Japan’s arms trade ban policy

3 The arms trade ban policy during the Cold War

The arms trade ban policy during the Cold War: A Shared norm, different ideas

Introduction

With the San Francisco Peace Treaty. Japan restored its independence in 1952. This marked its start as a ‘peaceful Japan'. Although Article 9 of the Constitution, which renounces the use of force, was drafted as a US initiative. Article 9 became a symbol of Japan’s determination never to wage war. Along with Article 9, the Three Principles on Arms Exports (Three Principles) announced in 1967 also became a symbol of a ‘pacifist Japan’.

By delving into Japan’s arms trade ban policy, this chapter examines why the Liberal Democratic Party (LDP) government announced the Three Principles and how the ideas held by political parties affected the decision. Clarifying the factors behind the announcement is important because it will enable us to properly examine the subsequent relaxation of the ban (Chapter 4). The chapter first examines the ideas held by the LDP government and the background to the policy. Second, it investigates the ideas held by the anti-militarist group. It then analyses how such ideas and the ideational distribution in domestic politics affected the decision-making process. Taking into account the number of seats held by major political parties in the National Diet, the chapter examines the factors behind the announcement and preservation of the policy. It then concludes that successive LDP governments announced and maintained the Three Principles to avoid disputes with the opposition parties. The ideational distribution rather than the norm thus affected the decision-making process.

The ‘normal state’ idea and the Three Principles

Announcement of the Three Principles by the Sato government

Following its defeat in World War II, Japan was occupied by the US. The US occupation policy aimed to weaken, demilitarise, and democratise Japan so that it w'ould never pose a security threat to international society. The US considered that the living standards of the Japanese people should be lower than those seen in Southeast Asian states and that Japan should therefore restart as an agricultural country.¹ Under this punitive US policy, the first report was written by a mission headed by Ambassador Edwin Pauley. The report recommended that factories and other facilities (especially military facilities) located in Japan should be demolished or disassembled and then transferred to Southeast Asian states.

However, the US occupation policy towards Japan showed signs of change in the late 1940s. In Europe, as exemplified by the Truman Doctrine (1947), which clarified the US intention to support countries threatened by external or internal communist movements, the confrontation between East and West became evident. In Asia, Ho Chi Minh, a communist, declared Vietnam’s independence in 1945. Then, Kim Il-sung established a communist North Korea. In China, Mao Zedong won the civil war with Chiang Kai-shek and established a communist China in 1949. Responding to confrontational circumstances in Asia and Europe, the US began to shift its occupation policy towards Japan. By taking seriously the advice of George Kennan, then Director of Policy Planning in the State Department, the US sought to help Japan’s recovery. The US expected that the country would play a role as a fortress against the spread of communism.² This US turnaround became irreversible when the Cold War became evident in Asia due to the outbreak of the Korean War in June 1950.

This US strategic shift had an impact on Japan’s defence production.³ At the early stages of its occupation, the US prohibited Japan from producing defence equipment. However, it quickly shifted its policy, allowing Japan to produce weapons such as fuel tanks, napalm tanks, bullets, and other military-related goods. What drove the shift was the need to secure the military supplies necessary to fight the Korean War.⁴ The US even formed a mobilisation plan in case of a possible World War III to take advantage of Japan’s expertise and skilled labour.⁵ Thus, due to the outbreak of the Korean War, the strategic environment surrounding Japan changed. Consequently, the country resumed full production and maintenance of weapons by revising the previous regulations that restricted arms production. Soon after, the US ordered Japan to produce large amounts of mortar.⁶

As a result of Korea-related special procurement, Japan’s defence exports accounted for 90 per cent of its total exports.⁷ For example, US procurement of fuel tanks and bullets amounted to $140 million over two years between 1952 and 1954, accelerating Japan’s economic recovery.⁸ However, the Korean War ended in 1953 and the Indochina War in 1954. As a result, US procurement in Japan decreased considerably from 1955 onward. Similarly, the procurement of ammunition ceased in 1955.’

Having lost US procurement, Japan's defence industry had to find new outlets to survive. Securing continuous orders and investment was indispensable to upgrading and maintaining facilities.¹⁰ The Ministry of International Trade and Industry (MITI) sought to nurture Japan’s defence industry by securing procurement from the Self-Defence Force (SDF). However, most of the weapons needed by the SDF were provided by the US under the framework of the Japan-US Mutual Defence Assistance Agreement. Therefore, there was no need for the SDF to order weapons from Japanese firms.¹¹ Besides, in 1955, the US provided 140,000 tons of bullets to Japan as part of its Mutual Security Assistance. This US assistance ironically made it difficult for the Japanese Defence Agency to procure defence equipment, including bullets, from Japanese companies.

