Into gear: Defence industrial and technology cooperation between Australia, Japan and the United States

Executive summary

• Australia, Japan and the United States (AJUS) are pursuing an ambitious defence cooperation agenda, including a growing array of defence industrial and technology initiatives. This cooperation is being driven by shared defence maintenance, production capacity and workforce challenges, as well as the ‘contested logistics’ dilemma posed to all three countries’ militaries by China’s growing power projection and anti-access/area denial (A2/AD) capabilities.
• Growing momentum at the trilateral level is being catalysed by developments at the bilateral and minilateral level, including through the likes of the US-Australia Guided Weapons and Explosive Ordnance (GWEO) initiative, the US-Japan Defense Industrial Cooperation, Acquisition, and Sustainment Forum (DICAS), the 2025 Australia-Japan Mogami-class frigate deal and cooperation between all three countries through AUKUS Pillar II.
• Whether through expanding the membership of these bilateral initiatives or pursuing new forms of trilateral cooperation, advancing the AJUS defence industrial and technology agenda will require overcoming a number of lingering cultural, legal, political and technical barriers. This includes harmonising industrial security regimes, setting shared operational requirements for defence industrial and innovation collaboration, accounting for differences in scale and funding, and balancing imperatives to prioritise domestic sources with the need to build a federated defence production and innovation network.
• This report presents the views of four policy thinkers and professionals from across the three countries on the current state of AJUS defence industry and technology cooperation, identifying points of consensus between the three countries as well as a range of next steps for advancing collaboration. These include:
  • Utilising deeper coordination through the Trilateral Defence Consultations framework, consider establishing a dedicated working group to craft shared defence industrial and technology requirements, including industrial security and acquisition standards for mutual priorities.
  • Trilateralise munitions production initiatives currently taking place at the bilateral level through GWEO and DICAS, with an initial focus on supply chains for essential componentry like rocket motors, and prioritising air defence and maritime strike capabilities.
  • Build on the momentum generated by the Australia-Japan Mogami-frigate deal and recent US-Japan shipbuilding agreements to explore options for establishing reciprocal ship maintenance authorities, in the interests of improving the resilience of trilateral operations and force posture initiatives.
  • Factor trilateral requirements and contributions into pending defence acquisition reforms in all three countries, including avenues for accessing commercial and dual-use technologies relevant to defence applications.

This report presents the views of four policy thinkers and professionals from across the three countries on the current state of AJUS defence industry and technology cooperation, identifying points of consensus between the three countries as well as a range of next steps for advancing collaboration.

Introduction

Tom Corben
Research Fellow, Foreign Policy and Defence, United States Studies Centre

Defence industrial and technology cooperation has well and truly become the central pivot point for the modernisation of alliances and strategic partnerships in the Indo-Pacific.¹ Though perhaps most notable in the trajectory of the United States’ key regional alliances, this trend is also increasingly prominent on the agendas between those allies themselves, and as a key driver of minilateral security cooperation. This includes the trilateral defence partnership between Australia, Japan and the United States (AJUS), a grouping viewed by all three countries as the core of a collective defence strategy of deterrence by denial in the Indo-Pacific.²

Such cooperation is driven by a number of factors. The shocks of the COVID-19 pandemic, Russia’s invasion of Ukraine, and new and protracted campaigns in the Middle East since October 2023, heightened the strain on Washington’s already stretched industrial base, including its ability to supply allies and partners with the capabilities needed to contribute to collective security. Additionally, cooperation on defence maintenance, repair, overhaul and production is increasingly essential to counteract the ‘contested logistics’ challenge in the Indo-Pacific; that is, the ability of allied forces to reliably and persistently operate, repair and resupply in a regional military environment where absolute freedom of manoeuvre is no longer assured. Finally, defence technology cooperation — including private sector engagement — is now also regarded as essential to foster a collective defence innovation edge over China and Russia.

Australia’s Defence Minister Richard Marles and Japan’s Defense Minister Gen Nakatani shake hands ahead of a joint press announcement aboard the Japan Maritime Self-Defense Force Mogami-class stealth frigate in Yokosuka, September 2025. Source: Getty

All three streams of cooperation are increasingly prevalent at the bilateral level, evidenced by initiatives like the US-Australia Guided Weapons and Explosive Ordnance (GWEO) enterprise and the US-Japan DICAS initiative, but are equally essential to the AJUS agenda. In that respect, Canberra’s recent decision to select Mitsubishi Heavy Industries’ (MHI) Mogami-class frigate as the Royal Australian Navy’s Future Frigate is already being hailed not only as a watershed moment for the Australia-Japan special strategic partnership, but a critical development in the context of trilateral cooperation between Australia, Japan and the United States. Similarly, Japan’s growing engagement through Pillar II of the AUKUS partnership between Australia, the United Kingdom and the United States is a testament to the growing trust that Canberra and Washington have in Tokyo’s capacity not only to protect sensitive information and technology from adversarial espionage, but to make essential industrial, innovation and operational contributions to a collective defence enterprise in its own right.

Yet as with much of the trilateral agenda, much work remains to be done to translate consensus into action. As with information and intelligence-sharing,³ AJUS must grapple with the challenges associated with harmonising its constituent bilateral defence industry and technology agendas,⁴ let alone deconflicting and coordinating with those of different minilateral defence groupings like AUKUS and the Partnership for Indo-Pacific Industrial Resilience (PIPIR), which feature countries beyond the trilateral remit. For example, even within the trusted community of AUKUS, progress on industrial security harmonisation in areas such as export controls, cybersecurity standards and security clearances remains a work in progress.⁵ The creation of a distinct AUKUS standard in these areas could create a two-tiered framework for cooperation with Japan outside of narrow project-specific regulatory ‘bubbles’. Furthermore, though Australia and Japan stand ready to contribute their respective technological advantages and industrial capacities to a collective enterprise, they lack the sheer scale of production or innovation brought to bear by the US industrial base, and continue to grapple with questions of social license, stable funding, and acquisition and procurement reform. There are also tensions between the clear strategic logic of such cooperation and the complex commercial incentives that can both drive and obstruct trilateral industrial cooperation, most visible in the ways in which all three countries are grappling with the trade-offs between efficient capability acquisition and protectionism or ‘buy local’ policies that extend to the defence realm.

In the spirit of advancing the trilateral defence agenda, the United States Studies Centre, with the support of the Australian Department of Defence, is bringing together leading policy experts and practitioners from across Australia, Japan and the United States to identify the art of the possible across a number of areas for practical cooperation. It is convening a series of five workshops featuring experts and officials from Australia, Japan and the United States who are focused on these areas and publishing corresponding reports that will highlight points of consensus or difference between the policy communities across all three countries on priority topics and will provide consolidated analyses of the opportunities for advancing cooperation in these areas. This compendium is the third in that series, featuring contributions from three leading experts from Australia, Japan and the United States, which collectively unpack the current state of trilateral defence industrial and technology cooperation and offer policy options for advancing this critical component of the overall AJUS agenda.

Underwriting AJUS: A US perspective on trilateral defence industry and technology development

Gregg Rubinstein
Adjunct Fellow (Non-Resident), Japan Chair, Center for Strategic and International Studies

An unprecedented growth in strategic cooperation among the United States and key Indo-Pacific allies, Japan and Australia, is evident across engagement on policy consultations, strategic planning and information sharing, as well as training and joint exercises. Continued progress in operationalising trilateral cooperation (AJUS, henceforth) will also require a more effective use of resources in defence-related technology development, systems acquisition, support of deployed equipment and strengthened industrial base collaboration. Among Indo-Pacific allies, the strategic geographies of Japan and Australia, their expanding security ties with the United States as well as with each other, and their substantial industrial/technology bases together make a compelling case for closer trilateral alignment in building defence capabilities.

Yet furthering cooperative acquisition with AJUS partners will require further US efforts to address chronic problems in managing military sales, information disclosure and technology release. Success will, in part, depend on revising long-held views of foreign defence programs from supplier-customer to partnership relations — a challenge now underlined by the need to reconcile international engagement with the current US administration’s America First agenda.

