Takaichi Sanae’s cabinet has approved a significant relaxation of the restrictions on Japan’s defence exports. The move creates major new commercial and diplomatic opportunities, but defence-industrial capacity issues need to be addressed.
On 21 April 2026, the cabinet of Japanese Prime Minister Takaichi Sanae revised the rules restricting Japan’s exports of defence equipment and technology, the Three Principles on Transfer of Defense Equipment and Technology (the ‘Three Principles’), following a proposal by the ruling coalition – the Liberal Democratic Party (LDP), supported by the Japan Innovation Party (JIP). The move included scrapping the rule that had limited Japan’s defence transfers of finished products to five categories of non-lethal items: rescue, transport, warning, surveillance and minesweeping. The government is aiming to increase defence exports and thereby also to strengthen Tokyo’s deterrence, enhance the country’s defence-industrial base and generate economic growth. While the change is set to create new commercial and diplomatic opportunities, there are capacity issues that both the government and industry need to overcome.
Gradual loosening
The significant relaxation of the guidelines comes after many years of gradual efforts to ease Japan’s self-imposed restrictions on defence transfers. The restrictions dated back to the introduction of the Three Principles on Arms Exports by the Sato Eisaku administration in 1967, which was followed in 1976 by the Miki Takeo government placing a near-total ban on arms exports. The biggest step in the opposite direction came in 2014, when the Three Principles on Transfer of Defense Equipment and Technology were introduced by then-prime minister Abe Shinzo. The new iteration of the Three Principles framed defence exports as a means of promoting peace and international cooperation, and of enhancing Japan’s national security. The five categories of non-lethal items were deemed to serve the latter purpose.
The Kishida Fumio administration further eased the restrictions in December 2023 through a partial revision of the Three Principles’ Implementation Guidelines, which included making it possible for finished defence products manufactured under licence in Japan to be exported to the licensor country. In March 2024 the Kishida government allowed the export to third countries of the next-generation fighter jet developed under the Global Combat Air Programme (GCAP), a joint programme between Italy, Japan and the United Kingdom.
The Takaichi administration had made the abolition of the five categories one of its core security policies, as stated in the LDP–JIP coalition agreement. The strong push for the policy change derived from the changed complexion of the ruling coalition, as the JIP is more aligned with the LDP on defence and security issues than the dovish Komeito party was during the 26-year coalition that came to an end in late 2025.
The revised defence-exports guidelines
Further to scrapping the five categories, the revised guidelines divide defence equipment and technology into two basic groupings: weapons and non-lethal capabilities. For non-lethal equipment there are no export restrictions, while exports of lethal equipment will be permitted to the 17 countries with which Japan has Equipment and Technology Transfer Agreements (ETTAs): Australia, Bangladesh, France, Germany, India, Indonesia, Italy, Malaysia, Mongolia, the Philippines, Singapore, Sweden, Thailand, the United Arab Emirates, the UK, the United States and Vietnam. There is also an ETTA with Canada, signed in January 2026, but it has not yet come into force.
The revision also allows transfers of weapons jointly developed and produced with other countries and the sale to third-party countries of weapons produced under licence in Japan. However, if a prospective purchaser is involved in an armed conflict, Tokyo will only permit the sale in exceptional circumstances (and GCAP-related products will not be sold to countries at war under any circumstances). The revised guidelines would also keep the requirement for approval to be given by the National Security Council in the case of any weapons being exported for the first time.
Parliamentary oversight of defence exports has been a politically sensitive issue. Under the new guidelines, the government only needs to notify the Diet regarding a weapons transfer after the National Security Council has judged that it can be approved. Opposition parties, however, have submitted proposals calling for mandatory advance notification to be given to parliament. Recent opinion polls suggest increasing support from the Japanese public for the country’s expanded role as a defence exporter, with one poll recording that 68% of respondents support Tokyo ‘promoting’ exports of defence equipment, whereas in a 2013 poll, 66% said they opposed any relaxation of the defence-exports guidelines.
