Submitted Testimony Of Frank J. Gaffney, Jr. Before A Hearing Of The US House Of Representatives Subcommittee On Commerce, Consumer Protection And Competitiveness On: The FS-X Agreement

23 February 1989

Introduction:

Mr. Chairman, Members of the Subcommittee, I appreciate very much the opportunity to participate in what will prove to be, I am certain, but the first of many congressional hearings into the U.S.-Japanese agreement on the FS-X fighter aircraft. In particular, I am grateful for the chance to present to you a paper on this subject recently released by the Center for Security Policy entitled "The U.S.-Japan FS-X Agreement: Assessing the Stakes." With your permission, Mr. Chairman, I would like to have that document inserted in the record at this point in its entirety; I will highlight a few of its most important points.

The Center’s Analysis:

The Center’s short treatment of the FS-X agreement represents an effort to assemble in a brief, readable form the main points — both pro and con — made by its partisans and by its critics. The fact that the accord between the two governments and the subordinate agreement between General Dynamics and Mitsubishi Heavy Industries detailing the implementing arrangements are not currently in the public domain makes it difficult (if not impossible) to render a definitive "bottom-line" at this time.

Similarly, the review now underway within the U.S. government — aimed at assessing the impact the FS-X deal will have on the future competitiveness of the American aerospace industry — represents an important, but as yet unquantifiable, factor. The Center’s paper shares the view of many in the Congress and U.S. industry that this executive branch review is vitally needed before final judgments can be made on the advisability of the FS-X agreement from the United States’ point of view.

The Center’s analysis concludes that, should this review fail to produce clear and direct evidence that the FS-X agreement will seriously and adversely affect the U.S. aerospace industry, the FS-X deal should be implemented.

Lessons Learned from Negotiating the SDI Agreement:

My personal view, however, is that — if the executive branch is conscientious in its conduct and rigorous in the analysis of its competitiveness review — that analysis will probably produce evidence that would argue against going forward with the FS-X deal under the present terms. While my reasons for making that statement must be regarded at this time as somewhat subjective and even tentative, I believe they warrant the Subcommittee’s consideration.

I had the opportunity in 1986-7, while serving as the Deputy Assistant Secretary of Defense for Nuclear Forces and Arms Control Policy, to lead the U.S. delegation charged with negotiating with the Japanese government an agreement designed to facilitate the participation of Japan’s industry in the Strategic Defense Initiative. In many ways, this was the most interesting — and certainly the most intellectually challenging — of the five such agreements we negotiated with allied governments.

The experience of preparing that agreement was a most illuminating one for me. One could not help but be impressed by the formidable skill of our Japanese interlocutors, and especially their negotiating discipline and tenacity. Similarly, I was struck by their readiness to assert with straight-faces the unalterable impossibility of some U.S. demand or other — where doing so suited their tactical purposes. In our negotiation, time after time, despite such dire statements, where the Japanese found it expedient to accommodate our demands a way was found to do so.

I believe my experience with the U.S.-Japanese SDI agreement is directly relevant to the FS-X deal in several respects:

• In both circumstances, the American negotiators were operating in the face of extremely ominous threats about what would happen if the agreement were not worked out on Japanese terms.

 

• In both negotiations, strong pressure was brought to bear by those in the State and Defense Departments responsible for managing the U.S.-Japanese bilateral relationship not to push Japan beyond where its negotiators said they could go. In some cases, I found in the SDI negotiations, that such individuals were often more forceful advocates of the Japanese position than even my counterparts from Japan.

 

• In both negotiations, there was remarkable resistance to having relevant agencies of the U.S. government (such as the Commerce Department, the U.S. Trade Representative’s Office, and the White House Science Advisor’s Office) involved in the talks. In the SDI negotiations, I had to overcome strenuous opposition from some of my colleagues at Defense and at State — and, ironically, the somewhat more muted concerns expressed by the Japanese counterparts from MITI and the Foreign Affairs Ministry — even to get a representative from USTR into the negotiating room!