Evolution of US regional policy

Since the ‘Pivot to Asia’ policy was introduced during the Barack Obama administration,⁶ the United States has sought to build a growing set of multilateral partnerships on the basis of long-established bilateral alliances, including AJUS. Closer cooperation among US defence forces with key allies and partners in the region has encouraged a deeper understanding of what interoperability means — beyond communication and common hardware, to the conduct of joint operations and cross-servicing support. This approach to interoperability also emphasises a greater need for resource sharing among allies and partners. Transfers of defence capabilities by sales and licenses have expanded to accessing industrial and technology base resources through coproduction, joint development and reciprocal investments in industrial assets. Despite their respective differences in substance and tone, successive administrations since the turn of the millennium have consistently supported closer regional ties among Indo-Pacific partners and recognised the importance of sharing resources, including industrial capacity and technologies, to provide critical defence capabilities.⁷ Current US defence policy settings in Asia draw substantially upon earlier initiatives, and will face similar challenges in implementation.⁸

US approach to defence acquisitions and international cooperation

A separation of defence acquisition and export activities in responsible US government agencies can obscure the reality of their shared dependence on US industrial and technology base resources. For instance, the US Government manages foreign defence transfers through the Department of State, supported by offices under the Pentagon’s Undersecretary for Policy, while acquisitions for US defence forces are implemented through Pentagon channels that converge with policy only at Cabinet level. This distribution of authorities has often led to disconnects in aligning available industrial resources for US procurements with foreign sales commitments, an issue which the Trump administration is seeking to address through sweeping Pentagon reforms.

The emergence of ‘near-peer’ adversary threats, and then the demands of support for operations in Ukraine and the Middle East, exposed the limitations of post-Cold War industrial base production and sustainment capacities in meeting surge requirements overseas while retaining sufficient inventories for US needs.⁹ US Department of Defense (DoD) measures to address these problems were announced in its 2023 National Defense Industrial Strategy (NDIS),¹⁰ the provisions of which covered more flexible acquisition planning, resilient supply chains, workforce development and “economic deterrence” measures such as cybersecurity, technology protection and safeguards on foreign investment. Importantly, “Allied and Partner Industrial Collaboration,” featured as one of six primary implementation initiatives of the NDIS, focused on advancing the AUKUS framework, the co-development and coproduction of key weapon systems and fostering closer industrial collaboration with global partners.¹¹ The Trump administration’s April 2025 Executive Order on defence acquisition reform and industrial base innovation echoes these and other NDIS provisions on more efficient acquisition processes and greater use of innovative technologies, particularly commercial products.¹²

Promoting cooperation in defence industry and technology development

If increased interoperability and resource sharing are by now widely understood goals of closer defence acquisition and industrial collaboration, so are the policy and process issues facing their realisation. For the US Government, these challenges may be summarised as:

• Export controls — as managed by the State Department under the International Traffic in Arms Regulations (ITAR) and by the Commerce Department’s Export Administration Regulations (EAR).
• Transfers of defence equipment and technology — the Foreign Military Sales (FMS), Direct Commercial Sales (DCS) and associated licensing processes.
• Information disclosure and technology release procedures.

If increased interoperability and resource sharing are by now widely understood goals of closer defence acquisition and industrial collaboration, so are the policy and process issues facing their realisation.

Though meant to facilitate support for allies while safeguarding critical US resources, overly restrictive applications of these regulations and processes have become serious impediments to both international cooperation and effective defence acquisitions. For example, years of bilateral dialogue on Japan’s F-X fighter program finally broke down over irreconcilable differences in US technology transfer restrictions and Japan’s insistence on self-sufficiency in program management, resulting in Japan joining the United Kingdom and Italy in developing a future fighter aircraft rather than working with Washington.¹³ Successive US administrations have sought to reduce the scope of export controls, improve the administration of arms transfers, and review standards for technology releasability, most recently in the context of the creation of an AUKUS license-free defence trade measure.¹⁴ All such efforts have led to sound (and similar) recommendations for reduced regulations, more efficient processes and better communication with partners and customers, only to fall short in inconsistent and incomplete follow-up.¹⁵

Reforming foreign defence sales practices

Few areas of defence cooperation have drawn more stakeholder attention — in the United States and overseas — than foreign sales and licensing activities. Various measures to improve efficiency in staffing and processes since the 1990s have made progress in some areas, but have fallen short of effectively supporting interest in strengthening defence capabilities with key partners such as Japan and Australia.¹⁶ This has manifested in delayed delivery timelines for crucial US military platforms to both countries,¹⁷ as well as complications in co-developing and co-producing next-generation military capabilities.¹⁸

The Trump administration’s 9 April 2025 Executive Order on “Reforming Foreign Defense Sales to Improve Speed and Accountability” is the most ambitious attempt so far to restructure US defence transfer activities.¹⁹ Its objectives include:

• Developing priority partner and capability lists to determine what defence capabilities the United States will provide — and to whom.
• Reducing regulations in development, implementation and oversight of defence exports; improving transparency and accountability in staffing.
• Providing more flexibility for implementing defence sales through standardised criteria for determining FMS-only requirements.
• Improving financing options and contract flexibility.
• Consolidating government-wide foreign disclosure and technology transfer approvals.
• Increasing government/industry collaboration on timely and cost-effective export programs; incorporating ‘exportability’ in designs for US systems.

The USS Miguel Keith completed a five-month Regular Overhaul at Mitsubishi Heavy Industries in Yokohama, Japan, April 2025.Source: US Navy

The Pentagon’s November 2025 Memorandum on “Unifying the Department’s Arms Transfer and Security Cooperation Enterprise to Improve Efficiency and Enable Burden-Sharing” is especially significant in directing a reorganisation of sales, cooperative development, and technology protection processes that, if implemented, will more directly align these activities with the Pentagon’s acquisition and industrial base policies.²⁰ While most of the provisions in these orders address long-recognised problems, earlier reform measures lacked the force of a presidential directive. It may be some time before the real impact of the Reforming Foreign Defense Sales initiative becomes evident, but effective implementation of its proposed measures could bring the most substantial changes to US policy and practice on defence transfers in decades.

Progress on AJUS defence acquisition and industry cooperation

Years of dialogue under Trilateral Defence Ministerial Meeting (TDMM) consultations have made substantial progress in aligning defence policies, planning, operations and capability development. As part of this process, TDMM dialogue has featured a growing focus on defence industrial and technology base collaboration in such areas as composite aerospace materials, uncrewed aircraft and application of artificial intelligence, as embodied in the Trilateral RDT&E Projects Arrangement of 2024.²¹

As seen in other areas of Indo-Pacific security policy, the Trump administration has continued support for closer trilateral engagement on defence acquisition and industrial cooperation. Discussion of advanced defence capabilities and industrial base strengthening in the latest TDMM statement in May 2025 are consistent with objectives detailed in the administration’s Executive Orders on defence acquisition reform and foreign defence sales.²² There is a high likelihood that current US emphasis on supply chain resilience and engaging non-traditional defence suppliers will expand opportunities for trilateral cooperation in technology development and industrial base support. The DoD’s uses of mechanisms like the Adaptive Acquisition Framework aim to reduce complications in introducing new capabilities from a broader range of potential suppliers.²³ Initiatives such as the Partnership for Pacific Industrial Resilience (PIPIR) offer a region-wide forum to explore innovative technologies and promote industrial collaboration.²⁴ Meanwhile, the US-Japan Defense Industrial Cooperation and Sustainment (DICAS) Forum has taken the lead in facilitating Maintenance, Repair and Overhaul in Japan of forward-deployed US systems.²⁵ Discussions on potential Japanese participation in AUKUS Pillar 2 projects continue.²⁶

Technology research and systems sustainment are at opposite ends of the defence acquisition spectrum — in between lie systems development, production and procurement, all of deep interest to AJUS. Recent strains on munitions inventories seen in Ukraine and Middle East operations have encouraged US interest in coproduction arrangements to expand sources of industrial base support. Terms for such activities will differ substantially from past arrangements — for example, the US-Japan programs of the 1970s-90s, essentially one-way licensed production and FMS arrangements that placed little expectation on returns of Japanese-manufactured hardware, or even in-country support of equivalent US systems.²⁷ Per current talks of Advanced Medium Range Air-to-Air Missile (AMRAAM) production in Japan, ‘business case’ justification for this arrangement will depend in large part on terms for access to production in Japan for US and third country use.²⁸

Possibly the greatest opportunity for cooperation on a major defence capability lies in the area of Collaborative Combat Aircraft, unmanned systems capable of performing surveillance, strike and other missions that will partner with manned fighters.

