Dual-Use Technology: Can It Save Japan’s Defense

Industry Base

Yuzo MurayamaStimson Center/Doshisha

UniversityOctober 10, 2013

Primary Research Field: Economic Security 1) Export Controls 2) National Security Restrictions on Foreign Direct

Investment 3) Defense Production and Technology Base

Second Research Field: Cultural Economics and Business 1) Revitalize Kyoto’s heritage industries 2) Seek sources of Japanese competitiveness from cultural aspects

Yuzo Murayama

At Stimson Center• Focus on constructing a business model and system

utilizing DUT1. Japan’s defense production and technology base2. International cooperation on defense production

and technology

• Increasing interests in Japanese policy circle on critical situation of the defense industry

• Need input from the U.S. to construct workable systems

Japan’s Defense Industry Base:Declining Market

• Decreasing defense budgets (since 2002: 5% decrease with slight increase in 2013)

• Acquisition of defense equipment 1989: 1,020 bill yen, 2013: 627 bill yen (39% decrease)

• Increasing trend in service and maintenance fee 2013: 868 bill yen

Japan’s Defense Industry Base:Industrial Organization

• U.S. and Europe: Reorganization started in the mid-1990s, several world-class companies emerged

• Japan: only two cases 1) Nissan’s aerospace division → IHI 2) Universal Shipbuilding + IHI → Japan Marine

United

• Declining market, but number of system integrators stay the same

Why? Implications?

Japan’s Defense Industry Base:Politics and Media

• Three Principles on Arms Export Original version – 1967, Export ban – 1976 Relaxations by making exceptions

o 1983: technology transfer to the U.S.o 2004: BMDo 2011: international joint R&D and peace buildingo 2013: F35

• Rising awareness of needs to relax it further among policy makers vs. traditional opposition from media

Brief History of DUT in Japan:A Negative Start

• 1980s – encountered DUT in the U.S., ex. Fujitsu-Fairchild

• Gulf War (1991) – Japanese components in U.S. weapons

• Company response: try to deny dual-use aspect of technologies

• Government response: concerned about consistency with the export ban policy

Brief History of DUT in Japan:Post-9/11

• 9/11 – focus on counter terrorism & such internal problems as earthquake, infectious diseases, rising crimes etc.

• New thinking: utilize Japan’s technology to solve these problems facing Japan and international community – science and technology for Anzen-Anshin

• (Publication of my book on economic security?)• Study groups were formed in 2003 in MEXT and CSTP• Positive recognition of DUT (for Anzen-Anshin)• CSTP document (2006) – DUT for R&D in defense, police

and fire fighting

DUT Programs at MOD• Started around 2002 in cooperation with NEDO Millimeter-wave device, Quantum Dot Infrared Photodetector,

etc.

• Good example: Non-cooling infrared sensor In cooperation with The National Institute of Advanced

Industrial Science and Technology (AIST) *High-end sensors (night vision devise, unmanned aircraft, etc.) for military use *Low-end sensors (surveillance security, automobile, etc.) for commercial market

DUT Programs at MOD• SBIR (Small Business Innovation Research) To spin on technologies developed by NEDO’s SBIR project

to defense sector ex) Motor for small robot system, toxic substance detection

• Inter-ministry cooperation for technology development by CSTP

Mainly technology development for counter-terrorism ex) Laser technology for remote detection

Integrated Defense DUT Base• Two steams of DUT development 1) Anzen-Anshin stream by MEXT, METI, CSTP 2)Defense stream by MOD

• Integration of these two streams provide interesting opportunity Anzen-Anshin-Defense Technology Base *Technology base for defensive technologies:

could acquire niche in the world market * Use of Japan’s competitive commercial technologies *Feedback between public and private sectors for raising

technology levels

Integration of the Safety, Security and Defense Technology Base

Defense

Safety( 安全 )

Security( 安心 )

TechnologyGovernment

Agencies

• MOD

• METI

• MEXT

• MHLW

• MLIT

• National Police Agency

• Fire and Disaster Management Agency

Organizational Collaboration

Industry/Research Composition

Defense Industry

Military Equipment

Responding to new threats (i.e. terrorism, cyber attack)

Technology Spin-Off

Technology Sharing

Funding

Funding

Safety and Security Industry

Companies, Universities, Research institutes

Technology Spin-Off

Commercialization in the civilian market (safety, security)Spin-on

© Yuzo Murayama, Doshisha University

Thoughts1) Need system to insert commercial technologies (especially

SME) to defense sector2) Defensive vs. Offensive: Do not make sense in materials and

component levels? (Especially in case of international R&D)3) How to globalize the defense DUT base?4) Need changes in the three principles? (How to implement?)5) Implications for industrial organization and acquisition

reform?

*Try to answer these Q’s in the next presentation