Japan has lifted a majority of its limitations on the export of weapons, permitting the country to now sell arms internationally for the first time post-World War II, with the intention of bolstering its defense industry.
Under the leadership of Prime Minister Sanae Takaichi, the cabinet has given the green light to modifications in the regulations pertaining to defense exports, which will open up a wider market for companies engaged in the arms trade.
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“These decisions are intended to safeguard Japan’s security and further contribute to the peace and stability of the region and the international community amidst rapidly evolving changes in the security environment,” Chief Cabinet Secretary Minoru Kihara says.
“At the same time, the government will uphold the fundamental principles of a peaceful nation that have been built over more than 80 years since the end of the war”.
Prior to this, companies were only allowed to export military gear for purposes such as rescue missions, transportation, alerts, surveillance, and mine clearance. The new regulations state that restrictions will continue to be in place for exporting deadly weapons to nations currently involved in conflicts.
However, exceptions may be permitted if these deliveries are considered to be beneficial for Japan's national interests. Half a year after assuming the role of national leader, Takaichi, known for her strong stance on security issues, has wasted no time in increasing Japan's defense budget and positioning the country to have a significant presence in the international defense market.
These updated regulations were announced shortly after Tokyo finalized an agreement to supply advanced warships to Australia, marking Japan's first post-World War II export of lethal military equipment. The primary company involved in the warship contract, Mitsubishi Heavy Industries Ltd., was ranked 32nd worldwide in 2024 for defense sector revenue by the Stockholm International Peace Research Institute.
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The government is optimistic that the agreement will lead to more export deals in the defense industry, as companies aim to take advantage of the increase in global defense spending by investing in research and development and production.
Japanese officials are also hopeful that this will prompt local companies to advance in key areas of defense technology, such as military drones, which have proven to be effective in conflicts in Ukraine and the Middle East.
Unlike major defense contractors in countries like the UK and the US, Japan's defense industry is made up of a few technology and manufacturing conglomerates that are mainly focused on other sectors. For most of these companies, defense has traditionally made up less than 20 percent of their overall revenue and has mainly involved providing equipment to the Japanese Self-Defense Forces.
Companies have been hesitant to expand production capacity due to the limited market, causing smaller businesses to struggle with low profit margins. Concerns about the negative perception of the "business of death" stemming from Japan's militarism in the early 20th century have also affected some businesses, although the impact of this stigma has lessened with younger generations supporting a shift away from Japan's postwar pacifist stance.
The emergence of China as a military power and the presence of North Korea's missile and nuclear programs have led to a growing sentiment in Japan for a stronger military to deter regional rivals. Share prices of Japanese companies involved in defense have climbed in response to Takaichi's efforts to hasten the planned increase in defense spending to two percent of the GDP for the fiscal year ending in March, along with escalating global conflicts.
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“To protect our own country and regional peace, it’s important to further promote the transfer of defence equipment and strengthen the deterrence capabilities of our allies and nations,” Kihara said. “By promoting the transfer of defence equipment, it is also important to strengthen the domestic defence production technology base that supports the Self-defence Forces’ mooring capabilities”.
Under the new regulations for exports, only countries that have agreed with Japan on safeguarding classified information related to defense equipment and technology will be permitted to purchase lethal Japanese defense equipment. Currently, Japan has agreements with 17 nations, which include various European and Southeast Asian countries, as well as the United Arab Emirates, India, and the US.