This absence of orders was a massive blow for a Japanese defence industry struggling with over-production of bullets due to the termination of US special procurement.¹²

Unable to obtain procurement from the SDF, Japan’s defence firms turned to arms exports instead in order to survive. However, following the end of the Indochina War in 1954, the US began offering military assistance to the Southeast Asian Treaty Organisation (SEATO) states. The US gave away redundant US weapons to countries such as Thailand and the Philippines. Consequently, the Japanese defence firms lost the future markets they had envisaged.¹’ When the US implemented a vehicle renewal plan in Southeast Asia to upgrade and renew older vehicles, Japan hoped to obtain this US offshore procurement. However, Japan failed to win the order to the extent it expected.¹⁴ The orders received by Japan between 1957 and 1963 remained at only about $50 million a year (about $500 million in today’s dollars), far smaller than US procurement during the Korean War.¹⁵ When engaging in war, the US was keen to support Japan’s defence industry. However, it lost interest in supporting Japan’s defence industry as a result of the temporal peace in Asia. The pressure on Japan to rearm also eased off.

As expected, after the end of the Korean War, Japan’s domestic economy plunged. The simultaneous termination of US aid, including the Government Aid and Relief in Occupied Areas (GARIOA) Fund, and the Economic Rehabilitation in Occupied Areas (EROA) Fund exacerbated the situation. The Japanese public demanded that the government cut defence spending before introducing austerity policies. Such voices made it difficult for the government to support the defence industry financially. Moreover, the government was not enthusiastic about supporting arms exports because it wanted to ‘avoid being entrapped by international conflicts’.¹⁶ The government therefore merely provided a nominal subsidy to alleviate the damage caused by the rapid decline in US procurement. However, such limited assistance contributed little to the survival of the defence industry.¹⁷ Not only the government but also the banks were reluctant to provide financial assistance to the defence industry.¹⁸ As a result, most defence firms were on the verge of bankruptcy.¹⁹

Due to the absence of sufficient government support and procurement, many firms shifted to civilian products in order to survive. In the meantime, some firms somehow continued to produce and export arms, such as bullets and helicopters, to Asian countries. However, the amount of these exports was negligible. For instance, from 1963 to 1967, Japan exported equipment worth only about 600 million yen,²⁰ a trivial amount compared to amounts exported during the Korean special procurement, which fluctuated between 12,700 and 15,100 million yen per year.²¹ Hoping to revive the defence industry, the Japanese business community, including the Japan Association of Defence Industry and Japan Business Federation (Keidanren) requested that the government support arms exports to maintain the operational status of its manufacturing lines. However, the government did not heed this request.²²

When the US began air raids over North Vietnam in February 1965, the Eisaku Sato government quietly supported US involvement in Vietnam because he wanted to curry favour with the US. Sato strongly hoped to realise the return to Japanese control of Okinawa, which remained under US occupation. It therefore recruited Japanese crews for US landing ship tanks (LST) to demonstrate Japan's support. Japan also provided weapons to the US. However, it is not clear how much support Japan provided to the US as no official records exist, because the government did not categorise US procurement in Japan as export. However, estimates show that 90 per cent of the napalm bombs used in Vietnam were Japanese products.²³ Moreover, some US aircraft carrying those bombs departed from US military bases in Okinawa. Japan thus played a significant role in supporting US military action, both logistically and strategically. Prime Minister Sato even welcomed a port call by the US nuclear aircraft carrier Enterprise to Nagasaki.²⁴ The Japanese government justified such US war procurement and use of US military bases in Japan by invoking the Security Treaty.²⁵

In addition to the provision of material support, Japan indirectly supported US involvement in the war through financial means.²⁶ The US demanded that an increasingly wealthy Japan share the economic burden of America’s Asian struggle.²⁷ In response, Japan began providing financial assistance to both South Vietnam and Indonesia. Japan’s economic assistance to Indonesia aimed to support the Suharto government, which was inaugurated following a military coup in 1965, in order to prevent the country from leaning towards communism. Japan also supported the US Cold War strategy by playing a leading role in establishing the Asian Development Bank.^2s Both countries considered that the economic development of Asian states was crucial to effectively preventing the spread of communism.

While quietly supporting the US in Vietnam through various means, the Sato government announced the so-called Three Principles in the National Diet in April 1967. Sato made the statement in response to a question by a Socialist member, who asked whether the export of solid propellant rockets invented by Tokyo University to Yugoslavia and Indonesia contradicted the spirit of Article 9. Sato stated that the government would not permit arms exports to the following three types of countries:

• 1. Communist bloc countries;
• 2. Countries subject to an arms exports embargo under United Nations Security Council's resolutions, and
• 3. Countries involved in or likely being involved in international conflicts.

