(Mitsubishi sales forecast corrected in paragraph 26 after company clarification, updated with Chinese Foreign Ministry statement)
By John Geddy and Tim Kelly
TOKYO, April 15 (Reuters) – Japan’s impending easing of arms export rules has sparked intense interest from Warsaw to Manila, with President Donald Trump’s security commitments to allies and wars in Iran and Ukraine straining U.S. arms supplies, Reuters reporting found.
Prime Minister Sane Takaichi’s ruling party approved the changes this week as he tries to bolster the pacifist country’s military-industrial base. His government will formally adopt the new rules as soon as this month, three Japanese government officials told Reuters.
Although it has largely isolated itself from the global arms market since World War II, Japan has spent $60 billion this year on its own military to sustain a large defense industry capable of building advanced systems such as submarines and fighter jets.
Among the potential new customers are the Polish army and the Philippine navy, which are modernizing amid regional security challenges, according to Reuters interviews with Japanese officials and foreign diplomats in Tokyo. Defense contractors Toshiba and Mitsubishi Electric are hiring and adding capacity to capitalize on demand, their officials said, providing previously unreported details.
According to two Japanese officials, Takaichi’s government is among the first to approve the export of used frigates to the Philippines, which is locked in a maritime standoff with Beijing in the South China Sea. Reuters is the first to report a potential sales timeline, which the missile defense system could follow, officials said.
Warsaw and Tokyo can help bridge gaps in each other’s armaments, cooperating in areas such as anti-drone and electronic warfare systems, said Mariusz Boguszewski, deputy chief of mission at the Polish embassy in Japan.
“There are some hurdles we can overcome to get Japan on board,” he added, without detailing specific deals. Poland’s WB Group, one of Europe’s largest private defense contractors, signed a tentative drone contract with Japanese aircraft maker ShinMaywa last year.
Three other European diplomats said Japan’s easing offered an opportunity to reduce its heavy reliance on US arms production, which has been strained by the conflict. Trump’s unpredictability, such as leaving the NATO security alliance and his threats to attack Greenland, has also increased pressure to diversify, according to the diplomats, who requested anonymity to discuss sensitive matters.
“Offers are coming from everywhere,” said Masahiko Arai, senior vice president of Mitsubishi Electric’s defense unit, which is adding staff in London and Singapore to facilitate defense exports.
Takaichi’s office declined to answer specific questions for this story, instead referring to a Feb. 20 speech to Reuters in which she said she was reviewing controls to bolster Japan’s defense production and strengthen allies’ capabilities.
Tokyo’s export reforms have been encouraged by previous US administrations, with allies including Trump eager to contribute more to collective defense efforts.
White House spokeswoman Anna Kelly did not respond to Reuters questions about changes in Japanese policy, but said the two nations were closer than ever under Trump and Takaichi.
China’s foreign ministry said in a statement in response to questions that governments should be aware that “indiscriminately handing over their security to another country, or tying themselves to another country’s war chariot, will only end up backfiring.”
The Philippine Defense Ministry declined to comment.
Risky business?
Japan’s first move to loosen regulations began a decade ago when Takaichi’s protégé, the late Prime Minister Shinzo Abe, eased export restrictions to encourage joint arms development with allies to counter China’s growing military power.
The push largely stopped, however, many restrictions – including deadly weapons – remained. Companies continued to shy away from foreign defense sales.
Buoyed by a bumper election victory and emboldened by a repudiation of a longtime alliance partner who opposed more radical change, Takaichi hoped the latest easing would prompt arms manufacturers to add the production capacity Japan needed for a massive military build-up.
Some Japanese defense firms said they were ready to pivot.
Air defense systems maker Toshiba told Reuters it plans to hire about 500 people over the next three years and is building new testing and manufacturing facilities. It also established a new department to manage defense exports.
“Reputational risk is not what it used to be,” said Kenji Kobayashi, vice president of Toshiba’s defense division.
Some big Japanese brands that have sidelines in defense equipment and also make consumer goods have expressed concern that arms sales will alienate a wider range of their customers.
“Instead of worrying about that, we’re focused on fulfilling our role and growing the business,” Kobayashi said.
A hiring list reviewed by Reuters from Mitsubishi Electric – whose products include refrigerators and missiles – shows the firm is hiring for an overseas sales role covering fighter jets and other military exports.
Demand for finished systems is strongest in Asia, while Europe, Australia and the United States offer markets for components and co-development of new products, said Mitsubishi Electric Defense Executive Arai.
The company expects defense sales, including domestic and international, to triple to 600 billion yen by 2031.
There is a gap between the political message and the policies of some companies, however, said Zigmars Žilgalvis, Latvia’s ambassador to Japan.
He gave the example of carmaker Toyota, whose subsidiary rejected an attempt by Latvian firm VR Cars to buy engines and related parts for a military utility vehicle in 2023.
The Latvian mission had tried to help broker the failed sale, Zilgalvis said.
Toyota Customizing and Development said in response to questions from Reuters that it could not accommodate requests for military vehicles “based on our business area and policy”. It declined to comment on upcoming revisions to Japan’s arms export policy.
VR Cars said it respected the decision.
As Tokyo is expected to maintain tighter controls on arms shipments to conflict zones, Ukraine also senses an opportunity.
Kyiv’s chamber of commerce in Tokyo will soon launch a new industry group of Ukrainian and Japanese drone firms to encourage the development of new technology, timed to coincide with the rule changes, its head Kateryna Yavorska told Reuters exclusively.
Two ‘timeouts’ emerging from world war
The US has long dominated global military supply chains. According to a March report by the Stockholm International Peace Research Institute (SIPRI), a think-tank, it accounted for 95% of Japan’s defense imports between 2021-2025, 85% of Australian and British purchases and 77% of Saudi Arabia’s purchases.
But Washington’s foreign military sales program, often blamed for late deliveries and rising costs, and its tight control over defense technologies have long been a source of frustration, officials and analysts said.
One of the aims of Japan’s rule change is to build defense supply chains in Asia that are not dependent on the United States, said a ruling party official involved in drafting the security policy.
Neighboring South Korea offers some blueprint: It has become the largest defense supplier to Poland and the Philippines after steady growth over the past five years, SIPRI data shows.
But Japan, the world’s fourth-largest economy, has more potential.
Even with sanctions, Japan’s arms industry is on par with that of South Korea, Germany, Italy and Israel, and nearly twice the size of India’s by 2024, according to SIPRI’s analysis of major defense contractor revenues. The American industry, however, is 25 times larger.
“Japan was kind of in a timeout box because of World War II, obviously. But they were inevitably moving closer to the center of global politics,” said Andrew Koch, founder of Tokyo-based defense-industry consultancy Nexus Pacific.
($1 = 159.2100 yen)
(Reporting by John Geddy and Tim Kelly; Additional reporting by Tamiyuki Kihara, Nobuhiro Kubo, Daniel Lucink and Zekaterina Golubkova in Tokyo, Karen Lema in Manila and Trevor Hunnicutt in Washington; Editing by Katerina Ang)
