TOKYO --- Japanese and U.S. officials met here Wednesday to discuss new rules for procurement of American defense equipment as contract terms set at Washington's sole discretion squeeze Tokyo's budget.
Japan's Ministry of Defense and the U.S. Defense Security Cooperation Agency agreed to work to increase transparency in pricing as well as tackle such issues as late orders and unpaid reimbursements.
Japanese spending on defense gear through Washington's Foreign Military Sales program has ballooned amid pressure from U.S. President Donald Trump to reduce the bilateral trade imbalance. Tokyo budgeted a record 701.3 billion yen ($6.38 billion) for FMS expenditures in fiscal 2019, compared with around 100 billion yen annually in the early 2010s.
The program lets U.S. allies procure sensitive and high-performance equipment not available through direct commercial sales, including cutting-edge systems that Japan's own defense industry cannot manufacture. Using the same equipment as American forces also makes joint Japan-U.S. drills more effective.
But Washington alone sets the prices and delivery time frames for such purchases. Tokyo must pay upfront for each order, and any payments exceeding the final cost are refunded only after the equipment is received.
The U.S. has not always kept to the terms it sets. Japan's Acquisition, Technology and Logistics Agency found 49.3 billion yen in unrefunded overpayments on projects past their estimated due dates at the end of fiscal 2018. Of these, 32.6 billion yen’s worth of equipment across 132 cases had yet to be delivered. The agency also found cases of purchase prices ballooning beyond the original estimates. (end of excerpt)
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