America's Ho-hum Effort to Learn From Japan : Technology: The FSX jet fighter program is a case in point of how the U.S. would rather complain than develop a coherent policy of transfer.

By David Friedman and Richard J. Samuels

June 21, 1992 12 AM PT

<i> David Friedman is a research fellow in the MIT Japan Program and an attorney with Tuttle & Taylor in Los Angeles. Richard J. Samuels is a professor and the director of the Japan Program at MIT</i>

TOKYO —

In a flurry of press releases coinciding with the latest government review of the U.S.-Japan FSX co-development program, Japan again was condemned for maintaining barriers to its domestic technologies. To be sure, Japan could do much more to facilitate technology “flowbacks” to the United States. But the most critical problems afflicting the jet-fighter program remain America’s lack of a coherent technology policy and its failure to take sufficient steps to tap Japanese resources. Washington can hardly expect countries like Japan to simply hand over their technologies.

The FSX program was explicitly sold to Congress with the intent that U.S. companies obtain Japanese technology while collaborating to build a jet fighter in Japan. Virtually every previous overseas military production deal has included boilerplate language permitting U.S. companies general access to or “flowback” from their partners’ technologies. Yet, for a variety of reasons, neither Washington nor U.S. defense contractors aggressively pursued these rights.

After Japan reluctantly agreed to the FSX joint-development program, critics worried that Japanese companies would obtain U.S. defense technology, developed at considerable taxpayer expense, without giving up anything in return. To mollify Congress, the U.S. government attempted to expand the technology flow back provisions of the FSX program. The result was an agreement that U.S. companies would enjoy free access to any Japanese technologies directly derived from U.S.-supplied information and would have the right to evaluate and purchase FSX technologies the Japanese developed on their own.

For a brief moment, the FSX debate sharply focused U.S. anxieties over defense-technology transfers and learning from abroad. But once the FSX agreement was signed, Congress, the federal bureaucracy and the military lost interest in the specifics. As a result, top-level guidance concerning acquistion of Japanese technology wasn’t forthcoming.

Enter diligent junior- and mid-level military and government staffers, who are forced to improvise answers to the specific problems involved in FSX technology transfer and flowback procedures. Even the most basic steps essential to acquire Japanese FSX technology are the result of chance hallway meetings between Japanese and resident American officials in Japan. The U.S. commitment to learn from Japan is taken so casually that if just four or five key mid-level staffers were to leave the government, the United States would have no one with a comprehensive grasp of the technical, political and commercial issues involved in the FSX project.

The lack of clear guidance in the complex technology-transfer process inevitably leads to unanticipated consequences. Early in the FSX program, for example, Japanese firms applied for licenses from U.S. manufacturers to produce many key components for the aircraft. If Washington had a coordinated, top-level commitment to obtain specific Japanese industrial knowledge, it might have been possible to use FSX licenses as a bargaining chip to build reciprocal information and technology exchanges.

Instead, mid-level reviewers in the Department of Defense were forced to approve or reject Japanese license applications in a largely arbitrary manner, hoping to protect “key” U.S. defense technology while inducing Japan to buy directly from U.S. vendors. Japanese companies, however, elected to produce most of the components they sought on their own, frequently relying on expertise obtained through previous joint-production experiences with U.S. defense contractors. They were also able to license or buy certain critical technologies without Pentagon review through purely commercial transactions with U.S. companies, further enhancing the pace of “dual-use” technology transfers to Japan.

Not surprisingly, U.S. defense contractors are ill-prepared to take advantage of the FSX flowback provisions. None of the approximately 70 U.S. engineers and managers in Japan are fluent in Japanese. To learn about the program’s technology issues, they must rely on abbreviated translations provided by Japanese corporate or government personnel. Compounding the problem, many FSX technical or design reviews are held hours after U.S. engineers have left for the day.

In light of America’s strikingly casual approach to critical technology transfer and learning, Japan has few incentives to open doors for its American collaborators. Instead, the FSX program is marked by a continuous struggle in which low- to mid-level U.S. military and commercial staff, without clear direction or support from above, are pitted against a phalanx of Japanese representatives, from all levels of industry and government, who share a commitment to build and protect their country’s technological base. Given this dramatic imbalance in strengths, it is little wonder that FSX technology flowback to the United States, as recent news reports suggest, is not yet satisfactory.

The lesson of the FSX program is that the United States must develop, and then implement at the highest levels, a technology policy that moves beyond the general language of previous joint-production agreements and specifically defines our transfer and flowback objectives, including the following:

-- Identify the technological strengths of our overseas partners and use military production exchanges to obtain access to those technologies.

-- Help U.S. companies learn about foreign-technology information gleaned from joint military ventures through symposia and technical publications.

-- Coordinate commercial- and military-technology transfers so foreign producers are unable to circumvent technology-transfer limitations spelled out in agreements, and assure that U.S. firms will not respond to perverse incentives--such as securing short-term profits or deflecting shareholder criticism--and sell off core technologies without concern for U.S. industrial or security consequences.

Each of these measures is utterly routine practice for Japanese technology planners. If adopted by the United States, cooperation would be stimulated. Indeed, many Japanese involved in the FSX program confide they are baffled by the lack of a U.S. technology policy.

While Japanese firms and government officials may deserve criticism for FSX program delays or cost overruns, problems with technology transfer reveal far more about U.S. strategic shortcomings than Japanese recalcitrance. The time is long since past when America could afford to ignore the effects of its technology transfers or pass up opportunities to learn from others. As Japan has done for decades, it is now crucial to develop the basic technology policies and specific tools for assuring effective technology flowbacks if we are to assure our military and commercial strength into the 21st Century.