Australia and Japan can actively contribute to these endeavours, too. Australia’s August 2025 decision to select Japan’s Mogami design for its future naval frigate could prove decisive in promoting trilateral acquisition and industrial cooperation. Aside from strengthening Japan-Australia defence ties, this program will bring substantial benefits to the United States in terms of strengthened alliance operational capabilities as well as substantial procurements of US systems.²⁹ Of comparable importance, implementing this first export of a major defence system will require government and industry stakeholders in Japan to further develop know-how in joint program management, overseas investment and export control processes essential to future engagement on any cooperative acquisition program with AJUS partners and others.³⁰

Co-development of future defence capabilities is the most challenging area for trilateral cooperation, requiring determination of common requirements early in the acquisition process, followed by alignment of program timelines and budgetary resources, and provision for joint program management. Development and production by the United States and Japan of the Standard 3 Blk IIA missile beginning in 2006 marked a precedent, if an often troubled one, in cooperative acquisition. While hailed as a major alliance achievement, codevelopment and production of SM-3 IIA suffered years of delay from shortfalls in planning, underfunding, and communication among government and industry stakeholders. Lessons learned from this program should be applied to current collaboration on development of the Glide Phase Interceptor hypersonic missile.³¹

Possibly the greatest opportunity for cooperation on a major defence capability lies in the area of Collaborative Combat Aircraft (CCA), unmanned systems capable of performing surveillance, strike and other missions that will partner with manned fighters. Interest in these autonomous complements for crewed aircraft opened the way to arrangements for robotics and AI research, with trilateral dialogue on CCA cooperation.³² However, momentum on trilateral CCA engagement has slowed as the United States has seemingly backed away from a previously close alignment of its CCA program with dialogue on international cooperation, while Australia is reportedly reluctant to open its CCA program to international participation. Japan is considering an indigenous option linked to its participation with the United Kingdom and Italy in the Global Combat Aircraft Programme.³³ What began as a very promising initiative risks being undone by loss of direction and leadership.

Future prospects

The case for cooperation in technology development, acquisition and defence industrial base strengthening among Australia, Japan and the United States has been made and repeatedly affirmed over changes in government in all countries. Policy and consultation frameworks needed to support such activities are largely in place, while work on regulatory and process arrangements has progressed to a degree that would have been difficult to imagine less than ten years ago.

As always, the real point is implementation. The critical question for US government and industry stakeholders is readiness to engage allies as not just customers for equipment sales and sources for overseas subcontracting, but as true acquisition partners. Signals remain mixed. The Trump administration wants to sell more defence equipment and seeks greater access to allied and partner country resources, but may not appreciate the challenges they face in determining how to acquire capabilities while retaining sovereign control of technologies and deployment.

Progress on trilateral acquisition and industrial collaboration will require further US work on addressing long-standing needs to:

• Engage potential partners early in the requirements and acquisition processes.
• Implement further reform of defence export measures.
• Adopt more flexible information disclosure and technology release standards.

At the same time, AJUS partners must continue their efforts to align practices in key areas like export control, cross-industry investment and information security — not by duplicating US structures, but demonstrating a substantive equivalence in processes that will encourage closer engagement on defence programs. Success in sustaining progress on defence and acquisition and industrial partnerships will most of all depend on determined follow-through of policy initiatives by government leadership. Only consistent, accountability-demanding oversight can overcome institutional and cultural resistance to changes in status quo practices.

A durable foundation: An Australian perspective on AJUS defence industry and technology cooperation

Guy Boekenstein
Senior Associate, Cognoscenti Group

Introduction

The Indo-Pacific region is increasingly defined by strategic competition, with China’s military modernisation and assertive regional behaviour challenging the balance of power. In this context, the United States, Japan and Australia face shared security imperatives that extend beyond operational interoperability to the integration of defence industrial and technological capabilities. In concept, trilateral cooperation would allow these nations to pool resources, share critical technologies and strengthen their collective supply chain resilience, thereby enhancing collective deterrence and operational readiness.

The United States is a well-known defence industry and technology market in Australia, given the latter’s long reliance on the US defence industrial base for the majority of its major capabilities and platforms. However, as Japan increasingly seeks to develop an export market for its defence capabilities, Australia stands to gain from cultivating a secondary defence partnership alongside its prominent AUKUS partnership with the United States and the United Kingdom, particularly through Pillar II (in which Japan’s participation is growing). Extending the defence cooperation between Australia and Japan to include greater industrial collaboration — complementing joint exercises, interoperability initiatives and intelligence sharing — represents a strategic and practical pathway to enhance both nations’ defence capabilities while generating long-term security and economic benefits. The selection of the Japanese government-backed Mitsubishi Heavy Industries (MHI) bid to construct Australia’s planned fleet of 11 next-generation frigates demonstrates that both countries have moved beyond the Soryu-class submarine experience a decade ago and marks “a tangible indication” of the “deepening collaboration and a shared strategic vision” between the two countries.³⁴

Crucially, a newly strengthened Australia-Japan defence industrial relationship would also support trilateral objectives. By taking steps now to coordinate on defence production through establishing trusted supplier networks and sharing industrial capacity, the three nations can reduce their risks of exposure to supply disruptions during crises.³⁵ Furthermore, closer technological collaboration in emerging domains — such as autonomous systems, quantum navigation, cybersecurity and hypersonics — would enable greater joint innovation and accelerate the deployment of advanced capabilities.³⁶ Collectively, these efforts would create a durable foundation for integrated deterrence, technological superiority and regional stability, ensuring that the United States, Japan and Australia remain agile and interoperable in a rapidly evolving strategic environment.

The state of play

Australia-US defence industrial cooperation

The defence industry relationship between Australia and the United States constitutes a cornerstone of the broader strategic alliance between the two nations. The relationship is supported by a range of formal mechanisms, such as the Guided Weapons and Explosive Ordinance Enterprise, Defence Trade Cooperation Treaty, AUKUS and a range of practical initiatives that fall under the US Force Posture Initiatives program. Unlike Japan, the Australian defence industry sector understands the US system well. Though this relationship has a long history, the advent of AUKUS represents a significant deepening of the defence industrial and technology aspects of alliance collaboration, most notably through the provision of nuclear-powered submarines to Australia and the co-development of a suite of advanced capabilities. This initiative not only enhances Australia’s naval capabilities but also signals a watershed moment for technology sharing with the United States, considering the transfer of sensitive nuclear propulsion technology and AUKUS-inspired reforms to US and Australian defence export controls to facilitate license-free defence trade in support of AUKUS and other bilateral projects.³⁷

Therefore, it makes sense for Australia to seek practical opportunities to expand its defence industrial relationship with the United States to include other allied nations.

Despite this deep relationship, some challenges remain as supply chain risks are felt economy-wide; they are especially pressing for mission-critical Defence and defence industries. There is now a globally recognised need to invest in improving the resilience of defence supply chains.³⁸ The Australian Government’s emphasis on adopting US defence technologies has succeeded in strengthening integration with the US military-industrial base. While this reliance raises questions about strategic autonomy, the reality is that withdrawal from US systems is neither practical nor desirable in the near term, given the extent to which they underpin Australian Defence Force capability.³⁹ Defence export controls and regulatory differences can also complicate industrial cooperation, notwithstanding achievements to reform and streamline these processes, ensuring that initiatives such as AUKUS and broader bilateral projects can progress efficiently.⁴⁰ Therefore, it makes sense for Australia to seek practical opportunities to expand its defence industrial relationship with the United States to include other allied nations.

