Japan is set to design a nose cone for an interceptor missile in its joint project with the U.S. to develop a ballistic missile defense system, sources said.

The two nations are expected to decide on the matter soon and include it in a joint-development agreement that will include a list of the areas each side will head and those on which they will cooperate, the sources said Wednesday.

The two countries hope to conclude the agreement by the end of the year, they said.

The project involves a larger, upgraded version of the Standard Missile-3 interceptor that will be deployed on Aegis warships to shoot down ballistic missiles.

Japan and the U.S. will test Japanese technology in a joint flight test of a conventional SM-3 interceptor off Hawaii, the sources said.

The nose cone is an essential component to protect sensors and other devices on the interceptor and must come off in the final stage of the interception of a ballistic missile. Japan has developed so-called clamshell technology, which makes the nose cone split in two and break off the missile.