Nonproliferation Export Controls in Japan


Richard T. Cupitt




Introduction


Post-war Japanese leaders used the devastating domestic and international
consequences of Japanese militarism in the first half of the twentieth
century to forge strong cultural norms against the instruments of state
security in Japan.[1]  The Japanese Peace Constitution not only renounces the
right of belligerency to settle international disputes (Article 9, Paragraph
2), it strictly limits its military forces to “self-defense” roles.  For
decades, the vaguest official mention of a potential Japanese military
contribution to regional security, could provoke storms of protest at home
(and sometimes abroad).



The clearest links between the anti-military cultural norms of Japan and its
trade policies exist in the area of arms exports.  The 1950s bore witness to
a considerable debate about the role of defense industries in the economic
future of Japan.  By the mid-1960s, consistent pressure from anti-militarist
opposition parties and the fear that Japanese support for the US military
might involve Japan in the conflict in Vietnam moved leaders in the Liberal
Democratic Party to take a stronger stance against arms exports.  Ultimately,
in April 1967 Prime Minister Eisaku Sato explicated the “Three Principles of
Arms Exports” to guide Japanese policy.  Under the Three Principles, Japan
would not export arms to communist countries, to countries under United
Nations embargo, nor to countries engaged or likely to become engaged in
international conflict.[2]  Prime Minister Takeo Miki augmented the Three
Principles in February 1976 with policy guidelines that Japan would avoid
arms exports to other areas and Japan would apply the same treatment to items
related to the production of arms.



With the assurance of US military protection, successive postwar Japanese
governments made economic growth their primary security objective.  In
particular, Japanese officials sought to use exports as an engine of economic
prosperity.  Even when Japan joined COCOM in September 1952, government
officials apparently did so to reduce restrictions on trade with the People’
s Republic of China.[3]  With this grand strategy, Japan became a leading
economic power, especially in the production and export of high-technology
products.



Distinguishing between military and commercial items, however, has become
much more difficult in recent decades.  In most fields, moreover, the
sophistication of technologies associated with commercial applications began
to go far beyond military technologies.  As the contributions of dual-use
goods, technologies, and services became increasingly important in modern
weapons and logistical systems, the “arms” export distinction in Japanese
policy grew less meaningful.[4]



In some controversial instances, Japanese dual-use exports involve relatively
old and widespread technologies.  North Korea reportedly imported and
converted Japanese civilian vehicles into self-propelled rocket launchers.[5]
 Several countries, as well as the United Nations, use Japanese
four-wheel-drive vehicles on military patrol duties, as did South African
forces with Japanese off-road motorcycles.  In 1983, Japan also formally
exempted technology transfers to the United States from a strict
interpretation of its “Three Principles of Arms Exports,” although Japanese
firms remain hesitant to transfer technology to US defense enterprises.[6]



More disturbing, however, were the transfers of more sophisticated dual-use
items that contributed to strategic or advanced conventional weapons systems.
 The most notorious example, the Toshiba-Kongsberg case, spawned much
ill-will with the United States (and sanctions against Toshiba Machine).
 After this experience, Japan began to reform its national security export
control system.[7]  Although Japan already participated in COCOM, the
Australia Group, the Missile Technology Control Regime (MTCR), and the
Nuclear Suppliers Group (NSG), the Toshiba reforms matured into the
foundation for Japanese nonproliferation export control policies of the
post-Cold War era.



Elements of Japanese Export Controls


The nightmares of Hiroshima and Nagasaki and the unconditional surrender of
the home islands in 1945 shook the cultural foundations of Japan.  Decades
later, revelations about Japanese chemical and biological weapons programs
and other horrors from that era continue to reverberate in Japan and abroad.
 In ways perhaps not replicated in any other society, the history of Japan
provides a strong base of societal support for vigorous nonproliferation
policies.  In the 1990s, French and Chinese nuclear testing, the March 1995
gas attack on Tokyo subway stations (and disclosures about the plans and
operations of Aum Shinrikyo), and recent reports of smuggling of sodium
fluoride and hydrofluoric acid, precursors for sarin, to North Korea help
keep nonproliferation from being treated as a historical abstraction in
Japan.[8]



In 1967, Prime Minister Eisaku Sato made the “Three Non-nuclear Principles”
 part of the foundation of Japanese nuclear policy.  Under the Three
Non-Nuclear Principles, Sato vowed the Japan would neither possess nor
produce nuclear weapons, nor would the government permit the introduction of
nuclear weapons in Japan.  The Diet passed a formal resolution of support for
the Three Non-nuclear Principles in November 1971, and Japan ratified the
Nuclear Non-Proliferation Treaty as a non-nuclear weapons state, further
committing itself not to produce or acquire nuclear weapons, in June 1976.
 Japan also supported the indefinite extension of the Nuclear
Nonproliferation Treaty (NPT) at the 1995 review conference and the
Comprehensive Test Ban Treaty.  In an effort to promote a Fissile Material
Cut-Off Treaty, Japan sponsored a seminar on technical issues in Geneva in
May 1998 and supported the formation of a new ad hoc negotiating committee
under the UN Conference on Disarmament in August 1998.