Australia-Japan defence industrial cooperation

Japan’s forward-leaning posture to establish industrial relationships is likely to be further bolstered under the new leadership of Prime Minister Sanae Takaichi, and Australia is well-positioned to find teaming and partnership solutions with Japanese companies. This offers new opportunities for Australian industry, especially the small to medium enterprise (SME) startup sector, advanced manufacturing, space, missile production and systems, components (especially for drones) and other sectors that often align with AUKUS Pillar II focus areas.

Japan is the obvious initial candidate, and the Australia-Japan defence and national security relationship is advancing at a rapid pace.⁴¹ Japan’s revitalised defence industry and expanding focus on defence exports offer Australia a valuable opportunity to establish a new and complementary partnership. By deepening industrial collaboration with Japan — a trusted, like-minded partner — Australia could better access advanced Japanese defence technologies to enhance its national defence capabilities while simultaneously strengthening and diversifying its domestic defence industrial base.

A Royal Australian Air Force Aircraft technician conducts final checks before the take-off of a F-35A Lightning II during Exercise Bushido Guardian 2025, Misawa Air Base, Japan. Source: Australian Department of Defence

Indeed, Japan is looking to further leverage its strengths in cutting-edge fields like robotics, AI, quantum computing, and advanced materials to drive dual-use technology development, fostering innovation with both civilian and military applications to enhance national defence and stimulate economic growth.⁴² Japan’s key advantages include a strong, innovation-driven industrial base, a growing ecosystem of start-ups encouraged by government funding and collaborative international partnerships — such as with the AUKUS nations and NATO — to align with global defence innovation networks and leverage emerging technologies.⁴³ This is being supported, especially in Japan’s dual-use technology startup community, by the relaxation of some restrictions for arms export and a shifting public sentiment away from strict pacifism.⁴⁴

The selection of Japan’s bid for Australia’s general-purpose frigate program (SEA3000) marks a significant milestone in Australia–Japan defence cooperation and, potentially, for trilateral cooperation too.⁴⁵ This decision represents more than a procurement choice; it signals a deepening strategic partnership that will strengthen defence ties and more closely align the two nations’ security futures. For Japan, the project is particularly momentous, as it constitutes the first major bilateral defence export initiative of substantial scale involving advanced technology transfer. Japan’s Defence Minister Gen Nakatani said the selection was “a testament to the trust in Japan’s advanced technological capabilities and the importance of interoperability between the Self-Defence Forces and the Australian military.”⁴⁶

Tokyo will be eager to ensure that this collaboration serves as the foundation for an enduring industrial partnership rather than a one-off venture.⁴⁷ Indeed, the Japanese Government has emphasised that state support for technology should not be confined solely to defence applications, thereby creating the potential for defence-related policies and incentives to extend into civilian and commercial sectors. A key priority is to facilitate a two-way flow between military and civilian technologies, encompassing dual-use equipment and civilian-grade systems, as well as repurposing defence technologies for commercial applications.⁴⁸ Such an approach could enable the mass production of commercial components that can later be adapted for defence purposes when required. It would also further enhance interoperability and complementarity between military and commercial technologies and support the rapid expansion of defence production capabilities in response to evolving security challenges.⁴⁹

Operationalising trilateral defence industry cooperation

Operationalising the trilateral defence industrial base offers substantial strategic and industrial advantages. By aligning their defence industries, the three nations can enhance interoperability, standardise equipment, and reduce reliance on single-source supply chains in critical areas such as munitions, advanced electronics and missile defence systems. Collaborative industrial initiatives can also accelerate research and development (R&D), allowing the partners to pool resources and expertise to rapidly field next-generation technologies.⁵⁰

Successfully integrating the base can also enhance resilience in times of crisis, mitigating the risks of supply chain disruptions and enabling rapid mobilisation of critical systems during regional contingencies.

However, this also presents a number of challenges. Differences in regulatory frameworks, procurement procedures and intellectual property protections across the three countries can complicate joint projects, while export controls and security clearance requirements may limit the flow of sensitive technologies. Coordination across different time zones, industrial cultures, and corporate and bureaucratic structures can further slow decision-making and complicate program management.⁵¹ Yet, successfully integrating the base can also enhance resilience in times of crisis, mitigating the risks of supply chain disruptions and enabling rapid mobilisation of critical systems during regional contingencies. This represents both a strategic hedge and an industrial opportunity linking national security objectives directly to economic and technological growth. Overall, while the benefits of a coordinated trilateral defence industrial base are compelling, realising them requires careful management of regulatory, industrial and political complexities. Transparent governance structures, clear frameworks for technology sharing and robust mechanisms for dispute resolution will be critical to operational success.

Recommendations

Recommendations the Australian Government should consider leading on to help realise this trilateral operationalisation include:

1. Establishing a Japan-Australia-United States Defence Industrial Council (JDIC)

A JDIC model could provide a stable, high-level institutional bridge to align capability priorities, harmonise standards and certification, coordinate industrial base resilience (munitions, microelectronics, shipbuilding, missiles), streamline reciprocal industrial participation and exports, and synchronise R&D and sustainment planning. By moving from ad-hoc, meeting-by-meeting cooperation to a continuous council with technical working groups, a JDIC could shorten decision cycles, reduce duplication, and increase industrial capacity and interoperability in the Indo-Pacific.⁵²

The JDIC could serve as a stable, high-level mechanism to translate strategic intent into coordinated industrial action. Its core objectives could include:

• Aligning capability roadmaps: By coordinating programs in shipbuilding, missiles, long-range fires, intelligence, surveillance and reconnaissance (ISR) platforms, the JDIC could prevent divergent design and production trajectories that lead to inefficiencies or interoperability gaps.
• Enhancing industrial resilience: The JDIC could map critical supply chains, including microelectronics, energetics and rare-earth materials, and develop surge production and mutual access agreements. This ensures that disruptions in one nation do not compromise trilateral operational readiness.
• Promoting interoperability and standards: Harmonised technical standards and certification processes would facilitate seamless integration of systems developed across the three nations, reducing the need for costly retrofits and adjustments.
• Fostering R&D cooperation and workforce development: Co-funding pre-competitive research, encouraging co-located R&D initiatives and investing in trilateral STEM pipelines would cultivate a shared technological edge and workforce capable of sustaining long-term collaboration.
• Streamlining export, intellectual property and procurement processes: Standardised templates for industrial participation, offsets and intellectual property management could help to facilitate cooperation while safeguarding national security interests.

2. Establishing a dedicated Japan-Australia Training Initiative to support greater interoperability and to further foster trilateral testing and evaluation opportunities for defence industrial applications

The long-established US Marine Corps Rotational Force Darwin (MRF-D) in Northern Australia exemplifies the application of testing and evaluation (T&E) in a real-world context. This annual rotational deployment supports live-fire and combined-arms exercises, providing industry and military stakeholders with opportunities to test systems such as precision munitions, unmanned vehicles and command-and-control networks.⁵³ This year saw the Japan’s Amphibious Rapid Deployment Brigade (ARDB), a marine unit of JSDF commence a similar rotational presence alongside the ADF and MRF-D.⁵⁴

Pursuing regular trilateral initiatives that increase the frequency and sophistication of combined military engagements could have positive flow-on effects for trilateral defence industrial and technology cooperation. Indeed, military exercises provide a critical environment for defence industry T&E, enabling the validation of new technologies and systems under operational conditions. Unlike controlled laboratory tests, exercises allow militaries and industry partners to assess performance, reliability, interoperability and operational suitability in realistic scenarios. These evaluations are essential for refining design, improving operational integration and ensuring that emerging capabilities meet the demands of modern combat.

