Conflicting U.S. Objectives in Weapon System Codevelopment

For various reasons, the United States has generally tried to discourage its allies from developing their own major weapon systems. Perhaps the most prominent example of this policy was America's insistence on cooperative development in the case of Japan's FS-X fighter aircraft. Did the outcome of the divisive struggle over the FS-X serve U.S. aims? What can be learned for future interaction on the FS-X program in particular and cooperative development in general? Recent Project AIR FORCE research by Mark Lorell sought to answer these questions.

Conflict and Compromise

In the summer of 1985, senior U.S. government officials began efforts to reverse Japan's decision to independently develop its first world-class fighter since World War II. They urged Japan to join the United States in the cooperative development of a modified version of an existing U.S. fighter. In doing so, DoD hoped to promote weapon system interoperability and to avoid the diversion of scarce Japanese defense resources from efficiently supporting the security alliance with the United States. U.S. officials also wanted to forestall the emergence of an independent Japanese defense industrial capability that could contribute to a more autonomous security policy.

After several years of difficult negotiations, Japan agreed to cooperatively develop a modified General Dynamics (now Lockheed) F-16. Despite Japanese concessions, however, submission of the agreement to Congress in early 1989 led to a long, acrimonious debate, driven mainly by economic concerns over technology transfer and U.S. industrial competitiveness. Critics in Congress and elsewhere believed that the FS-X represented a "giveaway" of advanced aerospace technology to America's most relentless economic rival, with few guarantees of anything significant in return. Ultimately, the domestic debate forced the Bush administration to insist on further clarifications to the agreement, causing considerable anger and frustration in Japan.

Actual R&D for the FS-X fighter did not get under way until April 1990, nearly a year and a half after the signing of the original agreements and almost five years after the start of the original negotiations. Since then, U.S policymakers have focused on guaranteeing access to and flowback of Japanese technology. Meanwhile, extensive changes to the baseline F-16 design have been quietly carried out in Japan.

A Mixed Outcome

Despite years of haggling and stacks of signed agreements, the FS-X program is not meeting many of the initial expectations of the Pentagon negotiators when it was agreed to in 1987. Most important, the aircraft has evolved away from the original concept of a minimally modified F-16 to a virtually all-new Japanese-developed fighter broadly based on the F-16. As a result, the FS-X is providing Japanese industry with an entree into the highly exclusive world club of developers of advanced fighter aircraft, a development with long-term implications for the U.S. military aerospace industry and for U.S. security policy. The FS-X will do little to promote the development of a commercial aircraft industry in Japan, but it will greatly increase Japanese military R&D capabilities. How did this happen? The research points to five key U.S. policy errors:

• The U.S. government did not formulate and implement a single, coordinated strategy toward collaboration with Japan that harmonized both U.S. military and economic objectives. U.S. security and economic objectives differed and sometimes conflicted. While the U.S. security establishment concentrated on stopping Japanese indigenous development by transferring all the necessary F-16 technical data packages to Japanese industry, Congress and the Department of Commerce sought to restrict this technology transfer, thus promoting greater Japanese indigenous development.
• The American side pressured the Japanese political leadership to accept a type of cooperative development program that was strongly opposed by the Japanese military R&D establishment. This made genuine sharing of technology and expertise based on a perception of mutual benefit unlikely. The U.S. side sought a cooperatively developed FS-X based on a minimally modified F-16C; the Japanese R&D establishment sought to develop an all-new national fighter based on a Japanese design and Japanese technology. Forced to cooperate with the Americans, they formulated and implemented a counterstrategy aimed at maximizing modifications to the baseline F-16, while minimizing U.S. control over the technical evolution of the R&D effort.
• The FS-X program should have been structured to provide greater U.S. influence over the final design configuration and technological evolution of the aircraft. The U.S. side could have followed one of two options: It could have pushed harder on the political level for licensed production of a U.S. aircraft, or it could have structured a more genuinely collaborative joint R&D program that included significant U.S. government funding and specific design and technology objectives meant to contribute to U.S. weapon systems.
• The U.S. government underestimated Japan's military R&D capabilities. This contributed to the failure of the Americans to control the technical evolution of the FS-X and encouraged U.S. skepticism about the potential value to the United States of Japanese defense-related technology.
• U.S. policy on technology transfer and access was fundamentally flawed. U.S. critics misunderstood the central motivation behind the FS-X in Japan and grossly overestimated the potential commercial value to Japanese industry of U.S. defense technology. This preoccupation caused constant disputes and diverted attention away from the Japanese strategy to transform the FS-X.

Where to Go from Here

Now that R&D is nearly complete, ensuring full series production of the FS-X is of critical importance for the United States. The bulk of the potential economic, technological, and political benefits to the United States depend on series production. Therefore, U.S. officials should adopt a flexible approach towards questions of work-share, technology transfer, and access to Japanese technology during negotiations for a production agreement. Although cancellation is unlikely, it would be the worst outcome from the U.S. point of view, particularly since the Japanese would in all likelihood go ahead and develop and all-national next-generation fighter.

Perhaps the most important lesson of the FS-X is that the U.S. government needs to formulate and implement a single, coordinated policy on weapon system procurement collaboration that harmonizes U.S. military and economic objectives. This policy should recognize that two-way technology transfer in codevelopment arrangements works best when industry on each side expects significant net technological gain. In such cases, both participants will make technological and financial contributions to the joint effort that complement each other and directly assist each side in achieving its own objectives.