Japanese officials, concomitantly, reminded the NPT states with nuclear
weapons of their ultimate treaty obligation to undertake nuclear disarmament.
 In 1994 and 1995, Japan also argued before the International Court of
Justice that the use of nuclear weapons violated international law.  In the
wake of the South Asian nuclear tests, the government also formed an
Emergency Action Forum with the Japan Institute of International Affairs,
which began a conference series on Urgent Actions for Nuclear
Non-Proliferation and Disarmament.



Regarding chemical and biological weapons, Japan deposited its ratification
of the Chemical Weapons Convention (CWC) in September 1995 and has moved
quickly to implement its obligations under the convention.  On March 30,
1995, the Diet passed its Chemical Weapons Act (originally drafted by MITI).
 Portions of the Act related to chemical weapons and various chemicals
(including Sarin) came into effect in May, while the remainder became
operative when the CWC went into force.[9]  Japan also worked to strengthen
the weak verification authority and procedures specified in the Biological
Weapons Convention (BWC).  As to the proliferation of conventional weapons,
Japan has moved beyond its own three principles.  Most important, Japan
co-sponsored the initiative that led to the creation of the UN Register of
Conventional Arms in January 1992.  Japanese officials also conducted an
Asian-Pacific workshop on the register.



Among the clearest signals of Japanese intentions came when Japan modified
its Official Development Assistance (ODA) Charter in 1991.  Under the four
new guidelines that modified the charter, the nonproliferation policies of
the recipient states became a condition for ODA.  The clearest consequence of
this policy change came when Japan suspended its yen grant to China in August
1995 in response to Chinese nuclear tests.  Although less than seven percent
of overall Japanese economic assistance to China, it was the first time Japan
applied its new ODA guidelines in practice.



The Japanese response to the nuclear tests in South Asia was just as
outspoken.  As the primary donor of foreign assistance to India, with 3.7￥
 billion grants in fiscal 1997 and 132￥ billion in loans committed for
fiscal 1998.[10]  Japan took some of the strongest steps of any nation to
express concern.  After the first round of Indian tests, Japan suspended new
grants-in-aid.  The second round of Indian tests, a particular affront given
Japanese protests, prompted the suspension of new yen loans to India.  Along
with Sweden, Slovenia, and Costa Rica, Japan also sponsored a resolution to
strengthen the nuclear nonproliferation regime that the UN Security Council
adopted unanimously.[11]



Although Japanese officials began implementing their own export control
system shortly before the SCAP completely transferred political power to
Japanese authorities, Japanese law formally allowed the government only to
institute controls in fulfillment of Japanese economic objectives.[12]  In
1980, the government altered the law and the promulgated a new regulation to
include security as a rationale for export controls on technology.  Only in
the aftermath of the Toshiba case did the government modify its law and
regulations to add “international peace and security” as a rationale for
the control of export goods.



After 1987, Japan began to reform its export control system radically.  The
Toshiba scandal embarrassed many Japanese officials and business leaders.
 The scandal also compromised the image of major Japanese firms in the
international arena, as well as spawning United States sanctions and threats
of further punishments.  As Japanese concern over the proliferation of NBC
weapons grew, moreover, the government moved to adapt its revamped export
control system to the demands of the post-Cold War environment.  In 1992,
MITI established a Security Export Control Committee under the Industrial
Structure Council, the official industry advisory body to MITI.  Chaired by
Ambassador Ryukichi Imai, formerly the Japanese representative to the UN
Committee on Disarmament, the Committee produced a white paper attesting to
the need for stronger nonproliferation export controls.[13]



The ongoing reforms mean that Japanese and US nonproliferation export control
policy have become ever more similar, converging toward new multilateral
standards for national export control policies.  With arguably one of the
strongest nonproliferation export control systems in the world, Japanese
businesses, including their joint ventures, now face restraints as great or
greater than any North American or European enterprise.  This makes greater
regional cooperation on export controls more attractive, and Japan is taking
a leading role in promoting nonproliferation export controls in East Asia and
elsewhere.



Legal Framework and Licensing


The legal framework for Japanese nonproliferation export controls rests on
the Gaikoku Kawase oyobi Gaikoku Boeki Kanri-ho or Gaitame-ho (the Foreign
Exchange and Foreign Trade Control Law (FEFTCL), Law No. 228 of December 1,
1949).[14]  Under the Gaitame-ho, Japan recognizes the principle of free
trade as the basis for its law, but also acknowledges the necessity of
imposing trade controls to promote the national interest (if kept to a
minimum).



Supporting the Gaitame-ho are two Cabinet Orders, the Export Trade Control
Order (Yushutsu Boeki Kanri-rei or Yushutsu-rei, Order No. 378 of December 1,
1949) and the Foreign Exchange Control Order (Gaikoku Kawase Kanri-rei or
Gaitame-rei, Order No. 260 of October 11, 1980).  Annex 1 of the Yushutsu-rei
enumerates the controlled goods (and the relevant controlled destinations),
while the Annex to the Gaitame-rei lists the technologies (and the relevant
destinations) controlled by Japan.



