North Korea's August 1998 launch of a three-stage Taepodong-1 rocket that flew over Japan before falling into the Pacific Ocean heightened the country's sense of vulnerability and sharpened policymakers' focus on defense needs. One consequence of this jolt to the national psyche was Tokyo's decision last fall to undertake joint research on a U.S.-proposed theater missile defense system. This was sweet news to Pentagon strategists. For several years, they have sought to broaden U.S.-Japan defense industrial cooperation. Codevelopment and coproduction of an advanced antimissile system is of particular interest.
U.S. defense officials seemed less pleased, however, with another repercussion of the August rocket launch: the government's decision to develop an indigenous intelligence satellite. A good portion of official Tokyo was caught off guard by the firing of the Taepodong-1, prompting a chorus of complaints that Japan had become too reliant on the United States for critical information. Washington's official position has been to support Tokyo's efforts to improve its self-defense capabilities. However, American defense experts are concerned that Japan's go-it-alone approach on an intelligence satellite not only will prove exorbitant, but also will yield a technologically inferior product. Insiders are worried as well that U.S.-Japan military coordination will suffer if Japan has its own intelligence capabilities.
The apparent speed with which Tokyo decided to develop and deploy its own reconnaissance satellite is deceptive since this option has been under consideration for several years. The government's interest is driven as much by the desire to boost the nation's fledgling satellite industry as by national security considerations. The post-Cold War political climate also has shifted in favor of Japan's assumption of more of the responsibilities and the trappings of a global power, analysts note. In addition, military contractors hurt by Japan Defense Agency procurement cutbacks have been lobbying for a security-related satellite project. In short, Pyongyang's provocative behavior served as a catalyst for a decision that had been in the making for some time.
The government's interest in indigenous defense systems by no means is limited to surveillance satellites. JDA has been under intense pressure to replace its U.S.-designed P-3C antisubmarine patrol aircraft and the C-1 transport plane with domestic products. Continued reductions in the agency's procurement budget would seem to create an incentive to explore less expensive, foreign-sourced alternatives. Yet, the desire of government and industry to maintain kokusanka (autonomy in defense production) in order to prop up beleaguered suppliers appears to have intensified during the past year or so.
Japan's commitment to bilateral TMD-related research has emerged as the bright spot in transpacific armaments cooperation. However, its participation beyond this initial phase may be limited by budget constraints as well as by the fact that the government still does not have an official policy on the deployment of ballistic missile defense systems. These issues, coupled with kokusanka-related pressures, suggest that Japan's involvement in TMD research may not necessarily usher in a new era of extensive bilateral collaboration on military hardware. Joint work on advanced weapons systems probably will continue to expand incrementally, both in terms of the technical complexity of the projects undertaken and their number.
JAPAN'S CURRENT ACCOUNT SURPLUS CLIPPED IN FIRST QUARTER by Douglas Ostrom
Japanese banks, their troubles of the 1990s notwithstanding, have remained giants in international finance. As indicated by recent Ministry of Finance data, transactions involving domestic financial institutions gave Japan's current account statistics a distinctive character in the January-March 1999 period. On a preliminary basis, these deals arguably even contributed to the 15.7 percent drop in the surplus from a year earlier the first three-month decline since the final quarter of 1996.
TOKYO THROWS SWITCH FOR ELECTRONIC COMMERCE by Jon Choy
Students of Japan's postwar economic development can point to many examples of the country's ability to catch up rapidly in areas where it lags behind world leaders. Just as the U.S. government perceived a "missile gap" with the Soviet Union and launched a concerted effort to close it, the cabinet and the Ministry of International Trade and Industry have declared that Japan suffers from an "electronic commerce gap" with the United States. To eliminate or at least narrow this deficit, Tokyo has drawn a roadmap to promote e-commerce and has begun to develop legislation to further this goal.
GUIDELINES BILLS ENACTED; NORTH KOREAN POLICY COORDINATION DISCUSSED by Barbara Wanner
As anticipated, the upper house of the Diet passed a package of bills May 24 to implement the September 1997 U.S.-Japan defense operational guidelines. Coming less than one month after the lower house's April 27 approval, the House of Councillors' imprimatur enacted into law measures that will enable Japan to play a broader role in the bilateral security alliance. "I am confident that the peace and safety of Japan will become stronger through the legislation's enactment," Prime Minister Keizo Obuchi declared following the upper house vote. Mr. Obuchi had made passage of the defense guidelines legislation an important goal of his administration.
MITI ADVOCATES GREATER REGIONAL INTEGRATION by Marc Castellano
In its 1999 white paper on trade, the Ministry of International Trade and Industry highlighted the benefits of regional free-trade agreements and urged the development of such an arrangement within Northeast Asia. The recommendation signaled a break with a central component of Japanese trade policy. The government long has assigned the highest priority to multilateral trade liberalization under the auspices of the World Trade Organization or its predecessor, the General Agreement on Tariffs and Trade. The success of such major trading blocs as the European Union and the North American Free Trade Agreement is one factor behind MITI's advocacy of greater regional integration.
Civic activists, bureaucrats and politicians in Japan continue to debate the implications of the recently approved Information Access Law, which, for the first time, obliges the government to make certain information available to the public (see JEI Report No. 20B, May 21, 1999). The thorniest point of contention is exactly what information is covered by the law's list of exceptions.