Japan-U.S. defense cooperation

In contrast to the Trump Administration’s concerns about some NATO members, notably Germany, not doing their fair share for mutual defense, the White House has been pleased with Japan’s efforts to counter the growing threats from China.

The U.S. – Japan Security Consultative Committee, with the participation of Secretary of State Mike Pompeo, Acting Secretary of Defense Patrick Shanahan, Minister for Foreign Affairs Taro Kono, and Minister of Defense Iwaya met in Washington on April 19. The two nations agreed to continue to play an “ indispensable role in upholding a rules-based international order and promoting their shared values, noting that their strategic defense policies aligned with each other.” The United States reiterated its commitment to the defense of Japan through the full range of U.S. military capabilities, including conventional and nuclear.

The participants “affirmed their strong commitment to realize a ‘free and open Indo-Pacific,’ a shared vision for a region in which all nations are sovereign, strong and prosperous. The U.S.-Japan Alliance serves as the cornerstone of peace, security, and prosperity in the Indo-Pacific region and remains iron-clad amid an increasingly complex security environment…[they] reaffirmed their commitment to maintaining readiness to face threats in the Indo-Pacific region, and discussed tangible ways to implement the National Defense Strategy and Japan’s National Defense Program Guidelines. Both parties agreed to enhance alliance capabilities and interoperability across the conventional, cyber, and space domains. Secretary Shanahan expressed appreciation for Minister Iwaya’s leadership, which has further strengthened the alliance and helped to ensure a free and open Indo-Pacific region.”

In a thinly veiled reference to China, both Washington and Tokyo expressed concern about “geopolitical competition and coercive attempts to undermine international rules, norms, and institutions present challenges to the Alliance and to the shared vision of a free and open Indo-Pacific.” In return, they stressed the need to deepen regional cooperation, led by the U.S. and Japan. They also noted the rapidly evolving challenges in space, cyberspace, and the electromagnetic spectrum. In response, they pledged to deepen their joint endeavors to counter the threats.

In a highly important specific area, the two nations “affirmed that international law applies in cyberspace and that a cyber attack could, in certain circumstances, constitute an armed attack for the purposes of Article V of the U.S.-Japan Security Treaty.”

Support was expressed for Washington’s attempts to negotiate an end to the North Korean nuclear and missile threat, a topic of key concern to Tokyo. North Korean missiles have been launched in test flights near Japanese territory. Both nations noted the importance of their joint efforts, including those of South Korea, to maintain peace in the area. Cooperation with Australia, India, and the ASEAN nations was emphasized.

The discussion included a number of specific recommendations, including:

Deepening cooperation on space capabilities
Bolstering capability and enhancing their respective integrated defense for both air and missile threats, including through the timely and smooth deployment of Japan’s Aegis Ashore.
The importance of modernizing and adapting the Alliance’s capabilities to meet both current and future needs, including through the introduction of advanced weapon systems to Japan such as F-35, E-2D, V-22, stand-off missiles, and Aegis Ashore.
The two nations will promote the standardization of defense equipment, sharing of defense networks, and cooperation on emerging technologies.
Both Washington and Tokyo will strengthen and enhance information security practices across the whole of government to protect classified information, maintain technological superiority, and preserve our shared economic and defense advantages in the face of evolving threats to the Japan-U.S. Alliance.
The U.S. and Japan will deepen operational cooperation as a means to improve Alliance readiness, interoperability, and deterrence, including the steady implementation of mutual asset protection; bilateral presence and joint Intelligence, Surveillance and Reconnaissance operations; increased scope of logistical support under the Acquisition and Cross Servicing Agreement; and ongoing exchange of liaison officers.
The two Governments will promote joint/shared use of the facilities of the Self-Defense Forces of Japan and U.S. Forces, in addition to operational training areas, to enhance interoperability, deterrence, and response capability, and to build a stronger relationship with local communities.

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Photo: AH-64D helicopter boarding a MSDF destroyer in support of island landing operations (Japan Self Defense Forces)

