Japan is considering what could become one of its most significant defense-industrial reforms since relaxing arms export restrictions in 2014: the creation of a Japanese version of the U.S. Foreign Military Sales (FMS) system.
Defense Minister Koizumi Shinjiro recently confirmed that the government is examining measures that include a Japanese-style FMS framework and a new organization to support defense exports and industrial development. While emphasizing that no final decisions have been made, Koizumi acknowledged that relevant ministries are engaged in what he described as “continuous deliberations” on concrete measures and institutional arrangements.
Such carefully worded language often precedes major policy shifts in Japan’s security policy.
The proposal would mark a notable departure from Japan’s traditional approach to defense exports. Under the current system, Japanese companies are largely responsible for negotiating and managing overseas sales themselves. A Japanese-style FMS would significantly increase government involvement by allowing the state to serve as the principal contracting window for foreign customers.
According to Japanese media reports, the government is considering establishing a new organization – possibly in the form of an independent administrative agency – to manage a Japanese-style FMS system and promote defense exports. The organization would also help strengthen Japan’s defense-industrial base and support the development of dual-use technologies, including artificial intelligence, drones, and autonomous systems.
The initiative is expected to be incorporated into revisions of Japan’s three key national security documents later this year, with implementing legislation potentially following in 2027.
Koizumi framed the issue in strategic terms. Defense equipment transfers, he argued, help strengthen the deterrence and response capabilities of allies and like-minded countries while reinforcing Japan’s own production base.
He described the defense industrial sector as a “defense capability itself” and summarized the government’s emerging philosophy with a succinct phrase: “Production capacity itself is deterrence.”
That view reflects lessons Japanese policymakers have drawn from Russia’s invasion of Ukraine. The war has underscored that military power is not measured solely by advanced weapons platforms. Countries must also possess the industrial capacity to replenish ammunition, replace losses, sustain maintenance, and continue production during prolonged conflicts. Japanese defense planners increasingly refer to this requirement as “sustained combat capability,” a concept that has gained prominence in recent strategic discussions.
For decades, however, Japan’s defense industry struggled under strict export restrictions and a relatively small domestic market. Limited production runs drove up costs, while some firms reduced or abandoned defense-related activities because of low profits and reputational concerns.
Although Tokyo has gradually relaxed export controls since 2014, Japanese companies have often found it difficult to compete internationally against firms backed by governments with more established export support mechanisms.
The proposal comes at a time when Japan’s defense sector is gaining momentum, as Tokyo seeks to strengthen defense-industrial cooperation with allies and partners.
Japan would not be breaking entirely new ground by creating a new organization to streamline and support defense exports. Many major defense-exporting countries already maintain specialized organizations responsible for managing government-to-government defense transactions and supporting overseas arms sales. South Korea relies on the Korea Trade-Investment Promotion Agency (KOTRA) and the Defense Acquisition Program Administration (DAPA), France has the Direction Internationale (DI), Israel operates the International Defense Cooperation Directorate (SIBAT) under its Ministry of Defense, and Sweden performs a similar role through its Defence Materiel Administration (FMV).
The existence of such institutions has strengthened the argument among Japanese policymakers that defense exports require a dedicated government framework rather than relying primarily on private industry.
Foreign defense acquisitions typically involve far more than the sale of equipment. Buyers often expect long-term maintenance support, training programs, logistics arrangements, financing mechanisms, and government-level commitments that extend over decades.
Many Japanese manufacturers – particularly diversified conglomerates for which defense represents only a portion of overall business activity – have limited capacity or incentive to manage such responsibilities independently.
Government involvement could provide foreign customers with greater confidence that Japan will remain a reliable long-term partner. It would also allow Tokyo to integrate defense exports more closely into broader foreign and security policy objectives.
This is particularly relevant as Japan deepens security cooperation with countries across the Indo-Pacific.
Tokyo has expanded defense ties with partners such as Australia, the Philippines, and other regional states that are seeking to strengthen maritime security capabilities amid growing concerns over China’s military modernization and increasingly assertive behavior in the East and South China Seas. A more robust export framework could make Japanese radar systems, naval platforms, drones, and other defense technologies more accessible to those countries.
At the same time, Japanese policymakers increasingly view defense-industrial cooperation as a tool of statecraft rather than merely a commercial activity. A Japanese FMS system would do more than help Japanese firms win overseas contracts. It would fundamentally reshape how Tokyo uses defense exports to support broader security objectives.
Yet creating a Japanese FMS system will not automatically replicate the success of its American counterpart.
The United States’ FMS program rests on decades of institutional experience, a vast defense-industrial base, sophisticated financing arrangements, and an extensive global logistics network. Japan lacks many of those advantages.
Tokyo will still need to address difficult questions involving contract management, liability, technology protection, pricing, after-sales support, and long-term sustainment responsibilities.
Domestic political sensitivities also remain. While public attitudes toward defense exports have become more favorable than in the past, debate continues over the appropriate balance between industrial competitiveness, alliance commitments, and Japan’s long-standing postwar restraints on arms transfers.
Nevertheless, the significance of the current discussion should not be underestimated.
Whether a Japanese-style FMS ultimately emerges remains to be decided. But the fact that senior officials are openly considering such a framework suggests that Tokyo is entering a new phase in its defense export policy.
A decade ago, Japan’s political debate focused on whether defense exports should be permitted at all. Today, policymakers are debating how actively the government should promote and support them. That alone marks a historic transformation.
