Aerospace & Defense Exporter Alert, Jun. 2024

Market of the Month, Japan

Executive Summary

Japan offers a lucrative market for imported aircraft, aircraft parts, and engines. U.S. firms have an overwhelming presence in the market due to long-standing relationships, some spanning over 70 years, with domestic manufacturers and trading firms. U.S. firms are presented with opportunities in the market as the domestic industry undertakes international projects, develops transport and patrol aircraft for defense, as well as small jet engines for civil aviation.

Commercial Aerospace

U.S. firms dominate Japan’s aerospace sector, benefiting from long-standing partnerships and increasing involvement of Japanese companies in international defense and civil aviation projects.

The resurgence in aircraft demand post-COVID-19 highlights a recovery in the aerospace sector, with a gradual increase in production for Boeing components by Japanese manufacturers such as Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Subaru. This recovery is supported by the U.S. FAA lifting the ban on Boeing 787 deliveries and a cautious approach to Boeing 777X program delays. In 2022, Japan imported $8.3 billion worth of aerospace products, with 59.6% coming from the U.S., and continues to offer duty-free importation on aircraft and parts under the WTO Agreement on Trade in Civil Aircraft.

Defense

Japan is increasing its defense budget in response to a challenging regional security landscape, underscored by North Korean missile advancements and China’s rising influence. The Cabinet approved a historic $55.9 billion budget for FY2024, marking a 16.5% increase from the prior year, to enhance capabilities across naval, land, and air dimensions, including the modification of Izumo-class carriers for F-35B operations, acquisition of new armored vehicles, and procurement of F-35A and F-35B fighter jets.

The budget focuses on advancing Japan’s defense technology research and development, with significant investments in stand-off defense, counter-hypersonic capabilities, and the Global Combat Air Program (GCAP) in collaboration with Italy and the UK.

Space

Japan’s space industry, renowned for its world-class industrial and technological prowess in R&D, is shifting its focus towards the commercialization of space technology, with concerted efforts from the Japanese government and industry to grow its space business. This pivot builds on a long-standing international collaboration in space development and exploration, initiated by a Japan-U.S. Joint Communique in 1969, and has seen Japan engaging in significant projects primarily led by NASA, with expectations for expanded collaboration in space exploration and science.

Recent developments have further strengthened space cooperation between the U.S. and Japan, including the signing of the Gateway Implementation Agreement in November 2022 as part of NASA’s Artemis missions for lunar exploration, offering a JAXA astronaut a crew position on a future Artemis mission. Additionally, Japan’s early commitment to the ISS extension until 2030, the signing of the Framework Agreement for Cooperation in Outer Space in January 2023, and subsequent dialogues and plans for a trade mission in May 2023, underscore a deepening partnership aimed at advancing space science, exploration, technology, and commercial opportunities between the two nations.

Upcoming Events

Japan International Aerospace Exhibition (“JA”) 
Dates: October 16-19, 2024 
Venue: Tokyo Big Sight 
Website: https://japanaerospace.jp/en/   
Description: Japan’s only large scale, fully integrated trade show on aerospace, defense and space. The most recent JA was held in 2018 in Tokyo with 520 exhibitors and 20,000 visitors. The U.S. Commercial Service Japan provided on-site counseling to U.S. exhibitors throughout the exhibition.  

Defense and Security Equipment International (“DSEI”) 
Dates: May 21-23, 2025 
Venue: Makuhari Messe Center, Chiba 
Website: https://www.dsei-japan.com/ 
Description: The only large-scale, fully integrated defense event.  DSEI-Japan brings the global defense and security sector together with both the Japanese and wider Asian defense community to innovate, partner and share knowledge.

Contact Information

Sayoko Koto, Senior Commercial Specialist
U.S. Embassy – Tokyo
Email: Sayoko.Koto@trade.gov
 

We engage with events and trade shows to accelerate the global reach of the events.  Providing participants the assurance that the U.S. Department of Commerce not only recognizes the event but is also committed to using the event to maximize opportunities for U.S. exporters.