Unlike controlled laboratory tests, exercises allow militaries and industry partners to assess performance, reliability, interoperability and operational suitability in realistic scenarios.

It is true that a rotational model would help to facilitate periodic testing, exercises and agile regional presence without the same political or fiscal burden associated with permanent basing.⁵⁵ At the same time, a dedicated training and testing arrangement would be better suited for continuous bilateral and trilateral capability development, long-term system evaluation and deeper industrial integration. In addition to these benefits, a dedicated training range would also facilitate more complex, multi-domain trilateral exercises involving land, air and maritime forces. Such a facility would enable realistic simulations of large-scale operations, improving coordination and readiness.⁵⁶

3. Establishing a Trilateral Defence Industrial Fund to enable co-investment in production facilities, workforce development, emerging technology research and development and dual-use technology teaming and coproduction

Funding could be structured as a mix of public grants, matched private investment and conditional industrial offsets. Tax incentives and export financing guarantees could further encourage firms to participate in joint projects. This could be similar to other contemporary defence innovation funding bodies such as the US Office of Strategic Capital or European Defense Fund, but with a distinct focus on progressing trilateral initiatives.⁵⁷ This fund could also support SMEs, which are often critical sources of innovation but face cost and compliance barriers to entry in defence markets. By enabling SMEs to participate in trilateral projects, the fund would help diversify industrial ecosystems and ensure that benefits are widely distributed. This would signal that Australia and the United States support the Japanese Government’s vision for the greater development of state-owned defence entities and government-funded industrial facilities, which will likely be necessary to support the production and rapid provision of essential equipment in times of crisis,⁵⁸ both for domestic consumption as well as by close partners.

4. Greater funding to support Australian industry engagement in Japan’s dual-use technology startup ecosystem and provide teaming opportunities for live government contracts

Japan has also been increasingly exploring dual-use technologies — technologies with both military and civilian applications. This includes areas such as artificial intelligence, robotics, unmanned systems, advanced materials and space technologies. The use of dual-use technologies offers the potential for cost savings, innovation and cross-sector collaboration compared to traditional defence acquisition programs.⁵⁹ Australia offers experience in aerospace, hypersonics, quantum, uncrewed aerial vehicles (particularly long-range, heavy lift), uncrewed underwater vessels and others. Collaboration between Japanese and Australian companies could also facilitate supply chain integration and promote greater interoperability between defence systems. Strategic steps forward could include joint manufacturing, component sourcing agreements, and logistics partnerships to streamline production and reduce costs.

One practical example could include deeper cooperation with the Japanese Government’s international start-up acceleration platform — J Star-X — which is already showing promise in the trilateral context.⁶⁰ J Star-X is a comprehensive support platform for Japanese start-ups seeking to enter international markets. It provides targeted overseas dispatch opportunities to innovation hubs globally. The program offers multiple sector-specific tracks, each designed to align with high-impact global trends and emerging technology domains. This platform has been successfully proven to facilitate Japanese startups’ wins and teaming arrangements with US companies for US government defence contracts.

Bridging strategy and business: A Japanese perspective on AJUS defence industrial cooperation

Rintaro Inoue
Research Associate, Institute of Geoeconomics

Japan is now in its third fiscal year of effort to fundamentally reinforce its defence capabilities, as China ramps up its military buildup and positions its defence industry to what some call a “wartime footing.”⁶¹ Essential to preparing Japan’s military to face that challenge will be strengthening its domestic defence industrial base, but also deepening ties with the United States and Australia. Japan’s defence industry has long cooperated with its ally, the United States, but trilateral cooperation that includes Australia is becoming increasingly important for enhancing resilience and interoperability — key elements in building effective “collective deterrence.”⁶² Yet although the strategic justification for such collaboration is widely accepted within Japan’s defence community, little tangible progress has been made. High-level statements increasingly refer to trilateral cooperation on missile defence and unmanned systems,⁶³ but in practice, current efforts largely resemble a patchwork of bilateral projects rather than a coherent trilateral approach.⁶⁴ Wider minilateral initiatives such as the Partnership for Indo-Pacific Industrial Resilience (PIPIR) are under discussion, but tangible results have yet to materialise.

There are, however, some welcome signs of progress. On top of longstanding US-Japan and US-Australia defence industrial and technology collaboration, Japan’s successful bid to provide the New FFM-class frigate for the Royal Australian Navy’s general-purpose frigate program represents a potentially transformative milestone for the wider trilateral partnership. Capitalising on this development will require the three governments to recognise that defence industrial collaboration must generate not only strategic benefits but also commercial incentives, and that the policy framework must be designed with those incentives in mind. This is essential, since the two stakeholder groups pursue different goals; defence departments primarily pursue deterrence, whereas businesses prioritise economic returns.

Tokyo’s interest in deepening industrial ties

The strategic rationale for trilateral defence industrial cooperation is well established, and the Japanese Government, particularly the Ministry of Defense, has shown increasing interest in deepening it. The Ministry’s push likely rests on the following three considerations.

First, Tokyo views deeper defence industrial cooperation as a means to reinforce strategic alignment with Australia and the United States, a consensus reflected in the emphasis on advanced capabilities and defence industrial resiliency frequently referenced in the Trilateral Defense Ministers Meeting (TDMM) statements.⁶⁵ By binding the three countries more closely through common industrial projects, Japan aims to make these relationships more stable and predictable, which some have referred to as “Trump proofing,” particularly in times of political turbulence in the United States.⁶⁶

Second, Japan seeks to enhance not only its own readiness and resilience but also that of its allies and partners by strengthening maintenance, repair and overhaul (MRO) efforts and securing stockpiles of munitions and components. Japan’s defence posture continues to rest on the premise that, in the event of a regional conflict, the Japan Self-Defense Force (JSDF) would be responsible for holding the line until the timely arrival of allied reinforcements,⁶⁷ requiring Japan and its allies to maintain high levels of readiness and endurance. Indeed, prior to 2022, Japan’s readiness levels and munitions stockpiles were in dire condition after decades of underinvestment.⁶⁸ Reports indicated that the JSDF possessed only about 60% of the missiles required for ballistic missile defence, and many platforms suffered from low readiness rates due to widespread cannibalisation of interchangeable parts caused by inadequate spare stockpiles.⁶⁹ Although the Japanese Government has begun addressing these shortfalls since 2022, further budgetary efforts remain indispensable.⁷⁰

The US Missile Defense Agency, the Japan Ministry of Defense and US Navy successfully conducted a flight test resulting in the first intercept of a ballistic missile target using the Standard Missile-3 (SM-3) Block IIA, aboard the USS John Paul Jones.Source: US Navy

These challenges are shared across all AJUS countries, grappling with readiness challenges and low missile stockpiles in particular. Like Japan, the US and Australian defence departments are also investing in readiness and resilience, yet both continue to face serious challenges, evident in the US Navy’s two decades’ worth of maintenance backlog and the aging Royal Australian Navy’s surface fleet.⁷¹ Enhancing AJUS force readiness and resilience through industrial collaboration, therefore, directly strengthens Japan’s own defence and stands as a fitting area for trilateral collaboration. Japan’s decision to export the frigates to Australia and frameworks such as the US-Japan Defense Industrial Cooperation, Acquisition, and Sustainment (DICAS) initiative, which enables Japanese defence firms to service US Navy destroyers and co-produce missiles with the United States, all reflect this logic.⁷²

Third, Japan views cooperation in developing next-generation capabilities, particularly unmanned systems, as essential to prepare for future defence requirements. Platforms such as unmanned underwater vehicles (UUVs) and collaborative combat aircraft (CCAs) inherently require a high degree of interoperability due to their high reliance on network systems, making trilateral collaboration indispensable.⁷³ In May 2025, the AJUS governments announced in their TDMM Joint Statement that they had completed a Trilateral Concept on Human–Machine Teaming for CCAs.⁷⁴ Two months later, Japan officially participated in a joint UUV exercise under the AUKUS framework, representing Tokyo’s desire to further deepen cooperation with the United States and Australia in this area.⁷⁵ Bilateral cooperation is also advancing: the Japan-Australia Defence Ministerial Consultations in September 2025 confirmed that the two countries will cooperate on testing the MQ-28 Ghost Bat, a CCA development program advanced by Australia, which the United States has also expressed interest in.⁷⁶