Although this announcement attracted attention, it was hardly a new policy. Prime Minister Sato merely articulated existing regulations regarding the export control policy of MITI. Article 48 of the Foreign Exchange and Foreign Trade Act enacted in December 1949 required exporters to obtain government permission for the export of weapons.²⁹ Through such control, the regulation aimed to block arms exports to communist countries. Imposing such a regulation in the occupation period clearly reflected US export control policy. Coincidentally in the same year, the Coordinating Committee for Multilateral Export Controls (CoCom) was established in order to cut the flow of technology and strategic

The arms trade ban policy during the Cold War 51 goods to communist states. After regaining its independence in 1952, Japan also joined CoCom. As a member of CoCom, Japan had to comply with its regulations governing the export of goods.³⁰

When the MITI Director explained the export control policy in August 1965 in the Diet, the explanation attracted no attention.³¹ However, Sato’s announcement of existing export regulations in 1967 unexpectedly attracted attention from the opposition parties. Contrary to government expectations, the statement then became institutionalised as what we now call the Three Principles. In other words, the export ban was far from normative but merely a policy in line with the restrictions imposed by CoCom.

Prime Minister Sato never considered that Article 9 prohibited Japan from exporting weapons. Rather, he thought that prohibiting all arms exports was not desirable since it would make it difficult to maintain a sound defence industry. Although having signed a security treaty with the US, Japan still needed to maintain its defence industry to ensure its national security. Production or export of offensive weapons should be restricted given the Constitution. However, the export of defence equipment would not be a problem.³² From Sato’s point of view, it was in Japan’s national interest to make sure that the defence industry remained viable. Japan should therefore produce and export defence equipment within limits imposed by the export restrictions. This view was clearly explained only five days after the April 1967 announcement. In the Diet, Sato stated that it would be legal to export weapons as long as the items remained defensive.³³ Based on this understanding, the government permitted Toyowa Industry to produce and export ArmaLite AR 18 rifles one year before the announcement.³⁴ The government had no intention of clashing with the defence industry. Sato himself did not expect his statement to become a symbol of anti-militarist Japan.

Although the announcement resulted in an unexpected consequence, it did not cause any economic damage because Japan’s defence exports were trivial at the time. In fact, the announcement was reasonable given the circumstances. First, the trade imbalance between Japan and the US became severe in Japan's favour. Therefore, MITI, which was once keen to nurture Japan’s defence industry, shifted its attitude. It became hesitant about encouraging the defence industry to export weapons out of economic consideration towards the US. In the 1960s, Japan’s exports to the US increased considerably. Consequently, the US suffered trade deficits with Japan. In the textile field, trade frictions between the two states escalated. Under these circumstances, Japan’s moves into the defence market would mean a possible escalation of the trade conflict between the two states. Naohiro Amaya, who later rose to Deputy Minister of MITI, made the following statement:

If Japan has the extra capacity to direct its human, financial, and technological sources to the defence area, it should put these resources into developing cutting-edge technology, such as the development of atomic energy, aircraft, space, computers, maritime resources, and so on ... The development of these industries would become an engine of Japan’s further growth.

Amaya added that ‘if Japan’s trade surplus expands, the US will put pressure on Japan to help improve the US balance of payments. When the pressure mounts, it would be wise to buy weapons from the US'. Amaya thought that Japan should direct its resources towards its civilian technological development rather than the defence industry.³⁵ Officials within the ministry shared this view.³⁶

Second, the US expected Japan to import US weapons.³⁷ Sensing such a US expectation, Japan planned to purchase US weapons worth $250 million as part of the 1967 Third Defence Program. This was equivalent to the trade imbalance between the US and Japan over the next five years. US Ambassador to Japan Alexis Johnson expressed his gratitude for Japan’s purchase of weapons because the purchase would redress the trade imbalance. Ambassador Johnson further showed his willingness to support Japan’s defence production through US licensing or co-production.³⁸ Japan’s purchase of weapons therefore served to help stuttering US trade.

Third, embarking on military aid or weapons exports was not a conceivable option for Japan, which invaded Asian states during World War II (WWII). It was evident that such behaviour would attract international criticism. The lingering antagonism was well illustrated by South Korea’s massive public protests against the conclusion of a peace treaty with Japan. In brief, it was too early for Japan to offer military assistance or export weapons to Asian states. Given the sensitivity of these states over Japan's militarism, exporting weapons was not an appropriate option for Japan.