U.S. Restudies Helping Japan Build Warplane : Bush Administration Reexamining Deal That Critics Fear Would Create Aerospace Competitor

The Bush Administration indicated Wednesday that it has ordered a reexamination of a deal negotiated by the Pentagon last year under which the United States would help Japan to build an advanced fighter plane.

Critics complain that the agreement for joint production of the plane--which is called the FSX and is based on the American F-16 design--could enable Japan to acquire American technology that it could use eventually to develop its aerospace industry into a commercial competitor of the United States.

The delay raises the prospect that the dispute over the FSX will turn into a highly charged test of relations between the United States and Japan.

Security Ties Cited

The Defense and State departments view the FSX agreement as important to maintaining close security ties between the two countries. But the Commerce Department and a growing number of congressional opponents are voicing concern about the impact of the deal on the future of the American aerospace industry.

Administration officials had originally expected to reach an interagency agreement by Wednesday to proceed with the FSX project. Before it takes effect, the agreement must be submitted to Congress, which has 30 days in which to disapprove it.

However, the Administration was unable to reach such an agreement. Instead, after a series of meetings last Friday and early this week, the Administration announced Wednesday that the National Security Council “has called for an expeditious but thorough review of the FSX agreement.”

“It will go on for a few weeks,” a State Department official said Wednesday. A congressional source said he had been told that the deadline for the new study is March 10.

The new study amounts to at least a partial victory for the critics of the FSX, who had been seeking to persuade the Bush Administration to conduct a 60- or 90-day review of the FSX deal.

One congressional opponent contended that the State and Defense departments had been trying “to ram this through while the new Administration is still disorganized.”

The negotiations between the United States and Japan over the FSX date back nearly two years. Originally, the Japanese Defense Agency wanted to build its own fighter, even though such a project would have been much more costly than simply buying American-made F-16s.

Eventually, U.S. and Japanese military officials negotiated what both sides viewed as a compromise for joint production of the FSX.

Under the deal, General Dynamics Corp., the American company that makes the F-16, would give Japan’s Mitsubishi Heavy Industries its design for the jet. In exchange, the United States would obtain any advanced technology that Japan may have in the fields of aircraft materials and radar.

General Dynamics would be guaranteed 35% to 45% of the $1.2-billion development budget for the FSX. However, critics complained that the Pentagon failed to get any commitments from Japan that the American company will get a share of the work when the fighter plane is actually produced.

One Pentagon official termed the FSX deal “a breakthrough in military cooperation” between the United States and Japan.

But a congressional opponent of the FSX deal countered, “Defense is not the name of the game here. The name of the game is the development of their (Japan’s) aerospace industry . . . . This (FSX project) will be a super-advanced seminar on how to build a jet fighter, and Japan will be the star pupil.”

The 1988 Omnibus Trade Act gives the Commerce Department and the U.S. trade representative a mandate to review military agreements such as the FSX deal and to consider their economic and commercial consequences. Until that law was enacted, those issues were decided almost entirely by the State and Defense departments.

Japanese officials have said repeatedly that they would like to have the FSX agreement approved before March 31, the end of the Japanese fiscal year. Otherwise, Japanese officials say, the money allocated for the FSX project in the Japanese budget this year will revert to the Treasury.