Economic Integration: A New Approach To Reform

The EBC Report on the Japanese Business Environment 2007

Space 


Regulatory Developments

Japan is a leading space-faring nation with independent access to space. State of the art programs include launchers, satellites and ground equipment. Despite such advances, commercial success of the space industry in Japan is limited to a few fields because of low domestic volumes and political pressure from the US. Only recently has Mitsubishi Electric Corporation been able to sell a communications satellite to a Japanese commercial satellite operator. Government budget decreases have only recently been balanced by a move into earthquake and disaster prevention areas as well as the security area.

Ariane launchers have been successful in Japan. Japan's space industry maintains productive relations with authorities and cooperation between the Ariane 5 and H-IIA launchers is progressing. On the commercial side, Arianespace and Mitsubishi Heavy Industries (MHI) are cooperating to make it easier for customers to shift satellites from Ariane to H-IIA and vice-versa, in cases of technical problems with the originally contracted launcher. European and Japanese space authorities are discussing the implementation of a similar inter-government scheme for the mutual backup of Japanese and European government missions.

Ground equipment is a new field being spurred by the recent thrust of Japan's space activities into security and defence applications. Japan's space activities increasingly involve space imaging and the use of associated ground equipment for image processing and interpretation, for applications in agriculture, fisheries and geophysics (such as tsunami warning). In addition, several homeland security type applications naturally enhance a nation's defence capability. Non-transparent procurement methods are still being used in this sector to the disadvantage of foreign suppliers.

Japan has designated space as one of the National 'Frontiers' of Science and Technology. The Prime Minister will officially head Japan's top official space strategy group. The new Space Law is close to completion and will lay the foundation for limited national security applications of space and for more industrial and organizational efficiency. In 2007, the Japan Defense Agency was upgraded to the status of a Ministry and national security and human flight have recently been designated as priority areas alongside telecommunications.

Prospects for EU-Japan Economic Integration

Japan's commercial satellite market is relatively open. European satellite manufacturers could soon make their first sale in Japan of a complete satellite. Their high reliability is a key factor, as well as their transparency policy towards Japan, compared with US control policies, which are opaque and unreliable. Japan's cooperation in satellite development is biased towards the US, whose political influence has had an adverse effect on the development of the Japanese and European space industries in Japan. Japan Aerospace Exploration Agency (JAXA) is now closer to Europe in the area of space electronic components. This is due to the disappearance of local production sources because of profitability problems, and by lead-time problems with US components. JAXA is now a member of Europe's Space Components Steering Board.

Priorities

  • Establish mutual recognition of export control procedures

Key Issues and Recommendations

■  General environment

Yearly status report: limited progress. Relations between the space agencies of Japan and Europe exist and both sides have expressed an interest in expanding cooperation, however this has been limited. Japan's usual practice of giving token responses to the best European cooperation initiatives has taken its toll on the Europe's intention to cooperate. Since other countries have been more responsive, it is surprising that Japanese officials cannot understand why Europe concentrates more of its cooperation efforts where they are more likely to be rewarded. The EBC is concerned by export license delays encountered in 2007 by European companies procuring Japanese parts and components that have never given rise to problems.

Recommendation:

  • The EBC urges closer cooperation between the space agencies of Japan and Europe. This will require a conscious effort by the Japanese Government, which does not realise the extent of European frustration. Agencies should compare plans in new application areas at an earlier stage in order to take better advantage of cooperation opportunities.

  • The EBC places high expectations on Japan's new Space Law and its potential to increase Japan-Europe cooperation, allowing both sides to make better use of limited space budgets. The EBC hopes that export licensing delays affecting European customers will be resolved.

■  Satellites

Yearly status report: limited progress. In 2007, JAXA and the Italian Space Agency held the first co-hosted event in Tokyo aimed at official exchanges to find future cooperation opportunities in the field of disaster contingency planning.

Recommendation:

  • The EBC hopes for closer cooperation between the space agencies in satellite technology development and applications, and strongly requests pro-active promotion and actual execution of cooperation projects. As soon as Japan's new Space Law is promulgated, the Japanese government should encourage international cooperation with Europe through satellite or satellite equipment procurement in fields related to national security.

■  Launchers

Yearly status report: limited progress. The Japanese and European space authorities are studying the possibility of backing up each other's government launch missions. This will solve the problem of government mission delays in cases of technical trouble with a launcher, and prevent a one-sided flow of government missions away from the delayed launcher. This idea is not new. Although the space industry on both sides is working towards commercial and industrial cooperation, more government leadership is needed.

Recommendation:

  • The EBC hopes that government and agency-level talks will bring about vigorous cooperation between our respective heavy-lift launchers. For technical reasons, this cooperation must be comprehensive and systematic for it to succeed. The EBC hopes that new launcher projects will help to consolidate existing cooperation initiatives.

■  Ground equipment

Yearly status report: no progress. Japan's international procurement activities in this area typically exclude entire systems and remain limited to small subsystems and components. Non-transparent procurement methods are still being used in this sector to the disadvantage of foreign suppliers.

Recommendation:

  • The EBC hopes that Japan's international procurement activities in ground equipment will soon include whole systems. We also hope that full transparency can be granted in respect to procurement for standard ground processing products.