	Unlock the Skies: Opportunities in Peru’s Booming Aerospace & Defense Sector  Webinar June 13, 2024 12:00PM Eastern Time Join us for an exclusive webinar spotlighting Peru’s rapidly expanding aerospace industry. Hear directly from key Peruvian Air Force leaders and U.S. government experts as they unveil lucrative opportunities for U.S. companies in this soaring market. Featured Speakers: General Victor Muñoz Curto, Peruvian Air Force Col. Joel Bolina, U.S. Air Attaché in Lima Mr. Philip Finiello, U.S. Commercial Attaché Register for webinar here. Questions: Jennifer Sosa-Chacon U.S. Commercial Service, Trade Show Pavilion
	WEBINAR: Developments in the Indian Commercial Space sector June 18, 2024 8:00AM Los Angeles time 11:00AM DC time Register for webinar here… Questions: Carey Arun U.S. Commercial Service, Webinar
	Eurosatory 2024 Paris, France June 17-21, 2024 Visit show web site here. Questions: Frantz Eyssallenne U.S. Commercial Service, TEPP
	Indian Ocean Defense and Security Conference 2024 Perth, Australia July 24-26, 2024 Visit show web site here. Questions: Doug Hartley U.S. Commercial Service, TEMS
	SME Zone at ADAS 2024 Manila, Philippines September 25-27, 2024 Asian Defense and Security (ADAS) is the only Tri-service Defense and Security exhibition that addresses the specific requirements of the Department of National Defense, the Armed Forces of the Philippines, the Philippine National Police, and other Government defense and Security Agencies. The U.S. Commercial Service and Kallman Worldwide are pleased to be organizing the SME Zone at ADAS 2024.  The SME Zone will include B2B matchmaking through the U.S. Commercial Service’s Gold Key Service.  Space is limited to five (5) small sized companies. More details here. Questions: Jason Sproule U.S. Commercial Service, Trade Show Pavilion
	Brazil Aero Medical  Business Development Mission September 25-27, 2024 This mission aims to introduce U.S. suppliers to the growing $3.1bn Brazilian aeromedical market by connecting U.S. companies to the public and private sectors responsible for bringing these life-saving equipment and solutions to Brazil. Firms participating in this event will be first-movers in this expanding industry and gain unique insights, make industry contacts, and develop strategies to increase U.S. exports and services to the Brazilian aeromedical sector. More information available here. Questions: Adam Shanks U.S. Department of Commerce, International Trade Administration, U.S. Commercial Service, Trade Mission
	AUSA 2024 Washington, D.C. October 14-16, 2024 Visit show web site here. Questions: Paul Matino U.S. Commercial Service, TEPP
	Denmark & Sweden Defense Business Development Mission Denmark, October 20-22, 2024 Sweden, October 22-25, 2024 This mission aims to give U.S. companies an opportunity to provide aerospace and defense equipment, technology, and services to Denmark and Sweden, and to advance U.S. national interests. Supporting NATO’s efforts to defend Northern Europe and Ukraine, the mission will focus on requirements defined by Denmark and Sweden NATO mission in the Baltic Sea region and introduce U.S. suppliers to aerospace and defense stakeholders in the Nordic region, assisting U.S. companies in developing business in Denmark and Sweden. More information available here. Questions: Diane Mooney U.S. Department of Commerce, International Trade Administration, U.S. Commercial Service, Trade Mission

For your awareness, ITA has issued a federal register notice (FRN) on its ongoing work in assessing and analyzing risk in global supply chains. Specifically, this FRN is looking for public comment on two priority topics: 

1. Input into a determination of an initial list of “critical sectors” and “key goods” as provided under the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement Relating to Supply Chain Resilience (Supply Chain Agreement). The United States’ initial list will be shared with the IPEF Supply Chain Council members and will inform work undertaken pursuant to the Agreement.
    
2. Insights into other analytical tools and methodologies developed by ITA’s Industry & Analysis unit to support resilient supply chains for U.S. industry, particularly a cross-sectoral risk assessment framework on systemic supply chain risks.

The full FRN gives further context on both the IPEF Supply Chttps://www.federalregister.gov/documents/2024/06/03/2024-12240/request-for-comments-on-commerce-supply-chain-risk-assessment-and-ipef-supply-chainshain Agreement and the cross-sectoral risk assessment framework and is available here: 
https://www.federalregister.gov/documents/2024/06/03/2024-12240/request-for-comments-on-commerce-supply-chain-risk-assessment-and-ipef-supply-chains. Public comments are open through Friday, June 21. ITA is seeking broad input from all interested stakeholders, including U.S. industry, researchers, labor organizations, academia, and civil society, and any interested commenters can reply to any or all of the questions identified in the FRN.