At least six Ministerial Ordinances also apply to the licensing of sensitive
exports in Japan.  These include:

‧                     Export Trade Control Regulation (Ministry of
International Trade and Industry Ordinance No. 64 of December 1, 1949);

‧                     Ministerial Ordinance Concerning Foreign Exchange
Control (Ministry of Finance Ordinance No. 44 of November 15, 1980);

‧                     Ministerial Ordinance Concerning Control of Invisible
Trade Transactions Relating to Foreign Trade (MITI Ordinance No. 64 of
November 27, 1980);

‧                     Ministerial Ordinance Defining Commodities and
Technology on the Basis of the Provisions of Supplement No. 1 of the Export
Trade Control Order and Supplement of the Foreign Exchange Control Order
(MITI Ordinance No. 49 of March 10, 1991);

‧                     Stipulating Goods Pursuant to Provisions of Supplement
No. 2 and Supplement No. 7 of the Export Trade Control Order (MITI Ordinance
No. 38, 1992)



‧                     Ministerial Ordinance Defining the Cases Where
Exported Commodities are Suspected to Be Used for the Development, Production
or Use of Nuclear Weapons or the Like (MITI Ordinance No. 16 of March 26,
1996).

In addition, the government applies two sets of instructions issued by the
MITI International Trade Bureau (ITAB):

‧                     How to Operate Under the Export Control Order (ITAB
Notification No. 322, 1987)

‧                     Transactions to Provide Technologies on the Basis of
the Provisions of Article 25-1-1 of the FEFTCL or Article 17-2-3 of the
Foreign Exchange Control Order (ITAB Notification No. 409, 1993).

While the Japanese government has moved away from heavy reliance on
Administrative Guidance, it remains a part of the implementation of export
controls.



Japan has no general license for exports, but the law allows for certain
exemptions from licensing requirements.  Exporters file individual licenses
by hand at the Ampo-ka at the MITI Head Office, although automation of the
licensing system should take place in the near future.  If less scrutiny
seems appropriate, exporters can file by hand at one of eight regional
bureaus (Tsusho Sangyo-kyoku).  Japan also has a Special Bulk License
(Tokutei Hokatsu) for a few exporters and consignees with strong, certified
internal compliance programs (and a financial relationship over the
end-user).  Japan also has General Bulk Licenses (Ippan Hokatsu - I & II) for
some goods for destinations other than the four named “controlled”
 countries.  Allegedly, MITI ended the mandatory practice of “prior reporting
” in 1994, where exporters had to notify MITI that they intended to export
goods, technologies or services related to WMD to countries not members of
the international export control regimes before making a formal license
application.  In some instances, however, the practice of prior reporting
continues, such as for export orders for cryptographic items.[15]



MITI distinguishes between various groups of countries in the licensing
process.  MITI identifies four countries, Iran, Iraq, Libya, and North Korea,
as proscribed destinations.  In contrast, General Bulk Licenses are available
for exports to members of the international export control arrangements,
including the former COCOM members, Austria, Finland, Ireland, New Zealand,
Sweden, and Switzerland.[16]  Transfers to another group of entities, the
remaining members of Wassenaar and a few others (such as the Republic of
Korea) with comparable export control systems, may be eligible for reduced
licensing requirements.  Licenses for exports to all other countries fall are
subject to its standard export control procedures.



Legally, Japan treats Hong Kong as a non-member of the regimes, so its law
does not distinguish between Honk Kong before and after July 1, 1997.  In
practice, the high level of commitment of Hong Kong (and the high volume of
trade with Japan) mean that license applications to it receive favorable
treatment.[17]  Exports to Hong Kong still require individual validated
licenses, but the process demands less scrutiny.



According to MITI officials, Japan issues less than 10,000 licenses a year,
although they did not track the total number of licenses issued.  They do not
deny many licenses; instead, exporters withdraw the application in
troublesome cases.  Older data on export licenses (from October 1994 to March
1995), indicated that most licenses for exports to East Asian countries went
for Taipei (16%), the Republic of Korea (13%), and Singapore (11%).[18]





Bureaucratic Process



MITI rests at the center of the Japanese export control process.  The staff
in MITI working on export controls increased from forty in 1987 to 124 by
1994, with the responsible office being upgraded to a division in 1994 with
more than fifty licensing officers. As of early 1997, the Deputy
Director-General for Security Export Control of MITI has primary
responsibility for the administration of Japanese export controls.  Under of
the International Trade Administration Bureau, the Deputy Director-General
supervises the activities of two divisions, the Export Division (Yushutsu-ka,
with a staff of about forty) and the Security Export Control Division (Anzen
Hosho Boeki Kanri-ka or Ampo-ka, with about sixty staff), and one office, the
Security Export Inspection Office (Anzen Hosho Yushutsu Kensakan-shitsu, with
around twenty staff), involved in nonproliferation export controls.  MITI
divides licensing officers into groups working on item sections in its
control list. Organization charts provide an overly formal picture of the
division of labor.  At least some key personnel, for example, work in both
the Export Division and the Security Export Control Division in MITI.



The Export Division coordinates Japanese commercial exports and arms control
policies.  It also manages export controls imposed for reasons other than
national security.  The Ampo-ka administers security-based export licenses,
negotiates and cooperates with foreign counterparts, and analyses security
information for MITI.  If the Japanese Defense Agency, for example, wishes to
export a military item, it has to get a license from the Ampo-ka.  Under the
Ampo-ka, the Security Export Inspection Office reviews business compliance
programs and conducts post-shipment inspections of licensed exports.  MITI
also has a Chemical Weapons Convention Office responsible for domestic
compliance activities related to the CWC, including preparing industry for
undergoing inspections by the CWC Secretariat.  Security export control
officials maintain frequent contact with other divisions within MITI
(including the Nuclear Energy Industry Division, the Material for Chemical
Weapons and Drug Control Office, the Biochemical Industry Division and the
Aircraft, Defense Products and Space Industry Division), especially since
they may have served in or with someone in those offices under the frequent
system of rotation used in the Japanese bureaucracy.