Barriers to cooperation

Strengthening defence industrial cooperation requires not only government initiatives but also active engagement from the private sector, since it is defence companies that decide whether to commit their resources to a given market. Without their stable participation, AJUS governments will struggle to deliver tangible results. Unfortunately, despite growing interest from the Ministry of Defense, Japanese defence companies remain hesitant to pursue deeper trilateral cooperation with Australia and the United States.⁷⁷

To their credit, Japanese firms have a long history of working with US partners, but this has been limited mainly to the joint development or co-production of capabilities and systems almost exclusively for use by Japanese forces. Notable examples include final assembly of F-35s, joint development of missiles such as the SM-3 Block IIA and Glide Phase Interceptor, and co-production of AMRAAM missiles and Patriot PAC-3 Missile Segment Enhancement.⁷⁸ Direct exports to the United States — let alone other countries — have been rare and typically only carried out at the Japanese Government’s strong request, as seen in the case of Patriot air defence missiles.⁷⁹

Unfortunately, despite growing interest from the Ministry of Defense, Japanese defence companies remain hesitant to pursue deeper trilateral cooperation with Australia and the United States.

Export cases were historically rare for two main reasons: long-standing domestic regulations and reputational concerns among defence enterprises about being perceived by the Japanese public as “merchants of death.”⁸⁰ However, since 2014, Japan has been pursuing changes to its policy and regulatory settings. Barriers that have been inhibiting deeper cooperation with US and Australian counterparts have eased significantly, particularly with respect to the reinterpretation of Japan’s Three Principles on Transfer of Defense Equipment and Technology in 2014 under Shinzo Abe.⁸¹ Today, the export of defence equipment related to rescue, transport, warning, surveillance and minesweeping is permitted under Japan’s revised export guidelines.⁸²

Japan’s regulations still technically prohibit the export or transfer of lethal weaponry; however, a significant loophole allows exports of any sort if the program is classified as “joint development.”⁸³ The frigate arrangement with Australia illustrates this point. According to Japan’s Ministry of Defense, joint development refers to a process that “bring[s] together technological advantages and sharing the costs and the risks among [contributing nations].”⁸⁴ In contrast, as Australian Deputy Prime Minister Richard Marles has emphasised, modifications to the frigates will be limited to “translation of the combat management system and regulatory changes required under Australian law.”⁸⁵ These limited adjustments are therefore more appropriately characterised as customisation rather than joint development, suggesting that Japan’s institutional and regulatory barriers to defence exports can, in practice, be navigated with relative ease.

Reputation risks perceived by defence companies — long regarded as a major constraint on defence exports — are now largely seen as negligible. Multiple studies have shown that, particularly after the Japanese Government released its National Security Strategy, National Defense Strategy, and Defense Build-Up Plan in 2022, major defence companies have come to view defence exports as far less damaging to their corporate image.⁸⁶ This shift is also attributable to changes in their primary customer base; many companies that manufacture defence equipment have moved away from consumer markets toward business and public-sector clients, reducing concerns over reputational backlash.⁸⁷ Public sentiment toward defence exports has also improved, with 51% of respondents in a recent survey by the Mainichi Shimbun stating that Japan should be allowed to export the next-generation fighter — a lethal weapon — currently being developed jointly with the United Kingdom and Italy, compared to 35% opposed.⁸⁸

Today, the most pressing challenge lies in how Japanese companies perceive foreign markets. For example, Japanese defence firms have continued to show reluctance to invest in or provide direct support, such as workforce training, to American shipyards, even when encouraged by the Japanese Government.⁸⁹ Cooperation with Australia has followed a similar pattern, remaining confined to research and development-level of sub-systems and not advancing to production, at least until Canberra’s recent decision to procure 11 New FFM-class frigates from Mitsubishi Heavy Industries.⁹⁰

The reluctance of many Japanese defence companies is now rooted in two factors: high barriers to entry and the perception that these markets are commercially unattractive. The obstacles are particularly severe in the United States. Although Japan is designated as a qualifying country under the Defense Federal Acquisition Regulation Supplement (DFARS), which exempts certain nations from the Buy American Act and grants lower barrier access to the US market, the practical reality is far less favourable.⁹¹ With the exception of a few niche products, such as the ShinMaywa US-2 seaplane, Japanese firms do not offer uniquely competitive systems to US operators. Furthermore, almost all Japanese equipment is not combat-proven and tends to be relatively costly, lacking competitiveness in the US market.⁹² This stems in part from the fact that Japanese regulations effectively prohibited defence exports until 2014, and from the chronic underinvestment of Japanese defence companies, whose enterprises were commercially unprofitable after decades of declining defence spending.⁹³ The challenge has been exacerbated by the second Trump administration’s imposition of a 15% tariff on Japanese goods, which has further reduced the affordability of Japanese products and raised the entry barrier to the US market for Japanese companies.⁹⁴

The reluctance of many Japanese defence companies is now rooted in two factors: high barriers to entry and the perception that these markets are commercially unattractive.

Even in sectors where Japan holds a comparative advantage vis-à-vis the United States, such as naval shipbuilding, US law imposes restrictions. Under Title 10 of the United States Code, vessels and major components of their hulls or superstructures built abroad cannot be accepted by the US Navy without a presidential waiver.⁹⁵ Large-scale MRO activities face similar legal constraints, even after the introduction of the DICAS framework.⁹⁶ Additionally, even if the President provides a waiver for the Japanese to sell surface combatants into the US market, they will have to be heavily modified to meet the US Navy’s general specifications. As seen in the example of the Constellation class frigates, this can result in significant cost overruns and delivery delays.⁹⁷ Australia’s regulatory environment is comparatively more flexible, but its Australian Industry Capability Program requires foreign firms to demonstrate contributions to Australia’s defence industrial base.⁹⁸ Meeting these requirements means that foreign companies would be forced to make substantial investments in local defence industries or to modify designs to maximise Australian industry participation, thereby increasing entry costs and potentially diminishing the appeal of the Australian market.

If the US and Australian markets were viewed as more attractive, Japanese companies might accept greater risk and invest in them. Yet, from their perspective, these markets are less appealing than that in their home country. High levels of uncertainty are prominent in both countries’ procurement trends. In the United States, frequent delays in congressional budget approvals and the use of continuing resolutions make long-term planning especially challenging for newcomers.⁹⁹ In Australia, procurement priorities have shifted abruptly in recent years, as illustrated by the reduction of Hanwha’s armoured vehicles, the Arafura-class offshore patrol vessels and the Hunter-class frigates.¹⁰⁰ Some observers argue this trend has “broken the trust between defence leaders and... industry,” a sentiment most vividly illustrated by the cancellation of the Attack-class submarine program.¹⁰¹ This environment has also prompted foreign firms such as Luerssen (Germany), prime contractor of the Arafura-class, to exit the Australian market after the Department of Defence cut the program in half.¹⁰²

Unpredictability is especially problematic in naval shipbuilding, a highly labour-intensive sector. If Japanese firms sought to export a large number of naval ships built in Japan to the United States or Australia, they would need to expand their workforce to meet production demands, given existing labour constraints.¹⁰³ This is evident in the Japanese Ministry of Defence’s FY2026 budget request, which reduced the number of New FFMs procured from three hulls to one to accommodate Australia’s purchase of its own fleet of Mogami frigates.¹⁰⁴ While Japan’s corporate culture of long-term employment helps nurture an experienced labour force, it also limits flexibility in responding to fluctuations in demand. As a result, shipbuilders are sensitive to unpredictability and hesitant to scale up their workforce even when met with requests for supply.¹⁰⁵

Given uncertainties around sustained demand, Japanese defence firms, particularly shipbuilders, lack strong incentives to commit to the defence markets of the United States and Australia.

