10. Memorandum From the Director of the Office of Northeast Asian Affairs (McClurkin) to the Assistant Secretary of State for Far Eastern Affairs (Robertson)1

SUBJECT

  • Procurement of Jet Aircraft in Japan

Background

The Department of the Air Force is submitting to the Department of Defense a recommendation that:

a)
Defense authorize the Air Force to negotiate a contract with the Japanese Government for assembly of 70 F–86–F jet aircraft in Japan, at a total dollar cost under MDAP not to exceed $28.4 million;
b)
The State Department and FOA be requested to cooperate and assist in finalizing this program;
c)
If necessary, an exception be granted under appropriate Defense directives to permit the contract to be made for a dollar cost estimated to be about 5 percent higher than the cost of these aircraft in the United States.

This proposal envisages the production in Japan of about 500 jet fighter aircraft over the next five years, with an initial program for the procurement of 70 F–86–F aircraft. The dollar cost of the 70 aircraft is estimated to be about $28.4 million and the yen cost, about $12.2 million, totaling about $40.6 million. The proposal involves a possible sharing of the total cost of the aircraft by the United States and Japanese Governments, since the Japanese Government would supply the [Page 16] 70 aircraft at a cost to the U.S. of $28.4 million and, presumably, would subcontract to the producer (probably Mitsubishi) for the aircraft, thereby contributing the yen portion of the total cost.

This proposal is the outgrowth of a proposal made to the Air Force in November by MAAG–J and FEAF. General Hull in a message to Defense, bearing Ambassador Allison’s concurrence, strongly endorsed the proposal (C–70402 to Defense, November 26, 1954, attached as Tab C).2 Embassy Tokyo in joint telegram 1694 of January 14 (attached as Tab D)3 reported that the Embassy, Far East Command, U.S. Operations Mission,FEAF and MAAG–J all agree on the desirability of initiating an aircraft production program in Japan during the forthcoming Japanese fiscal year beginning April 1, 1955 and urge early approval of this proposal. The Embassy also pointed out the urgency of approval in view of lead-time considerations and the fact that the Japanese Government, now in the process of finalizing its defense budget for Japanese fiscal year 1955, will not make provision for the program unless it has been formally presented by the United States Government.

Since the initiation of aircraft production in Japan would be a significant step toward the accomplishment of our NSC objectives in Japan, it is believed that the Department should indicate support of the proposal and offer to assist in finalizing the program. In view of the need for an early decision on the matter, it is believed that early consultation by Defense and the Air Force with the Department and FOA is desirable, particularly to determine the availability of facilities assistance funds to meet dollar assembly tooling costs and of yen funds under U.S. control to assist, if necessary, in meeting a portion of the yen production costs.

Recommendation

In view of the foregoing, it is recommended that you

a)
Sign the attached letter to Assistant Secretary Hensel (Tab A)4 expressing support of the Air Force proposal to procure jet aircraft in Japan and suggesting early consultation on the matter by the Departments of Defense and the Air Force with this Department and FOA.
b)
Sign the attached letter to Mr. Stassen (Tab B)5 enclosing a copy of the letter to Mr. Hensel.
  1. Source: Department of State, Central Files, 794.5622/2–155. Secret. Concurred in by S/MSA.
  2. In justification of the proposal, General Hull stated in part: “Healthy Jap acft ind will reduce burden on US ind to supp Allied Forces in Far East in event of all out world conflict. Immed OSP of acft will hasten day for impl of JCS goal for Jap thereby permitting an earlier redeployment of US Forces. The success of the impl of the JCS force goals for Jap according to USAF programming docu rqr new proc of acft either from US or Japan. US ind presently actively engaged in mfr of more adv type acft. OSP of acft would permit US ind to cone on these acft.”
  3. Not printed. (Department of State, Central Files, 794.5–MSP/1–1455)
  4. This letter was sent February 3. (Ibid., 794.5–MSP/2–355)
  5. This letter and its enclosure were also sent February 3. (Ibid., 794.5622/2–355)

    Documents ibid., 794.5, 794.5–MSP, and 794.5622 for 1955 indicate that the Departments of State and Defense were in agreement on the desirability of procuring jet aircraft in Japan and that the idea was accepted by the Japanese Government. For text of the Agreement under Mutual Defense Assistance for the assembly and manufacture of airplanes in Japan, effected by an exchange of notes at Tokyo on June 3, 1955, see TIAS 3383; 6 UST (pt.3) 3817.