Article 69, paragraph 4 of the Gaitame-ho, specifies that MITI may ask the
Ministry of Foreign Affairs (MOFA) to comment on export license
applications.[19]  In practice, MOFA has a formal right to express an opinion
on exports, and MITI usually respects the position of MOFA.  MITI will grant
a license without consultation, but Ampo-ka will not issue a license without
consultation if they have any concern about international repercussions, the
need to refer to partner countries, and so forth.



Informal consultations also play as important a role as formal discussions.
 Typical Japanese policy practices, such as nemawashi (literally “root
building” or the behind the scenes preparations for policy), kuromaku (“
black veil” or informal political actors), tsukiai (the out of office social
networks) and consensus decision-making, emphasize such informal
practices.[20]  MITI officials, for example, consult with representatives in
MOFA and the Japanese Defense Agency regularly.  Informal phone
consultations, reportedly, occur almost daily between the Security Export
Control Division and the Nonproliferation Bureau of MOFA.[21]



Within MOFA, the Nonproliferation Bureau takes the leading role in licensing
issues and cooperation with MITI officials regarding the international export
control arrangements.  Several other units in MOFA play a part in the
process, such as the Nuclear Energy Division, which handles NSG Part I items
(the Nonproliferation Bureau handles Part II items), and the CWC Division,
which works on legal issues of the CWC.[22]  Both units, however, work
closely with the Nonproliferation Bureau.



Control Lists


Japan lists its controlled goods in Annex I of the Yushutsu-rei, as
complimented in detail by Ministerial notices or Sho-rei.  In addition to the
items on the old COCOM lists, MITI added the MTCR items on December 20, 1988
while the original fifty precursors for chemical weapons controlled by the
Australia Group appeared on July 9, 1989.  In 1991, the government
reorganized its list of controlled items.  Arms, for example, covered items
197-205 in the Yushutsu-rei, instead of appearing somewhat randomly on the
list.[23]  Japan added the sixty-five items of the new NSG Guidelines on
dual-use items and nineteen new categories of missile items from the revised
MTCR on April 4, 1992 and January 1, 1993, respectively. On July 16, 1993,
the government also added seven categories of biological agents.



Today, Japan controls a sixteen category list of items for security purposes.
 The overall list corresponds to the current NSG/Zangger Committee, the
Australia Group, the MTCR, and initially, the COCOM control lists.  To
reflect the control lists and procedures of the Wassenaar Arrangement, the
government amended the relevant Cabinet Orders, Ministerial Ordinances, and
ITAB Notices on September 13, 1996.  Among other things, this created an
additional category (i.e., category fifteen, the “very sensitive” list).
 The categories are:

1 - Weapons

2 - Nuclear Weapons (NSG Part 1 and Part 2 items)

3 - Biological and Chemical Weapons (CWC and Australia Group items)

4 – Missiles (MTCR items)

5 - Advanced materials

6 - Materials processing

7 - Electronics

8 - Computers

9 - Telecommunications

10 - Sensors and lasers

11 - Navigation and avionics

12 - Marine

13 - Propulsion

14 - Munitions

15 - Sensitive Items

16 - Complementary export controls

The list of controlled technologies appear in the annex to the Gaitame-rei
and various Sho-rei.  The categories parallel those for goods.



Japan modifies the lists to mesh with changes in their international
obligations.  It added new agents in line with the CWC, for example, while it
also modified the criteria for chemical agents in line with Australia Group
guidelines.[24]



Regime Adherence


Japan joined all four major nonproliferation export control regimes at their
inception.  It abides by all the guidelines and control lists developed in
the arrangements.  The Japanese legal framework, moreover, identifies
international obligations as the primary basis for shaping its national
export control system.  Many sources indicated that Japanese authorities,
before 1987, adopted a passive role within COCOM and other export control
arrangements.  Since then, however, Japanese delegations have made
increasingly important contributions to discussions and to the infrastructure
of multilateral export control arrangements.  In particular, the Japanese
Permanent Mission to the International Organizations in Vienna became the
official Point of Contact (POC) for activities related to Part 2 of the NSG
List (the dual-use list) in 1992.  In April 1995, the same mission also
became the POC for activities related to Part 1 of the NSG list.  In 1998,
Japan also became chair of the MTCR, which may prompt it to become more
active in the MTCR.



“Catch-All” Controls


Japan maintains no strictly unilateral controls for security reasons.  MITI
Ordinance No. 16, however, outlines the Japanese version “catch-all”
 controls and its “know” standard.  When it came into effect on October 1,
1996, Japan added a category sixteen (the “know” items) to its control
list.  These “complementary export controls” emerged after a lengthy
discourse between business and government, largely based on government
initiatives.



In contrast to the broader measure supported by the United States, Japan
limited the application of its “know” standard to a list of about ninety
dual-use items that could “materially contribute” to proliferation
activities.  These items are the same as those found in the NSG and other WMD
lists, but Japan controls them at lower levels of technical specification
(hence the name “spec down” controls).



