Made in Japan

By Rick Mendenhall

It’s looking like 1985 because Japan is exporting again. This time, however, “Made in Japan” will be etched in Soryu Class Submarines instead of Sony Walkmans. In April, Japan relaxed its almost half century policy against exporting military goods and technology. Since this move, a host of East and South Asian nations swooped in to forge new military trade agreements with Japan. Vietnam and the Philippines have purchased patrol ships, and a deal for Australia to purchase submarines is about to be announced.

Japan’s policy shift though throbs with domestic constitutional implications. Article Nine of Japan’s Constitution, written in the post-WW2 era, forever forbade Japan’s right to wage war. While manufacture and trade of weaponry isn’t expressly banned by the Constitution, it runs contrary to the pacifistic sentiment many Japanese embrace. In an attempt to temper the new policy, Japan’s government, headed by Shinzo Abe, has stressed they would not export military goods to countries involved in international conflicts. Furthermore, the deals have not included attack weapons like tanks or warplanes. Ostensibly, all exports could be used for defensive purposes, so would not clash with constitutional sentiment.

But Abe’s government might be pushing the envelope with Japanese voters. In July, Japan formally reinterpreted Article Nine so that Japan can wage war to aid an ally. Abe’s approval rating subsequently dipped below 50 percent for the first time since he gained office. Abe’s push to revise the Constitution shocks no one who remembers that the leader has long harbored an ambition to amend the Peace Article, at least since his first stint as prime minister in 2006. It may have contributed to Japan’s opposition party dethroning Abe’s Liberal Democratic Party in 2007. It was the first time since World War II that the Liberal Democratic Party did not hold power.  

A key difference to Abe in 2014 is that China’s ascendant territorial ambitions in the South China Sea could pay out whopping dividends to Japanese defense companies. The South China Sea is brimming with oil and gas—estimates soar as high as billions of gallons of oil and trillions of cubic feet of gas. Vietnam, the Philippines, Malaysia, Brunei and Taiwan all have territorial disputes with China in part because of the untapped wealth of resources slumbering below. Consequently, old foes have become strange bedfellows. South Asian Countries like the Philippines, who were subjugated by imperial Japan and would never normally seek out Japanese military armament, have entered into agreements with the Land of the Rising Sun to combat China.

The South China Sea remains largely untapped, however, because private companies are unwilling to risk investment in a zone that might erupt into a regional conflict. The uncertainty over property rights is too large of a deterrent. No company wants to sink millions of dollars in drills to find out that China will bar them from drilling.
But even with the resources lying fallow, Japan should still end up in the black. In the past ten years South Asian countries have nearly doubled their defense spending, and Asian defense spending will soon overtake Europe’s. With the regional appetite growing for arms, Japan probably picked the ideal time to enter the market.