1/85 SPACE PROGRAM AND CORRUPTION - Industrial Policy - Targeted Industry

The Japanese police have arrested two middle ranking officials from the National Space Development Agency (NASDA), in the rocket development division, on charges of accepting bribes from the manufacturers of gas analyzing equipment for awarding the firm contracts. In this relation, the Japan Federation of Economic Organizations (Keidanren) has urged that the Japanese government give special consideration to expanding the government budget for the next fiscal year for acceleration of the development of a totally made-in-Japan rocket. In the development of the first Japanese rocket, the H-II, scheduled for 1992 completion, NASDA has already awarded contracts for various parts of the rocket. NEC is to develop electronic components except for the guidance system. Mitsubishi Heavy Industries is to develop the first and the second stages of the rocket, Kawasaki Heavy Industries the liquid oxygen-liquid fuel engine and Nissan the booster rocket. Rocket development costs are expected to reach 200 billion yen. The interest of the heavy machinery firms in the space industry runs high. On the one hand they believe there is not much future in heavy machinery industry growth such as shipbuilding and competition is growing from developing countries. On the other hand they believe that only massive industrial combines like themselves have the wherewithal to handle such vast projects and technologies. As reported earlier in this publication, the Japanese are very concerned about the restraints on export potentially that accompanies dependence on foreign space technologies. They are determined to solve this problem. The Japanese have done quite well in other export related areas of space technology. It is estimated that 35-40% of the earn stations around the world used by INTELSAT are made by NEC alone. Nevertheless, the Japanese are keenly aware that are this time of massive trade surpluses and the lack of competitiveness of the Japanese space industry something must be done to pacify the foreigners for the time being until Japan’s industry is competitive and "free trade" can once again be the correct rule of trade. Thus Keidanren in its bid to lauch a telecommunications satellite to challenge Nippon Telegraph and Telephone when it goes private in 1985 is leaning towards importing an American one. Some expect the name of the manufacturer to be announced before Prime Minister Nakasone meets President Reagan in January 1985 when trade issues are expected to be brought up. There are still factions within the Keidanren advocating a "buy-Japanese" policy on the satellite purchase. Even if they end up with an import certain aspects are aimed at putting cracks in the US industry. Mitsubishi Electric, which is currently developing the made-in-Japan 1/2 ton telecommunications satellite (and which it claims is enough to meet Keidanren’s needs) is tying up with its group trading company, Mitsubishi Corp to represent Ford Aerospace, the second ranking satellite maker in the US, to try to make sure that in Japan at least front-running Hughes Aircraft does not also run away with the prize. To that extent, American satellite makers have asked the Japanese government to clarify its position on the imports of satellites by the private sector. Following intense pressure from the US government that Japan drop its protectionist space development policy, the Japanese government refused to use foreign imports in government projects but would permit the private sector to import "only to the extent consistent with Japan’s own space development policy." The Americans have asked for clarification. The Japanese have also admitted to another roadblock to space technology independence. In their plan to join the international space base being pushed by NASA of the US, The Japanese have admitted that they could not have possibly develop a system for a manned module by the 1992 schedule, such as temperature controls and carbon gas waste disposal facilities with enough reliability to chance a human astronaut with them. In addition, within the Japanese government a wrangle is going on over who will have jurisdiction over the commercialization of the space industry. The Science and Technology Agency has handled many aspects until now, but as commercialization nears, MITI wants to take over. NASDA estimates that space industry production by the by the year 2000 will amount to 170 billion yen per year, centering on pharmaceuticals and semiconductors.

JAPAN LAWLETTER, January 1985. By Roderick Seeman