In addition, the government has a set of “objective” criteria, an “informed
” by MITI clause, and a “know” (if the exporter knows or suspects), which,
if not met, allows companies to export controlled items without a license.
 Companies need not apply the “objective” criteria for catch-all controls
when exporting to twenty-two countries that participate in all the
non-proliferation treaties and regimes and have a catch-all control system
(Country List 4-2).  Through ITAB Notification No. 248, 1996, consultation
with MITI is recommended whenever the exporter knows the item will go for
proliferant activities, regardless of the precise limits of the written
regulations.



Training


MITI trains its licensing officers, although much of it remains on the job by
necessity.  A recent Director of the Security Export Control Division, for
example, reportedly got briefings for one week, including several hours with
a predecessor.  The officers of the Security Export Control Division have
one-two days of initial training, but also get licensing manuals, take
specific training courses, and visit factories and customs offices for
seasoning. The export control staff of both MITI and MOFA, however, might
benefit from greater experience. The longest-serving person working on export
licensing issues in MOFA, for example, however, had little more than two
years experience in the field.  The normal rotation period in the Japanese
bureaucracy precludes most individuals from staying in one office for too
long, but in rare cases exceptions are made, which the complexity of the
issues might justify here.



Professors and journalists also provide seminars for MITI, while MITI
licensing officers may also study abroad or take posts in the Japanese
permanent mission in Vienna (the Point of Contact for the NSG).  Customs
agents undergo a nine-month introductory course and additional training
courses and seminars, which apparently include information on
nonproliferation and export controls. Major Japanese companies also include
training of their employees and their subsidiaries as an integral part of
their ICPs.



Customs Authority


The nine regional customs houses operate as local branches of the Ministry of
Finance, with additional offices at almost every sea and airport in
Japan.[25]  The more than 8,000 customs officials work closely with the
Security Export Control Division and with other enforcement agencies, both
domestic and foreign, in enforcing export controls.  Reportedly, MITI
oversees the custom houses to assure appropriate implementation of export
controls under Section 54 of the Gaitame-ho and Section 5 of the
Yushutsu-rei.[26]  Allegedly, customs authorities closely examine export
documents and conduct spot-checks of specific shipments.  Japanese customs
authorities also work with representatives of US Customs in Tokyo and the
Office of Export Enforcement of the US Department of Commerce.



Verification


As with other members of the former COCOM, Japan maintains an International
Import Certificate (IC) / Delivery Verification Certificate (DV) system, and
controls the re-export of items.  The system has a passive means of
verification by collecting reports from importers.  It also has an active
system of on-site inspections and auditing to confirm the end-use and
end-user of exports.  These inspections take place within one to five years
after licensing.



In practice, officials from MOFA do not conduct make post-shipment
verification inspections often, as they lack the necessary staff.  On an ad
hoc basis, MOFA will instruct a consulate or embassy to carry out
verification procedures.  Generally, Japanese officials depend on the trust
they have built with partner countries and their exporters.



Penalties


Under Article 69-6 of the Gaitame-ho, violators may face imprisonment of up
to five years and fines of ￥2,000,000 or, if the value of the goods exceeds
￥400,000, up to five times the amount in question, with smaller penalties
for lessor violations under Article 70.  Under Article 25-2, MITI can curtail
the export privileges of a violator for up to three years for the export of
technology without a license or the export of weapons.  Under Article 53,
MITI can prohibit exports of goods by a violator for up to three years.
 Penalties for filing false reports (or no reports), obstructing spot
inspections or making false statements include up to six months imprisonment
and fines of no more than ￥200,000 under Article 72.



In sixteen recent cases, the government imprisoned people for more than one
year in seven cases and for less than one year in three other cases.  In
three cases, MITI prohibited exports for more than one year.  In nine cases,
MITI imposed export bans of  less than one year.  Some cases receive
significant attention in the mass media.



Companies with internal compliance programs have an obligation to report
their own violations and maintain an adequate paper trail for investigators.
 The government often acts upon tips about potential violations from various
official intelligence sources and from corporate sources, as well as from its
regular auditing and reporting processes.



Information Sharing


Government-to-Government



Internationally, Japan became more assertive in promoting nonproliferation
export controls.  In 1991, MITI debuted its Asian Export Control Initiative,
promising to promote export controls throughout the region.  In addition to
its more intensive participation in the four nonproliferation export control
regimes, Japan began hosting regular seminars on security export controls for
all Asian countries.[27]  The government also modified its licensing
procedures to offer a special bulk license as a means to induce other Asian
states to cooperate on export controls.  In January 1994, Japan participated
in an approach to the PRC on joining the NSG (along with Switzerland,
Australia, and the Netherlands) and in March 1995, it joined Spain, the
United States, and Australia in helping to bring the Republic of Korea into
the NSG.



Although Japan continues to rely on the United States for significant
intelligence information, MITI has set aside significant funds for developing
intelligence information on end-users and other nonproliferation concerns of
relevance to exporters.  In recent years, Japan also focused on
nonproliferation export controls in bilaterals with South Korea, Taiwan, the
People’s Republic of China, Malaysia, and Indonesia.  In August 1994, Japan
also sent a mission to Pakistan regarding the MTCR, and conducted a regional
policy forum with Russian officials in 1993.  Japan also has taken the
responsibility to keep Hong Kong officials informed about the activities of
the Nuclear Suppliers Group, as Japan, Australia, the United Kingdom, and the
United States divided the task of providing export control information to
Hong Kong after the transition.