Strategic rationale
The primary aim of scrapping the five categories and streamlining the export guidelines is to increase defence exports. Despite the 2014 revision of the Three Principles, exports of finished products since then have been limited to three fixed J/FPS-3 radars and one mobile J/TPS-P14 radar to the Philippines in 2020, and a joint-development and -production agreement for 11 upgraded Mogami-class frigates with Australia in 2025. There is, however, increasing foreign interest in Japanese defence platforms, including from Indonesia for second-hand submarines and frigates, from the Philippines for the Type-03 medium-range surface-to-air missile, and from New Zealand for upgraded Mogami-class frigates.
The proposal to revise the guidelines also outlined two strategic motivations. Firstly, Tokyo aims to use defence transfers to enhance deterrence, response capabilities and inter-operability with the US and with its strategic partners. The radar transfer to the Philippines has contributed to monitoring Chinese activities in the southern South China Sea, while the joint development of frigates with Australia has increased inter-operability with Japan’s Maritime Self-Defense Force, which already operates Mogami-class frigates. Such cooperation contributes to shaping a security environment favourable to Japan by addressing the Chinese strategic challenge in the Indo-Pacific.
Secondly, the government wants to strengthen Japan’s defence-industrial base, with the 2022 National Defense Strategy having identified sustainability and resilience – including ammunition stockpiles and fuel security – as one of the key capabilities requiring fundamental reinforcement. In addition, uncertainties regarding the US commitment to the Indo-Pacific, as well as the fact that the US needs to boost its own defence-industrial base, are increasingly requiring the Japanese defence industry to plan for a sustainable production capacity. The urgency is compounded by the fact that over 100 Japanese firms have withdrawn from defence production in the last 20 years due to low profit margins and reputational concerns, narrowing the supplier base. The move to expand export opportunities is partly intended to sustain the remaining manufacturers by boosting economies of scale. Defence transfers through joint development and procurement, and through licensed production abroad, can enhance the resilience of Japan’s defence supply chains, and increase redundancy, while decentralising production capacity internationally.
The Takaichi government is also pursuing a ‘defence Keynesian’ approach by aiming to boost economic growth through defence exports, as reflected by the inclusion of the defence industry as one of the 17 strategic sectors prioritised for public–private investment. Easing the export restrictions should increase business opportunities and improve predictability for defence manufacturers, enabling them to scale up their investment domestically. To broaden the economic benefits from defence transfers, Tokyo is also focusing on exports of dual-use technologies, particularly in the areas of artificial intelligence, quantum technology and space.
Outlook and challenges
Despite the easing of the restrictions, several structural challenges remain. One major issue is the limited production capacity of Japan’s domestic defence-industrial base, which is largely structured to meet only the needs of the Japan Self-Defense Forces. Despite Japan’s increasing defence spending since 2022, uncertainty and a lack of predictability around defence procurement have reduced the incentives for the defence industry to invest in extra production capacity. Defence companies are already facing production-capacity bottlenecks and have resorted to using civilian facilities. The government is increasingly considering the introduction of a Government-Owned, Contractor-Operated scheme under which the government would own defence-production facilities and equipment while contractors would manage and operate them, which could potentially underwrite capacity that firms are unwilling to create on purely commercial grounds.
Another challenge is the shortage of human resources. Japan has been facing a labour shortage due to its ageing and declining population. Increasing domestic demand for defence equipment is already placing pressure on the industry’s workforce, and greater demand from abroad will exacerbate the issue. Some companies have already been mobilising civilian-sector personnel for defence production. The Japanese legislation aimed at supporting defence-industrial manufacturing, the 2023 Act on Enhancing Defense Production and Technology Bases, does not include any provision for increasing the workforce. Investment in training will be needed, given that defence manufacturing requires specialised skills and strict information-protection procedures. Furthermore, to meet the likely level of future demand, it will be vital to improve productivity through further mechanisation and automation, and to increasingly integrate artificial intelligence.
Tokyo is reportedly planning to publish its first national defence-industrial strategy by the end of the 2026 financial year, and to revise the National Security Strategy, National Defense Strategy and Defense Buildup Program. With demand for Japan’s defence products set to increase, a further deepening of public–private partnerships in the defence industry will be an important means of equipping Tokyo to strengthen cooperation with its strategic partners, enhance its defence-industrial base and boost economic growth. Despite the challenges ahead, the revision of the guidelines sends a political signal that Japan is willing to play a greater role in maintaining regional security as an exporter of defence equipment and technology.