TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/032789/03278900.010

Text File | 1990-09-17 | 5.6 KB | 101 lines

BUSINESS, Page 70

A Deal That Nearly Came Undone

Despite qualms, the U.S. will help Japan build the FSX jet


    When it finally flies, Japan's FSX fighter jet (top speed:
1,300 m.p.h.) will represent technology at its peak. But the
aircraft may represent an even loftier accomplishment in diplomacy,
since it has become a centerpiece in the friendly but fierce
economic rivalry between the U.S. and Japan. For more than four
years, the two governments have been negotiating a joint effort to
develop a new generation of fighter jet that would patrol the
island nation's shipping lanes and support its defense forces in
the 1990s. When a tentative deal was first reached last November,
the project drew heavy fire from officials within the Commerce
Department, who contended that the U.S. would reveal so much
advanced aviation technology to Japanese defense contractors that
they could develop a civilian aircraft industry that would compete
with such U.S. producers as Boeing and McDonnell Douglas.

    This month the FSX's proponents at the State and Defense
departments, who see the deal as an economic and strategic boon for
the U.S., argued heatedly with critics who wanted to scrap the
plan. Finally last week, President Bush called an unusual National
Security Council meeting to thrash out the issues. In the end, he
decided on a compromise: to go through with the deal but to apply
safeguards that will prevent Japanese contractors from getting
access to the most important technology. According to presidential
spokesman Marlin Fitzwater, Bush has yet to decide on "at least
three or four basic issues regarding the agreement," which he is
expected to announce this week.

    Japan originally wanted to build its own fighter from scratch
but eventually agreed to a deal in which the U.S. would share more
of the F-16 fighter jet's aviation and military secrets than it had
before with any of its allies. In return, the U.S. would acquire
some Japanese developments in radar-absorbing, or Stealth,
materials that would be used in the plane's wings and fuselage.
General Dynamics, which first developed the F-16 in 1972, would
design and build 35% to 40% of the FSX prototype. Later, U.S.
contractors would expect a 30% share in the production of 130 to
170 airplanes. The project would also ensure that the Japanese and
U.S. air forces remained fully compatible for the next two decades.

    Tempers flared during last week's NSC meeting, which lasted
more than two hours. U.S. Trade Representative Carla Hills argued
vehemently that Bush should scrap the agreement in favor of
persuading the Japanese to buy standard F-16s, minus the
instructions for putting their most sensitive components together.
On the other side, National Security Adviser Brent Scowcroft and
Secretary of State James Baker contended that the agreement should
proceed unchanged. But the lack of a Defense Secretary to argue the
Pentagon's side handicapped the pro-FSX forces. Covering the middle
ground, Commerce Secretary Robert Mosbacher thought he could abide
the deal as long as the most crucial U.S. design secrets were not
given away.

    Mosbacher's view prevailed. He scored an even greater victory
by persuading the President to promise that henceforth the Commerce
Department will be included at the start of any new negotiations
involving the exchange of military or technology secrets.

    In deciding this week just how to modify the FSX agreement,
the President must walk a fine line between foreign-policy and
economic considerations. If the deal preserves too many secrets,
the Japanese Defense Agency is likely to scrap it and build an
advanced fighter without the U.S. "If Japan needed outside help,
it could turn to the Europeans," says Joel Johnson, vice president
of the American League for Exports and Security Assistance.
Currently, the U.S. provides more than 95% of Japanese defense
imports. Says Johnson: "Not only do we risk losing an important
share of the FSX program, but we would also be assisting our
toughest competitors to penetrate one of our major defense
markets."

    Some of Japan's own staunch protectors of their country's
technology might secretly welcome the demise of a joint FSX
program. Japan agreed to co-develop the plane only after very hard
bargaining by the Pentagon. "It's a fallacy to suggest that we ever
seriously considered buying the F-16 off the shelf," says Ryoji
Onodera, director general for international affairs in Japan's
Defense Agency. "From the beginning we said that it had to be
something new."

    A primary issue is how much of the F-16's computer software
will be shared. Bush has not yet decided whether to include the
so-called source codes of the plane's mission computer, which
integrates radar, navigation and weapons systems. If the Japanese
fail to receive these codes, they may not share their new radar
technology. Lacking the codes, Japanese engineers would have
trouble coordinating the plane's hardware and software. The likely
result: a less flashy and efficient plane.

    In terms of civilian aerospace competition, even outspoken
critics of the jet deal admit that the FSX's secrets alone are not
enough to make Japan competitive in commercial aircraft, a market
it has yet to enter. But, on principle, should the U.S. give away
its advantages? "The real question," observes Clyde Prestowitz, a
former Commerce Department negotiator, "is whether we actively help
Japan cut into our lead in aircraft and component design." The
battle over the FSX proves that trade issues have become just as
important as national security or foreign relations in determining
U.S. policy.