Government-to-Industry



While MITI accepts requests for consultation on export controls, most
government outreach takes place through the Center for Information on
Security Trade Controls (CISTEC).  In the 1980s, some large Japanese
commercial entities, such as Hitachi, began to educate their affiliates and
local partners on how to conform to export control standards, similar to the
practices of US and European Union multinationals.  In September 1987, MITI
ordered major Japanese exporters to develop company programs to comply with
security export controls.  The initial audits of these internal compliance
programs (ICPs) by the Office of Strategic Materials Export Inspection (now
the Security Export Inspection Office in MITI) to certify these programs
allegedly proved disappointing.  Consequently, the companies, with the
encouragement of MITI, created CISTEC (then named the Center for Information
on Strategic Technology) in April 1989 to assist their efforts.  As a
zaidanhojin, CISTEC acts as a nonprofit organization in association with
Japanese exporters, to improve business compliance and otherwise work as a
liaison between industry and MITI on export control issues (it operates under
the auspices of the Export Division in MITI).  CISTEC engages in research and
consulting, conducts training seminars and international symposia, and
publishes information in various media formats.[28]  CISTEC, for example,
developed a system to collect and analyze information in the public domain
related to nonproliferation export controls, such as data on end-users, for
their members.



MITI undertook more intensive reviews of ICPs after the Japan Aviation
Electronics (JAE) Industry case in 1991, where missile and jet fighter parts
were transferred to Iran.  CISTEC played an important new role when MITI
notified about 150 companies and trade associations in June 1994 that it
wanted companies to conform to post-Cold War, nonproliferation concerns by
creating new compliance programs.[29]  On the basis of this order, CISTEC
developed a new model compliance program for business.  As a result, by the
summer of 1996, roughly 900 major Japanese companies, accounting for nearly
80% of all exports from Japan, had ICPs registered with MITI (to whom they
must report regularly).  CISTEC and MITI have now turned their attention to
assisting small and medium size companies as well.



CISTEC now has a mandate to promote compliance with export controls
throughout the region.  In cooperation with MITI, for example, CISTEC trained
three representatives from Mongolia in late 1992, three officials from
Vietnam in March 1993, and five representatives from South Korea in late
1994.  CISTEC also plays a central role in preparing the Asian Export Control
Seminars.  In order to implement the Chemical Weapons Convention (CWC), MITI
also began programs, seminars, and training sessions for domestic chemical
manufacturers.



Analysis and Implications: Japanese Export Controls in Perspective


Applying the CITS/UGA assessment methodology portrays the Japanese system of
nonproliferation export controls as highly compatible with emerging
multilateral standards (see Table I).  Only in bureaucratic process, training
and verification does the Japanese system stand slightly askew from the
highest multilateral standards.  The bureaucratic process, training, and
verification differences occur, in part, because of traditional Japanese
practices, which informal mechanisms can or could supplement.  In the
licensing process, for example, it appears clear that MITI integrates the
views of the Ministry of Foreign Affairs and the Defense Agency in the review
process.  The British model of bureaucratic turnover impedes training and
institutional memory, which an expert in residence might help.  Japan tightly
restricts the size of its bureaucracy, so Japan would need to make
verification a higher priority to get more personnel.  Close relations with
the business community, strong ICPs, and good working relations with partner
countries, however, can compensate for this constraint.



While highly compatible, the Japanese system has unique features as well.
 CISTEC has no real parallel in other countries as yet, although it may serve
as a model in the future.  The Three Principles of Arms Exports, even more
than the Three Non-Nuclear Principles, are a rare show of leadership by
example by a country that could, if it choose to do so, become a major arms
exporter.  Few governments have pursued the development of rigorous internal
compliance programs for major exporters with the vigor done in Japan.  Nor
did the creation of the complementary system of export controls slavishly
imitate the catch-all controls of the United States.  After considerable
review of policies around the world, Japan designed a simple yet effective
alternative that may become the international norm.



As Table II indicates, the Japanese system more closely matches emerging
multilateral standards than any other system in East Asia.  Plenty of
evidence exists to demonstrate that Japan has a strong commitment to the
nonproliferation of WMD and other arms, and to export controls as a means of
implementing that commitment.  By most accounts, Japan has made a remarkable
transformation of both its commitment and its implementation of that
commitment since the late 1980s.  Indeed, Japan now promotes the development
of nonproliferation export controls in other countries in Asia.  Even in the
case of defense technology transfers to the United States, where Japan makes
an exception to the Three Principles of Arms Exports, some companies appear
hesitant to participate, fearing they might violate export control laws and
regulations and incur public wrath.



While this assessment only resembles a snapshot, Japan will likely keep
export controls as a favored instrument of nonproliferation policy.
 Government and industry have invested considerable resources in building
this system.  Export controls, moreover, offer a non-military means of
improving Japanese national security and regional (and global) stability on
which the Japanese economy depends.  By coordinating its policies with other
suppliers and transit states, Japan greatly reduces its transaction costs for
security.  As important, as a champion of nonproliferation export controls,
Japan takes a leadership role in the international community.











