplying these missiles to Ukraine.
Neighbor South Korea has seen growing international curiosity in its arms industry and is striving to turn into a serious international arms provider. Will Japan be capable to compete? Consultants differ.
Roche says that Japan has the information, expertise and expertise to be a serious arms provider, however IOG’s Inoue warns that Japan could face manufacturing points as a consequence of its falling inhabitants and rising proportion of seniors.
“I feel it is very tough for Japan to as soon as once more focus into manufacturing jobs,” he mentioned.
RAND’s Aoki pointed to still-strict rules. “Japan has the technical capability to do many issues,” however as export rules stay extreme, it should use exports primarily as a instrument to strengthen its protection industrial base and protection relations with like-minded international locations, notably the U.S.