 

• In both negotiations, it appears that there was a visceral unwillingness on the part of some in the U.S. government to seek maximum benefits for the United States from the negotiations. Whether this is the result of some hopelessly outdated and inappropriate sense of noblesse oblige or — more likely, in my view, a desire not to jeopardize Japanese good will and modest movement toward Japan’s sharing of a somewhat greater portion of the common defense burden — I cannot say. Whatever its motivation, however, it has the potential to disserve U.S. interests dramatically.

As an example, Mr. Chairman, with Secretary Weinberger’s unflagging support, I insisted that we could not fully consummate an agreement providing for close collaboration on SDI without completing — some thirty-five years after Japan had promised it — an accord protecting American patent secrecy rights. In the end, we obtained both accords — but it was despite, not because of, the concerted efforts of many in our own government who saw no need to encumber the SDI negotiation with this parallel effort.

The intractable opposition of such individuals to the full participation of other, key agencies invariably makes it more difficult for wise, creative and wide-ranging trade-offs to be made in the course of such negotiations. My sense is that the complete exclusion of Commerce and others from the FS-X negotiations — contrary to internal USG regulations and the intent of Congress (as reflected in the Bingaman Amendment to the FY1989 DoD authorization bill) — contributed to less than fully satisfactory outcomes in this recent agreement.

Congress Must Demand Satisfactory Answers/Insist on Reform:

As a result of these observations, I believe Congress must conduct its own careful review of the implications of the FS-X agreement, both with regard to the appropriate U.S. approach to future negotiations with Japan and with respect to assessing America’s competitiveness down the road. The following are some of my thoughts on those points:

• Process: Never again should the United States be in the position of judging the impact upon its industrial base of a given agreement with Japan after it has been signed. A review of U.S. interests (what we want to get, what we cannot afford to give up, where trades can profitably be made between progress on other areas in dispute and those in question in the immediate negotiations) — involving all relevant agencies — should take place before we sit down to negotiate with the Japanese.

We should be under no illusion: the Japanese approach their negotiations with us in precisely this manner; we are unnecessarily and irresponsibly handicapping our negotiating teams when we do otherwise.

• The Strength of the U.S. Industrial Base: As a corollary, we can no longer afford to think narrowly about the U.S.-Japanese security relationship as an isolated element of our ties. The United States needs to take a hard look at the health of our industrial base both as an essential component to future economic growth and as a vital engine for national security.

Where it makes sense for us to help the Japanese develop an indigenous capability that will compete with our own in the future, we should be extracting from them comparable benefits for our industry (e.g., electronics process-engineering and manufacturing technology). I, for one, am not persuaded that the co-cured composite wings and phased array radar technologies identified for "flow-back" to the United States under the FS-X deal meet that test.

• Revising the FS-X Deal: If, as I suspect it will, the executive branch’s competitiveness review reflects real problems with the governmental FS-X agreement — and, even more worrisome, with the implementing arrangements signed by General Dynamics and Mitsubishi, serious consideration should be given to seeking their renegotiation. This is not without risks: it has been said (and will be again) that this is a take-it-or-leave-it deal; if so, any effort to reopen the negotiations could result in no collaboration with Japan on the FS-X.

Based upon my own experience negotiating with the Japanese, however, I am convinced that the sound technical reasons that made them opt for collaboration with the United States in the first place will prevail in the future.

• Future Off-the-Shelf Purchases: In the event the United States does decide to go ahead with the FS-X deal — either as presently negotiated or with improvements, the executive and legislative branches should make it clear that this is not the basis upon which we intend to do business in every case in the future. Where off-the-shelf purchases by Japan of clearly superior U.S. military technology will afford at less cost and more quickly requisite capability, such should be the terms of the sale.

Japan should understand, too, that agreeing to a major outright purchase of equipment (for example, their planned acquisition of U.S.-produced AWACS and tanker aircraft) could help alleviate some of the political and technical concerns associated with the FS-X deal.