Table I

Elements of the Japanese System of Nonproliferation Export Controls, 1998

(Raw/Weighted Score)





Control Element


Japan



Licensing (6/7.47)


  6         /     7.47



Lists (3/6.34)


  3         /     6.34



Regime Adherence (12/3.2)


  12       /     3.2



Catch-All Controls (3/1.2)


  3         /     1.2



Training (9/3.87)


  8.5      /     3.66



Bureaucratic Process (6/3.47)


  5.5      /     3.18



Customs Authority (6/6.6)


  6         /     6.6



Verification (9/3.67)


  8.5      /     3.46



Penalties (6/1.8)


  6         /     1.8



Information Sharing (12/4.2)


  12       /     4.2



Totals (72/41.82)


  70.5      /   41.11



Percent of Total Score (100/100)


  98       /   98






Table II

Selected Nonproliferation Export Control Systems in Asia, Early 1997

(Raw/Weighted Score)



Control Element


Taipei


South Korea


Hong Kong


PRC


Kazakhstan

Russia



Licensing (6/7.47)


  6   /  7.47


  6   /  7.47


  6    /   7.47


 5    / 6.23


  6   /  7.47


  5.5  /  6.85



Lists (3/6.34)


 2.5 /  5.28


 2.5   /  5.28


  3    /   6.34


  2 /   4.23


 2.5 /  5.28


  3    /   6.34



Regime Adherence (12/3.2)


8.5  /  2.27


12     /   3.2


  8.5 /  2.3


 2  / .53


 4    /  1.06


12     /   3.2



Catch-All Controls (3/1.2)


  0   /  0


  0     /   0


  3   /  1.2


  0  /  0


 0    /  0


  0     /   0



Training (9/3.87)


  6   /  2.58


  7.5  /  3.22


  6   /  2.56


 1  /  .43


 7.5 /  3.22


  8    /   3.41



Bureaucratic Process (6/3.47)


 5.5 /  3.18


  5     /  2.89


  5.5 / 3.19


 4.5  /  2.6


  5   /  2.89


  5    /   2.89



Customs Authority (6/6.6)


  5   /  5.5


  6    /    6.6


  6   /  6.6


  3  / 3.3


  4   /   4.4


  4     /   4.4



Verification (9/3.67)


  8   /  3.26


  8.5 /  3.47


  9   /  3.67


 3  / 1.22


 3    /   1.22


  8    /   3.26



Penalties (6/1.8)


  5   /  1.5


  5    /  1.5


  5   /  1.49


 4  /  1.20


 3.5 /  1.05


  3.5  /   1.2



Information Sharing (12/4.2)


  8   /  2.8


12    /  4.2


10   /  3.49


 3.5  / 1.23


 7    /  2.45


  8     /   2.8



Totals (72/41.82)


54.5 / 33.83


64.5 / 37.83


62  / 38.31


27.5 / 20.97


42.5 / 29.04


57.5 / 34.35



Percent of Total Score (100/100)


75.7 / 80.9


89.6 / 90.5


86.1 / 91.6


 38.2 / 50.14


59    /  69.4


79.9  /  82.1


Sources: Richard T. Cupitt, “Nonproliferation Export Controls in East Asia,”
 The Journal of East Asian Affairs, XI, 2 (Summer/Fall 1997), p. 480,
revised, expanded and updated, with assistance from Mike Beck for the Russian
Federation and Keith Wolfe for Kazakhstan.



                                                       Appendix I



                                      Institutional Affiliations of Japanese
Interviewed



Institutions



Center for Information on Strategic Trade Controls

Diet of Japan

Hitachi

IBM-Japan

Institute for International Policy Studies (International Institute for
Global Peace)

Japan Atomic Industry Forum, Inc.

Japan Center for the Promotion of Disarmament and Nonproliferation

Keidenren

International Economic Affairs Department

Miltec Corporation

Ministry of Finance

Tokyo Customs

Ministry of International Trade and Industry

Security Export Control Division

Ministry of Foreign Affairs

Nonproliferation Bureau

NEC

Sony

Toshiba




















--------------------------------------------------------------------------------

[1]  For an excellent presentation of this phenomena, see Peter J.
Katzenstein, Cultural Norms & National Security: Police and Military in
Postwar Japan, Ithaca: Cornell University Press, 1996.

[2]  Under Japanese law “arms” mean items used by military forces for
direct combat purposes.  Further, the law controlling the Self-Defense Forces
uses the term buki, which means “machines, apparatuses and equipment with
purposes of directly killing or harming persons, or destroying materials as a
means of armed conflict....”  See Bates Gill, Kensuke Ebata, and Matthew
Stephenson, “Japan’s Export Control Initiatives: Meeting New
Nonproliferation Challenges,” The Nonproliferation Review, 4, 1 (Fall 1996),
p. 41.

[3]  Prior to its return to self-government, the Supreme Command of the
Allied Powers (SCAP) determined Japanese export control policy.  SCAP applied
the anti-communist export control regime adopted by the United States, which
was stricter than that of COCOM.  See, for example, Yoko Yasuhara, “Japan,
Communist China, and Export Controls in Asia, 1948-52,” Diplomatic History,
10, 1 (Winter, 1986), pp. 75-89.

[4]  Some observers indicate that military and civilian production
traditionally coincided in Japanese industry.  See Richard J. Samuels, , “
Rich Nation, Strong Army” National Security and the Technological
Transformation of Japan, Ithaca: Cornell University Press, 1994, pp. 154-341.

[5]  Gill, et al., “Japanese Export Control Initiatives,” p. 34.

[6]  Defense Task Force, Committee on Japan, National Research Council,
Maximizing U.S. Interests in Science and Technology Relations with Japan,
Washington, DC: National Academy Press, 1995.

