Abe Moves Toward Easing Japan’s Weapons Export Restrictions

Prime Minister Shinzo Abe’s ruling coalition began discussing a loosening of Japan’s 40-year-old restrictions on weapons sales, a move that is unpopular with voters and risks new tensions with China.

Under a draft of the new “principles on transfers of defense equipment” obtained by Bloomberg, such transfers will not be allowed where they will clearly damage international security. A ban on exports to countries involved in conflict will remain, according to the draft. The change was reported earlier by the Kyodo news agency.

Abe is seeking to boost Japan’s security capacity at a time of concern about China’s military aspirations and a territorial dispute over East China Sea islands. China has already criticized plans for Japanese weapons exports, after Japan’s first-ever National Security Strategy called in December for the country’s defense industry to be strengthened.

“The move is poised to further erode Japan’s pacifist image, intensify regional mistrust and escalate international conflicts,” a Feb. 28 editorial by the official Xinhua News Agency said.

Pacifist Constitution

The draft changes come against a broader backdrop of Abe’s efforts to widen Japan’s deployment abilities, calling for a reinterpretation of the country’s pacifist constitution to allow Japan to come to the aid of its allies. Abe is set to increase defense spending for the second year running and has established a U.S.-style National Security Council.

Easing the rules will allow Japan to tap the growing demand for weapons in Asia that helped South Korea to boost arms exports to a record $3.4 billion last year, 14 times the 2006 level, according to the country’s Defense Acquisitions Program Administration. The surge benefited companies such as STX Offshore & Shipbuilding Co. (067250) and Korea Aerospace Industries. (047810)

In Japan, Mitsubishi Heavy Industries Ltd. (7011), Kawasaki Heavy Industries Ltd. (7012), Mitsubishi Electric Corp. (6503) and the Nippon Electric Company (6701) are the Ministry of Defense’s biggest contractors. Mitsubishi produces ships, submarines, tanks, aircraft and rockets, while Kawasaki has made fixed-winged maritime patrol planes, helicopters and jet engines. Mitsubishi Heavy is also involved in Lockheed Martin (LMT) Corp.’s F-35 Joint Strike Fighter.

A poll carried out by Kyodo on Feb. 22-23 found 67 percent of Japanese respondents opposed easing the curbs on weapons exports. The agency surveyed 1,011 people and did not give a margin of error.

‘Three Principles’

The new rules on defense equipment transfers will replace the “three principles” on weapons exports drawn up in 1967, which banned exports to communist bloc countries, countries under United Nations embargo and those involved in international conflict. It was eventually expanded to become a virtual ban on almost all exports.

“The three principles on weapons exports do not fit the current age,” Takeshi Iwaya, head of the ruling Liberal Democratic Party’s security panel, told reporters yesterday. “We need to create transparent rules and processes that suit the times.”

Isamu Ueda, deputy head of ruling coalition partner Komeito’s policy panel, said in an interview this week that the new principles could be agreed by the end of this month.

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net Isabel Reynolds

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