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Japan to screen defense contractors for data security, China risks

TOKYO — Japan will introduce a new screening process for defense procurement to safeguard against leaks of sensitive information, Nikkei has learned, in a move that will increase scrutiny on supply chains for missiles, ships and other equipment.


New legislation will be proposed to give the government authority to seek changes to existing defense procurement contracts if concerns are found at the supplier level. The aim is to begin the screening mandate in fiscal 2023.


The move is expected to restrict the use of Chinese-made equipment while leading to greater demand for domestic suppliers and cooperation with the U.S. on weapons programs. Telecommunications equipment maker Huawei Technologies is among the suppliers likely to face barriers on economic security grounds.


Japan’s Ministry of Defense provides contractors with information on the Self-Defense Forces’ needs and activities. Any leak of such information through components built into their equipment could expose the SDF’s weaknesses and tactics.


Cyberattacks present another threat. The U.S. has urged Japan, a development partner in fighter jets and other weapons programs, to bolster its cybersecurity readiness. Japanese government agencies have been told since fiscal 2019 not to procure telecom equipment from suppliers that pose security risks.


The new screening process, to be administered by the Defense Ministry, will focus on suppliers that have been awarded contracts. The checks will span components as well as computers and internet connections used at the suppliers. Until now, such inspections have been left up to suppliers themselves.


One proposal would require preapproval for installation of production equipment, as well as information security checks of existing capacity.


Japanese companies involved aerospace and defense supply chains have suffered cyberattacks in recent years. They include Mitsubishi Electric, NEC and other industrial groups that deal with the Defense Ministry. Information security experts have noted the possibility of Chinese involvement in these attacks.


Japan’s tougher stance on information security seeks to lay the groundwork for more joint defense development with the U.S. and European countries.


“We are ready to answer any call for stronger measures,” an executive at a heavy industry group said.


Prime Minister Fumio Kishida is seeking to raise Japan’s level of defense spending. The government plans to seek more than 700 billion yen ($6.1 billion) in additional funding for defense in the fiscal 2021 supplementary budget.


Equipment purchases that were meant to be funded by fiscal 2022 budget request will be brought forward, signaling a sense of urgency to the U.S.



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