Compounding this challenge, most naval shipyards and their workforces are highly specialised in particular classes of ships and cannot easily be redirected to other production, including different types of naval vessels or commercial ships.¹⁰⁶ The same applies to subcontractors, whose technologies and facilities are tailored to naval specifications.¹⁰⁷ This often leaves shipyards idle during downturns, creating heavy financial burdens and jeopardising the sustainability of the industrial base.¹⁰⁸

Alternatively, if Japanese firms chose to invest in shipyards in the United States or Australia to increase capacity, they would face substantial up-front costs, not only capital investment and infrastructure development, but also personnel deployment for workforce training, similar to challenges that have been surfaced in South Korean firm Hanwha Group’s takeover of Philly Shipyard on the US west coast.¹⁰⁹ For Japanese shipbuilders, already struggling with labour shortages, this would pose a significant burden. Thus, given uncertainties around sustained demand, Japanese defence firms, particularly shipbuilders, lack strong incentives to commit to the defence markets of the United States and Australia.

Policy recommendations and conclusion

Trilateral defence industry cooperation is essential to strengthening the defence of the three countries. Yet in order for AJUS to succeed on this front, government enthusiasm alone is not enough: the three countries also need to attract long-term corporate interest. Japanese, US and Australian governments should seek to minimise or eliminate institutional barriers, increase the predictability of demand, and generate early success stories that can encourage broader corporate participation in AJUS defence industrial and technology projects.

Lowering barriers to entry

First, lowering entry hurdles, particularly by reducing institutional obstacles and harmonising regulatory requirements, would significantly contribute to facilitating joint development and technology transfer. For example, one possibility would be for Japan, the United States and Australia to mutually exempt tariffs on defence equipment. Another would be further relaxation of export control and acquisition reforms in all three countries.¹¹⁰ Such steps would not only reduce entry barriers but also enable the United States, for instance, to purchase components or finished products from Japan and Australia at more reasonable prices. Japan will also need to further relax its defence export restrictions, which have recently seen an increase in discussions after the successful Japanese bid for the Australian frigate competition.¹¹¹

In addition, qualifications and standards among the three countries need to be better aligned to ensure institutional interoperability. For example, if Japanese shipyard workers are already certified to repair Japanese destroyers, they should be able to carry out comparable work for allied navies without having to obtain country-specific certifications. Currently, Japan and the United States apply different standards for non-destructive testing on naval vessels, which greatly limits the number of Japanese technicians qualified to work on US Navy ships.¹¹²

Lowering entry hurdles, particularly by reducing institutional obstacles and harmonising regulatory requirements, would significantly contribute to facilitating joint development and technology transfer.

A similar problem extends to regulations such as survivability standards for surface combatants, which define the levels of damage control and recoverability that must be met.¹¹³ A vessel that already meets Japanese standards should be recognised as suitable for use in the Australian or US navies with little to no modifications. Right now, that is not the case. Although Australia has pledged to minimise requirement changes for the newly selected frigate, it still plans to make alterations to meet its own safety standards, the Australian Naval Classification Rules.¹¹⁴ While this may seem a reasonable decision, it carries hidden risks.¹¹⁵ As noted earlier, the US Navy’s Constellation-class program illustrates the danger: to meet US standards, the original Italian design was modified so extensively that its planned 85% commonality with the off-the-shelf model has fallen to just 15%, resulting in major cost overruns and repeated delays.¹¹⁶

To avoid repeating these mistakes, creating a common survivability standard among the AJUS navies or at least ensuring reciprocal recognition of standards should be treated as a priority. This effort should proceed in parallel with the US Congress’s consideration of the Ensuring Naval Readiness Act, which seeks to open pathways for the US Navy to procure vessels from allied countries.¹¹⁷ Tokyo also appears to be addressing this issue by reviewing its system of technical standards for naval vessels, with the goal of facilitating defence equipment exports.¹¹⁸

Demand signals

Second, defence authorities in all three countries must present a stable and predictable demand signal, both in terms of what capabilities are needed and how much.¹¹⁹ Fundamentally, this hinges on how seriously each country is committed to trilateral integration and the operational concepts it intends to pursue. Given the existing alliance treaties between Japan and the United States, as well as between Australia and the United States, the only remaining link is the one between Japan and Australia. Since a formal alliance between the two countries is unlikely to be realised in the foreseeable future, other frameworks will be essential. In this context, Japan and Australia should finalise and release their Scope, Objectives, and Forms (SOF) — which outlines the strategic direction and practical dimensions of their bilateral cooperation — as soon as possible. Discussions on the SOF appear to have reached a milestone in September 2025, being described as having “identified directions” for further development.¹²⁰ However, much work remains to finalise the terms of the SOF before the framework can take effect. Doing so would clarify mutual expectations and requirements, laying the groundwork for more concrete collaboration. This will be particularly important when developing next-generation assets that would be produced in large numbers, such as CCAs and UUVs, as it would provide industry with clearer demand forecasts. In addition, all three countries should commit to implementing force development plans once they are announced to the greatest extent possible. Frequent course changes erode industry confidence and complicate cross-border coordination.

Success stories

Finally, the three countries should create visible success stories to encourage broader industry participation in trilateral defence cooperation. The Japan-Australia frigate program is a promising start, but it also carries significant risks, particularly related to workforce capacity. Labour shortages are a challenge not only for Japanese shipyards but are, if anything, even more severe in the United States and Australia.¹²¹ To build momentum and avoid these constraints, the three governments should consider starting with projects that are less labour-intensive than shipbuilding, such as missile production.

Australia is already pursuing the Guided Weapons and Explosive Ordnance enterprise.¹²² Still, aside from the Naval Strike Missile and Guided Multiple Launch Rocket Systems, it currently has no plans for licensed production of other missile systems.¹²³ Given that the three countries have committed to cooperating on long-range strikes and integrated air and missile defence, there is a clear opportunity to produce common long-range anti-ship and surface-to-air missiles through parallel supply chains.¹²⁴ Launching industrial cooperation in missile production, which demands fewer skilled labourers than shipbuilding and perhaps better job retention rates, due to a less intensive work environment, may offer a starting point that could yield faster results and meet mutually urgent capacity requirements in a key area.¹²⁵

Ultimately, governments cannot drive defence industrial cooperation on their own; industry must also be willing to play an active role and invest in their business. This requires AJUS governments to lower barriers to entry and create conditions where participation is commercially attractive. Only then will it be possible to build a truly integrated defence industrial base among the AJUS countries.

Conclusions and recommendations

Tom Corben
Research Fellow, Foreign Policy and Defence, United States Studies Centre

The three expert contributions and trilateral 1.5 workshop conducted in support of this publication suggest that policy practitioners in Australia, Japan and the United States are generally well-aligned in their thinking about the requirements of trilateral defence industry and technology cooperation. Even so, there is evidently much work for all three countries to do to address a range of technical, political, legal and cultural challenges to advancing this agenda, including aligning regulatory regimes, coordinating on acquisition reform and balancing indigenous industrial development with integration with allies. The findings below capture the main contours of this ongoing discussion, as well as other areas for further investigation.

1. A robust defence industry and technology agenda should be factored into trilateral defence cooperation as an essential condition for operationalising trilateral defence cooperation, not simply as an optional addition.

Such collaboration has firmed up as the central pivot point for US alliance modernisation efforts in the Indo-Pacific, not only as a means to offset US supply chain constraints and to supplement its defence innovation capabilities, but to address real operational challenges through creating regional repair and resupply options for allied forces.¹²⁶ Initiatives like AUKUS, DICAS and GWEO demonstrate that these maintenance and co-production efforts are of acute relevance to maximising the value proposition of force posture initiatives in Australia and Japan, in the interests of underwriting a more resilient collection military posture and, with it, a more favourable regional strategic balance. In that sense, policymakers must be cognisant of pursuing trilateral cooperation for its own sake and, in the first instance, should assess individual lines of effort vis-à-vis collective military operations. This will almost certainly require holistic consultation through the ministerial Trilateral Defence Consultations and, at the working level, potentially through a Joint Defence Industrial Council (JDIC).