Quick Analysis

Federal Reserve Report on the Economy

The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from each District’s sources. The latest edition has just been released. We present key portions of the summary here. Overall Economic Activity Overall economic activity expanded slightly, on balance, since late February. Ten out of twelve Districts experienced either slight or modest economic growth—up from eight in the previous report, while the other two reported no changes in activity. Consumer spending barely increased overall, but reports were quite mixed across Districts and spending categories. Several reports mentioned weakness in discretionary spending, as consumers’ price sensitivity remained elevated. Auto spending was buoyed notably in some Districts by improved inventories and dealer incentives, but sales remained sluggish in other Districts. Tourism activity increased modestly, on average, but reports varied widely. Manufacturing activity declined slightly, as only three Districts reported growth in that sector. Contacts reported slight increases in nonfinancial services activity, on average, and bank lending was roughly flat overall. Residential construction increased a little, on average, and home sales strengthened in most Districts. In contrast, nonresidential construction was flat, and commercial real estate leasing fell slightly. The economic outlook among contacts was cautiously optimistic, on balance. Labor Markets Employment rose at a slight pace overall, with nine Districts reporting very slow to modest increases, and the remaining three Districts reporting no changes in employment. Most Districts noted increases in labor supply and in the quality of job applicants. Several Districts reported improved retention of employees, and others pointed to staff reductions at some firms. Despite the improvements in labor supply, many Districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers, and hospitality workers. Wages grew at a moderate pace in eight Districts, with the remaining four noting only slight to modest wage increases. Multiple Districts said that annual wage growth rates had recently returned to their historical averages. On balance, contacts expected that labor demand and supply would remain relatively stable, with modest further job gains and continued moderation of wage growth back to pre-pandemic levels. Prices Price increases were modest, on average, running at about the same pace as in the last report. Disruptions in the Red Sea and the collapse of Baltimore’s Key Bridge caused some shipping delays but so far did not lead to widespread price increases. Movements in raw materials prices were mixed, but six Districts noted moderate increases in energy prices. Contacts in several Districts reported sharp increases in insurance rates, for both businesses and homeowners. Another frequent comment was that firms’ ability to pass cost increases on to consumers had weakened considerably in recent months, resulting in smaller profit margins. Inflation also caused strain at nonprofit entities, resulting in service reductions in some cases. On balance, contacts expected that inflation would hold steady at a slow pace moving forward. At the same time, contacts in a few Districts—mostly manufacturers—perceived upside risks to near-term inflation in both input prices and output prices. Highlights by Federal Reserve District Boston Business activity expanded at a modest pace in recent weeks, and prices rose slightly. Employment was flat overall, but one retailer reported significant layoffs. Convention and tourism activity grew at a robust pace. Home sales increased on a year-over-year basis, marking a turnaround. The outlook ranged from cautiously optimistic to bullish. New York On balance, regional economic activity remained flat. Labor market conditions were solid and continued to normalize as labor supply and labor demand came into better balance. Consumer spending was unchanged after a weak first quarter. Housing markets strengthened, with the spring selling season picking up beyond the seasonal norm. The pace of selling price increases remained modest. Philadelphia On balance, business activity was flat in the current Beige Book period—after declining slightly last period. Employment edged up, despite staffing and recruitment efforts slowing to a crawl. Wage and price inflation continue to moderate; however, housing affordability continues to be a concern. Overall, the outlook is positive, as firms remained optimistic about expectations for future growth. Cleveland District business activity increased modestly, as did employment. Firms anticipated greater ease filling open positions, including those that have been particularly challenging, because of increased labor availability. Wage pressures continued to normalize, and some contacts reduced starting wages for new roles. Cost and price pressures changed little. Richmond The regional economy grew at slight pace since our previous report. Consumer spending on retail goods was mixed but spending on travel and tourism was up slightly. Fifth District port activity slowed and was impacted by the collapse of the Francis Scott Key Bridge. Employment growth slowed from a moderate to a modest rate in recent weeks, but wages continued to grow moderately. Price growth also remained moderate. Atlanta The Sixth District economy grew modestly. Labor markets continued to stabilize; wage pressures eased. Many nonlabor costs moderated. Retail sales were steady, but consumers remained price conscious. Tourism remained robust. Commercial real estate conditions slowed. Transportation activity was mixed. Manufacturing grew slightly. Loan demand was flat. Energy activity improved. Chicago Economic activity increased slightly. Employment increased modestly; business and consumer spending rose slightly; nonbusiness contacts saw no change in activity; and manufacturing and construction and real estate activity were flat. Prices and wages rose moderately, while financial conditions were stable. Prospects for 2024 farm income were unchanged. St. Louis Economic activity has continued to increase slightly since our previous report. Prices have increased modestly, as contacts are broadly feeling the pressures of increases in both labor and non-labor costs. The outlook was neutral to slightly optimistic, which is generally unchanged from our previous report, but better than one year ago. Minneapolis District economic activity grew slightly. Employment grew some, but labor demand was softer. Wage pressures were present but continued to ease, while price pressures ticked up. Consumer spending was mostly flat, and manufacturing slowed modestly. Commercial and residential construction improved […]