[7] In 1981, Toshiba Machine, along with the trading firms Ito Chu and Wako
Koeki, contracted to supply the Soviet Union with four nine-axis milling
machines to develop more efficient and quieter propellers for its nuclear
submarine fleet.  Toshiba Machine got a license to export two-axis machines
(which it got from Kongsberg).  They then exported an upgrade program for
nine-axis machines to the Soviets through Kongsberg.  In December 1985, Kazuo
Kumagai, a disgruntled employee of Wako Koeki, wrote officials in COCOM about
the sale.  According to Yoko Yasuhara, Japanese officials got the letter and
met fifteen times before MITI concluded it could not substantiate the sale in
April 1986.  Officials in the United States, however, continued to press the
case, which eventually resulted in Congressional sanctions.

[8]  For more on the sodium fluoride and hydrofluoric acid case, see “ROK:
DPRK ‘Smuggled’ Toxic Chemicals From Japan,” FBIS?EAS?96?069, 3/8/96,
Seoul KBS?1 Television Network (in Korean), 1200 GMT, 3/8/96.

[9]  Masahiko Asada, “National Implementation of the Chemical Weapons
Convention in Japan --- Its Relevance and Irrelevance to the Tokyo Subway
Incident,” The Japanese Annual of International Law, 39 (1996), pp. 19-20.

[10]  “Japan Imposes More Sanctions Over India's Nuclear Tests,”
 FBIS-EAS-98-13414 May 1998 Tokyo Kyodo in English 1002 GMT 14 May 98

[11]  Statement by Foreign Minister Keizo Obuchi on the Adoption as a U.N.
Security Council Resolution of a Joint Proposal by Japan, Sweden and Other
Countries against Nuclear Testing by India and Pakistan, June 7, 1998.

[12]  This was the interpretation of Tokyo District Court Judge Ryokichi
Sugimoto in the Japan Industrial Fair case of 1969.  Following COCOM
decisions, MITI denied export licenses for 19 items intended for exhibitions
in Beijing and Shanghai (out of about 7000 display items).  After a poor
turnout at the Beijing exhibition, China denounced Prime Minister Eisaku Sato
and canceled the rest of the exhibition.  Organizers tried to sue the
Japanese government for compensation, arguing that without a UN resolution
against trade with China or a security clause in the Yushutsu-rei, MITI had
no right to deny the license applications.  Judge Sugimoto denied the suit,
but agreed that application of the restrictions in the Yushutsu-rei was
limited to “pure and direct” economic objectives.  See Yoko Yasuhara, “
Japanese Export Controls, COCOM, and the United States: A Historical
Perspective,” in Gary K. Bertsch, Richard T. Cupitt, and Takehiko Yamamoto,
eds., U.S. and Japanese Nonproliferation Export Controls: Theory, Description
and Analysis, Lanham, Maryland: University Press of America, 1996, p. 94.

[13]  Security Export Control Committee, Industrial Structure Council, The
Future of Security Export Controls, unofficial translation, Tokyo: MITI,
1993.

[14]  Especially articles 25, 48, 51, 53, 54, 61, 66, 69, 70, and 72.

[15] Japan has changed the amounts needed to prompt a prior approval from
time to time.  Japan, for example, lowered the value of cryptographic exports
subject to prior approval in 1996, reportedly at the behest of the Clinton
administration.  The request came after the Japanese affiliate of RSA Data
Security seemed ready to export a triple-data encryption standard (DES) chip,
a capability exceeding that allowed under US law.  This would have undermined
efforts of the Clinton administration to deter legislation (in particular
Pro-CODE) that would nearly eliminate restrictions on encryption software and
technology.  See Declan McCullagh, “The Japan Factor,” The Netly News,
http://www.netlynews.com/, October 29, 1996.

[16]  What Japanese officials call the “white” list.

[17]  MITI and MOFA officials, February 1998.

[18]  MITI official, February 1996.

[19]  Bates Gill, et al., p. 33.

[20]  For an excellent discussion of the importance of informal activities in
Japanese foreign policymaking, see Quansheng Zhao, Japanese Policymaking: The
Politics Behind Politics, Informal Mechanisms and the Making of China Policy,
New York: Oxford University Press, 1995).

[21]   MITI and MOFA officials, February 1998, and earlier interviews.

[22]  MOFA officials, February 1998.

[23]  Yamamoto, p. 108 in Bertsch, et al.

[24]  MITI Official, February 1998.

[25]  Customs and Tariff Bureau, Ministry of Finance, Japanese Customs in
Brief, Tokyo:  Ministry of Finance, p. 3.

[26]  Susumu Hirai, “Japan,” Worldwide Guide to Export Controls, Japan 1.

[27]  The seminars, co-sponsored with Australia and the United States, have
taken place five times, October 1993, January 1995, January/February 1996,
January 1997, and February 1998, all in Tokyo.

[28]  Its periodicals include the bi-monthly CISTEC Journal and CISTEC
Express News.  It has published many books and at least one video related to
export controls.

[29]  MITI, “Formulation or Review of Compliance Programs Relative to the
Observance of Export-related Laws in Response to Nonproliferation Export
Controls for Industry Through Export-related Associations,” June 24, 1994.

http://www.uga.edu/cits/documents/html/nat_eval_japan.htm