2. In that context, Australia’s decision to select the Mogami-class frigate manufactured by Japan’s Mitsubishi Heavy Industries could generate additional momentum behind trilateral defence industrial and technology cooperation.

Beyond filling out a missing piece of the Australia-Japan Special Strategic Partnership, policy practitioners in all three countries believe that the Mogami frigate decision can and should open up plethora of pathways for trilateral collaboration across the full defence industrial spectrum. This may initially focus on federated maintenance and supply chain coordination in support of trilateral naval sustainment requirements. However, plans to equip Australian shipyards with the materials and data necessary to construct eight of the 11 planned vessel, along with Japan’s ambitions to double its shipyard capacity and a new US-Japan Memorandum on “aligning investment, procurement, workforce, and technology initiatives” with respect to shipbuilding,¹²⁷ could create opportunities for both junior allies to support the delivery of the United States' next frigate program. This would certainly be an attractive proposition if the Mogami comes to be a regarded as a viable replacement for the US Navy’s increasingly problematic Constellation-class program.¹²⁸

3. Along with cooperation on air and naval maintenance, AJUS should prioritise closer coordination on trilateral production for both long-range strike missiles and land-based and sea-based missile interceptors.

Such cooperation is a natural pathway given all three countries’ deep interest in expanding munitions production, the existence of formalised ordnance production initiatives including the Australia-US Guided Weapons and Explosive Ordnance (GWEO) and the munitions workstream under the US-Japan Defense Industrial Cooperation, Acquisition, and Sustainment Forum (DICAS), and the stated interest between Australia and Japan to cooperate on missile production.¹²⁹ Indeed, Tokyo has recently proposed expanding US-Japan air defence coproduction efforts to include the Standard Missile-6 interceptor at a time when ongoing funding for these items is uncertain,¹³⁰ while the ground-launched Precision Strike Missile has recently become an official cooperative program between Australia and the United States.¹³¹

Soldiers from the Australian Army, the Japan Ground Self-Defense Force and the US Army participated in Yama Sakura 89 in Japan, September 2025.Source: US Army

Trilateral cooperation on anti-ship cruise missile production figures as a prime candidate, particularly considering that large Australian and Japanese orders for US-made Tomahawk missiles must be delivered amid challenges associated with US operations in the Middle East and the lingering possibility of transfers to Ukraine.¹³² These efforts would need to overcome restrictions on technology sharing that have already inhibited PAC-3 co-production in Japan and slow-rolled progress on GWEO.¹³³ A trilateral strike production initiative could also consider the inclusion of Japan’s Type-12 anti-ship missile, particularly given their competitive price point vis-à-vis US alternatives, their use aboard Japan’s Mogami-class frigates, and considering recent live-fire demonstrations of land-based models from Australian test ranges (though missile model appears to be one of the few projected differences between Australian and Japanese frigates).¹³⁴ Growing interest in expanding coordination on rocket motor production between Australia and Japan, and parallel efforts in both countries’ alliances with the United States, to support collective munitions production requirements, suggests that this could be a viable pathway forward.¹³⁵

4. In parallel with discussions on maintenance and production, AJUS should also engage in harmonising industrial security requirements for these initiatives.

This should start with a trilateral discussion about export controls, considering AUKUS-inspired reforms to the US International Traffic in Arms (ITAR) and Export Administration Regulations (EAR) and to Australia’s own Defence Strategic Goods List (DSGL) last year, and impending reforms to Japan’s Three Principles on Transfer of Defense Equipment and Technology to facilitate greater defence trade. Indeed, Australian and Japanese analysts have noted that the creation of an AUKUS defence free trade area, while essential to that initiative’s success, could create complications in dealing with fourth parties like Japan without establishing project-specific regulatory ‘bubbles’.¹³⁶ While such bubbles may help to facilitate near-term cooperation, these will likely continue to privilege government-to-government forms of cooperation, and could complicate the creation of an incentive structure for commercial or dual-use companies from all three countries to work together on trilateral defence projects.

Beyond export controls, the three countries will also need to address coordination on cybersecurity standards, security clearances, information sharing, intellectual property and other industrial security issues.

Beyond export controls, the three countries will also need to address coordination on cybersecurity standards, security clearances, information sharing, intellectual property and other industrial security issues. Discussions on these topics are not yet fully resolved even within the trusted community of AUKUS,¹³⁷ and will likely become more complex as the Pentagon undergoes a significant review of its acquisition, cybersecurity, procurement and sales processes.¹³⁸ Harmonising protections for defence technologies, not simply the authorities to share them, will also be required to give government and commercial stakeholders in all three countries confidence in one another’s regimes, and to inculcate a culture that defaults to sharing rather than withholding sensitive information or technology. Setting up a forum for coordination on industrial security issues at an early stage would not only grease the wheels of industrial and technology cooperation through AJUS but could also have positive flow-on effects for Japan’s engagement with Australia and the United States on unmanned underwater systems through AUKUS.¹³⁹

5. Australia, Japan and the United States should factor one another into impending defence acquisition reforms, including with respect to setting project standards and requirements, to grease the wheels of trilateral cooperation on procurement and co-development.

Indeed, all three countries are pursuing ambitious procurement reform agendas. Since coming to office, the Trump administration has pursued a wholesale overhaul of US acquisition processes and foreign military sales (FMS) regulations,¹⁴⁰ intended to establish “speed to capability” as the Pentagon’s new “organizing principle” driven by a “commercial first” approach.¹⁴¹ Similarly, experienced voices in Australia’s defence community have called for “concrete steps to implement holistic reform of capability acquisition” in the interests of meeting Australian and allied operational requirements alike,¹⁴² actions the government has sought to capture in its Defence Industrial Development Strategy.¹⁴³ Likewise, the Japanese Government has pursued reforms to its contracting and procurement systems to streamline capability delivery timelines, but has continued to grapple with balancing speed to capability with lifecycle support and industrial base capacity, as well as a lack of access to the international defence market.¹⁴⁴ Industry stakeholders have already identified standards and procurement harmonisation as an essential condition for cooperation in the context of AUKUS,¹⁴⁵ another defence industrial and technology-oriented minilateral.

Though these efforts are and should be fundamentally driven by national requirements, factoring priority partners into acquisition reforms and future program designs should nevertheless be a major consideration for the AJUS partners. Indeed, the new consensus in all three countries on rapid capability development and delivery, including through prioritising commercially available technologies, should filter through the trilateral cooperation too, if the countries are serious about collaboration on unmanned platforms and hypersonic and counter-hypersonic systems. Synchronising reforms made at the national level, especially with respect to standards, will be necessary if trilateral defence projects are to avoid the sorts of cost and delivery pitfalls that have undercut major overseas defence acquisitions in all three countries, such as the Hunter-class and Constellation-class frigate programs, respectively.¹⁴⁶

This is especially true with respect to advanced capability development that seeks to access commercial and dual-use technologies — the sort that Australia, Japan and the United States are seeking to leverage in support of unmanned systems projects through AJUS and AUKUS Pillar II.¹⁴⁷ As a starting point, this could involve formulating what some leading US experts have referred to as a “roadmap” or “joint commercial development and acquisition model” for how the AJUS countries intend to pull good ideas from across the industrial spectrum through to capability, individually and together, including setting common operational requirements and technical specifications for certain joint projects at the outset.¹⁴⁸ Beyond simplifying military sales between the three countries, such a roadmap could also facilitate smoother co-development cooperation, something which should be of keen interest given the history of slow progress and imbalanced control over such projects at the bilateral level in the past.¹⁴⁹