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For Both Sides, FSX Deal Shouldn’t Fly

<i> John H. Makin is director of the project on economics and national security at the American Enterprise Institute in Washington. </i>

The question of whether Japan will produce its own military aircraft or coproduce a plane with America’s General Dynamics Corp. has been hotly debated within the Bush Administration.

Opponents of the current proposed arrangement, whereby Japan will develop a fighter plane largely of its own design with General Dynamics as a subcontractor, are being portrayed as Japan-bashers and paranoids who see Japanese dominance in all matters economic as inevitable.

Yet the proposed arrangement on Japan’s new plane, the FSX, is bad policy for both Japan and the United States--in economic as well as geopolitical terms. President Bush should cancel the current co-production plan and offer again to sell the Japanese our F-16, modified to meet their special needs.

Free-traders in the United States have consistently defended the principle that if Japan builds the best television sets or VCRs or automobiles, they should have unfettered access to American markets. The same sound economic principle applies to military aircraft. No one argues that the United States does not produce the best military aircraft at lowest cost, even if modifications are made for special requirements of the Japanese Defense Forces.

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Japan prefers to develop its own fighter plane at more than twice the $3-billion to $5-billion cost of modified F-16s, which would be available for almost immediate delivery to Japan’s military forces.

The geopolitical dimension of Japan’s decision on the FSX is also baffling. Whenever the topic of defense burden-sharing arises, Japanese officials reject any measures that would suggest that their country is rearming or becoming a significant military power. Why then do they insist on Japanese development of its own military aircraft? Surely a co-production arrangement on civil commercial aircraft such as already exists between a Japanese consortium and the Boeing Co. would be a far better way for Japan to develop its potential for the peaceful use of aircraft technology.

By insisting on developing a plane of its own design, Japan necessarily projects a message that it is rearming, whatever its true intentions may be. The fact that the prime contractor for the plane, Mitsubishi Heavy Industries, also produced Japan’s famous Zero fighter plane during World War II cannot have escaped the attention of Japan’s neighbors.

Advocates, both in America and Japan, claim that the United States will receive valuable Japanese technology through the FSX co-production arrangement. General Dynamics is to provide technological information on the F-16, but the results of the research and development efforts for the design of the FSX are to belong to the Japanese Defense Agency. It is this agency that will decide whether FSX technology flows back to the United States. Last December, the Japan Times hinted at the one-sidedness of the technology-sharing arrangements, noting that “the defense agency should not be in a position of seeming to have obtained the technology on too one-sided a basis.”

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The $440 million that General Dynamics may receive for co-development work on the FSX project is only a small fraction of the $3 billion to $5 billion that the United States would receive from sale of the 140 fighter planes that Japan ultimately plans to produce. Further, since Mitsubishi will be paying General Dynamics for products developed using U.S. taxpayers’ money, it is questionable whether the benefits of such publicly funded research should accrue exclusively to General Dynamics.

The Japanese express some understandable frustration about recent American complaints on the FSX arrangement. They claim that Caspar Weinberger, when he was secretary of defense, pushed hard for the current co-production arrangement once he learned that the FSX prototypedevelopment had led to technology that would be valuable to the United States. Frank Carlucci, who succeeded Weinberger, also encouraged the co-production arrangement.

The apparent reversal, or at least clouding of the issue, is frustrating to Japan’s Defense Agency and the Mitsubishi group. Both want to get moving on production of the FSX. While such frustration is understandable and while it is important to continue to maintain a constructive economic and strategic relationship with Japan, neither of these considerations changes the fact that the currently proposed FSX co-production arrangement is flawed from both an economic and geopolitical standpoint.

It is said that Japan would reject an American offer to sell it the modified F-16. So be it. If Japan insists on producing its own fighter planes at a cost far greater than the cost of the modified F-16, this is Japan’s right as a sovereign nation. But then Japan’s export industries had better be prepared to face parallel “infant industry” protectionist arrangements from other countries that wish to develop or redevelop their own production of electronic products or other goods for which Japan possesses a legitimate comparative advantage.

Japan also will have to be prepared for increased skepticism concerning its desire to substitute foreign aid for defense burden-sharing. Nations without a desire to develop military power do not spend billions extra to develop their own fighter-bomber planes.

Finally, since the home-grown FSX won’t be ready for deployment between now and 1997, Japan will have plenty of time to contemplate the value of its unique position under the American defense umbrella.


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