Japan poised to ease restrictions on lethal arms exports in 2026
Measure could help defense industry break into global market, but challenges remain
Japan's plan to supply an upgraded version of its Mogami-class frigate to Australia is allowable under current rules, as a portion of the ships will be built in Australia. (Photo by Rurika Imahashi)
TOKYO -- Japan is moving to end next year a requirement that limits defense equipment exports to five nonlethal categories, a step that proponents say would give its long-struggling defense industry a boost.
A security policy panel in Prime Minister Sanae Takaichi's Liberal Democratic Party met this week to consider proposals. The LDP's coalition agreement with the Japan Innovation Party includes a goal of abolishing the five-category limit during the ordinary session of parliament in 2026.
The five categories of allowed defense exports are equipment related to rescue, transport, detection, surveillance and minesweeping. The rule was established in 2014 during the second run of then-Prime Minister Shinzo Abe, whose government in effect lifted a total ban on arms exports.
Such lethal weapons as tanks and fighter jets do not fall into any of these categories and cannot be exported.
Equipment outside the five categories can still be exported under the current system if jointly developed with other countries. Even for used ships, Japan needs a joint development agreement to export them, making the process cumbersome.
Doing away with the five-category limit would help the Japanese defense sector grow its international business, backers argue.
"The five-category rule should be abolished immediately," Nobukatsu Kanehara, a former assistant chief cabinet secretary in the Abe government, told Nikkei. "The basic rule of managing defense equipment is to provide it to allies and not to enemies. The five-category rule is meaningless."
Okasan Securities senior analyst Toshiharu Morota said: "Exports could expand in areas where Japan has high technological competitiveness, like naval ships and conventional submarines."
Mitsubishi Heavy Industries led Japanese companies in procurement contracts for fiscal 2024, according to the Ministry of Defense, followed by Kawasaki Heavy Industries and Mitsubishi Electric.
World's top arms sellers in 2024 | |
|---|---|
| Company | Arms revenue |
| 1. Lockheed Martin (U.S.) | $64.65 billion |
| 2. RTX (U.S.) | $43.6 |
| 3. Northrop Grumman (U.S.) | $37.85 |
| 4. BAE Systems (U.K.) | $33.79 |
| 5. General Dynamics (U.S.) | $33.63 |
| 6. Boeing (U.S.) | $30.55 |
| 7. Rostec (Russia) | $27.12 |
| 8. Aviation Industry Corp. of China (China) | $20.32 |
| 9. China Electronics Technology Group (China) | $18.92 |
| 10. L3Harris Technologies (U.S.) | $16.21 |
| ... | |
| 32. Mitsubishi Heavy Industries (Japan) | $5.03 |
| 55. Kawasaki Heavy Industries (Japan) | $2.65 |
| Source: Stockholm International Peace Research Institute | |
Mitsubishi Heavy has reported a surge in its defense and space order intake, to nearly 1.9 trillion yen ($12.2 billion at current rates) each year for fiscal 2023 and fiscal 2024 from roughly 500 billion yen for fiscal 2022.
From fiscal 2023, Japan moved to significantly increase defense spending under then-Prime Minister Fumio Kishida. The shift in posture came in response to a deteriorating security environment in the surrounding region that includes China, North Korea and Russia.
Mitsubishi Heavy's market capitalization had hovered around 1 trillion yen until early 2022 but has since soared, briefly passing 15 trillion yen this past October.
Total arms revenue for five leading Japanese defense contractors, including Mitsubishi Heavy and Kawasaki Heavy, grew 40% on the year in 2024 to mark the sharpest rise among major countries, according to the Stockholm International Peace Research Institute's new report on the world's top 100 weapons-producing and military services companies. But Japanese contractors lag far behind the top U.S. defense groups.
The majority of the Japanese defense industry's sales are to the Defense Ministry, and the strong growth of 2024 was thanks largely to domestic factors.
But some express caution. "We also need to consider how this will affect Japan's path as a peaceful nation," said Makoto Nishida, secretary-general of Komeito, a political party that was in the LDP's ruling coalition when the defense equipment export rules were drawn up in 2014.
Under its pacifist postwar constitution, Japan has pursued a course of nonmilitary international assistance. Its revised National Security Strategy, issued in 2022, said Japan will maintain "an exclusively national defense-oriented policy, not becoming a military power that poses a threat to other countries."
If Japan expands its defense exports, then diplomatic efforts will be needed to explain that the goal is to strengthen deterrence and that the shift does not conflict with Japan's pursuit of being a peaceful nation.
Abolishing the five-category limit would not mean free rein to export weapons. The 2014 policy would still bar exports to countries where the United Nations Security Council is taking steps necessary to maintain and restore peace and security.
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