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FSX Deal Becomes Test of U.S., Japan Relations : Sharing of Technology, Defense Plan at Issue; Bush Agrees to Review Pact

March 06, 1989|JIM MANN | Times Staff Writer

WASHINGTON — When American and Japanese officials signed a deal late last year for joint development of a new Japanese fighter plane called the FSX, they expected it to win approval in Washington quickly and with little controversy.

Instead, the proposed FSX agreement has turned into a highly public test of U.S.-Japanese relations--one that underscores the conflict between Japan's role as a close defense ally of the United States and its role as this country's leading economic competitor.

Under pressure from critics, the Bush Administration recently agreed to take a second look at the FSX deal completed in the final months of the Reagan Administration. If the Bush Administration decides to go forward, it will soon submit the agreement to Congress, where opposition is mounting.

Most analysts believe that the Administration will proceed with the FSX agreement. But Administration officials categorically deny reports that they have already decided to send the deal to Congress and that the U.S. Commerce Department has withdrawn its objections to the FSX agreement.

"The suggestion that we've made up our minds is an incorrect one," Wayne Berman, counselor to Commerce Secretary Robert A. Mosbacher, said Saturday. "We're just not there yet. The decision has not been made." A senior Administration official confirmed Berman's account.

Emotions are running high. Opponents of the FSX deal view it as a foolish giveaway of American technology to Japan's budding aerospace industry. Supporters call the deal vital to the future of American defense planning in East Asia and the Pacific, as well as to the fundamental trust between the two governments.

One opponent, Massachusetts Institute of Technology scholar Charles H. Ferguson, told a recent congressional hearing that the FSX deal is an example of "the ruthless dynamism of the Japanese industrial system and the amiable naivete of the United States."

With equal fervor, American supporters of the FSX deal accuse the critics of unwittingly aiding Japanese who favor a stronger, more independent Japanese military. American opponents "play into the hands of the Japanese nationalists . . . who never wanted this deal in the first place," said Joel Johnson, a representative for an American defense industry trade group.

More than merely the issue of weaponry, "the maintenance of a relationship of trust" between Japan and the United States is at stake, former Prime Minister Yasuhiro Nakasone said last month.

Under the proposed agreement, an American company, General Dynamics, would serve as subcontractor to Japan's Mitsubishi Heavy Industries to develop a new Japanese plane, the FSX (Fighter Support Experimental). That plane would be based upon the American F-16, which is itself built by General Dynamics. According to the Air Force, it cost the United States $3.1 billion to develop the F-16.

In exchange for its F-16 technology, the American company would get about $440 million from the Japanese government for development work, a 35% to 45% share. However, there is no guarantee that General Dynamics would get any of the subsequent production work, which the Japanese Defense Agency values at about $5.2 billion in 1985 prices. For each aircraft produced in Japan, the American company would get a royalty payment, the amount of which has not been disclosed.

General Dynamics would also obtain some Japanese technology it does not already have. The value of this Japanese technology is in dispute: American proponents of the FSX claim that it may prove extremely important, while critics say the Japanese technology may be virtually worthless.

To its American and Japanese supporters, the FSX accord was merely a reasonable compromise.

The Japanese Defense Agency had fought hard for the right to develop its own, all-new fighter plane. U.S. officials had sought in vain to persuade Japan to buy some version of existing American planes. The two sides settled on a deal in which Japan would develop a plane that used U.S. F-16 technology.

"This agreement was a breakthrough in military cooperation," said a Pentagon official involved in the FSX deal.

Pentagon and State Department officials argue that the FSX deal managed to land a reasonable share of the work on the plane for an American company, while keeping Japanese defense planning and technology linked closely to that of the United States.

"The FSX deal . . . ties U.S. and Japanese (defense) industries together for the next 20 years, to the benefit of both," James E. Auer, a former Pentagon specialist on Japan, said recently.

However, critics in Congress and elsewhere charge that the supposed compromise is a bad deal for the United States. The FSX deal, they say, enables Japan to obtain, at relatively low cost, the sort of know-how that could eventually enable Japanese aerospace firms to compete with U.S. ones.

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