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As 2020 draws to a close, it appears likely that Japan and the United States will not reach an agreement by the end of this fiscal year — March 31, when the current deal expires — on how much Tokyo will spend over the next five years to host American troops.

The coronavirus delayed discussions, and Japan wants to continue long-term negotiations with U.S. President-elect Joe Biden’s administration after he takes office in January. In the interim, the Japanese government will likely approve a one year budget, roughly the same as this year’s amount.

What is host nation support and why is it needed?

In January 1960, Japan and the U.S. signed a security treaty that committed the U.S. to defending Japan in case of attack but did not obligate Japan to come to the defense of the U.S. The two sides also signed a Status of Forces Agreement that spelled out Japan’s responsibilities for hosting U.S. military bases. At the time, that meant merely providing facilities and land areas for use.

However, in later decades, the yen’s rise against the dollar meant it became more expensive for the U.S. to maintain forces in Japan and pressure was placed on Tokyo to help out. In 1978, Japan agreed to provide more money, especially for social welfare costs related to Japanese employees working at U.S. military facilities. Senior Japanese officials referred to the funds as a “sympathy budget” provided in response to U.S. government requests for more funding. The U.S. did not like the term, and though it is still used by some today, it is officially known as host nation support.

Before 1987, host nation support was essentially provided on an ad hoc basis. In 1987, it was agreed to formally establish the support through a series of special measure agreements (SMAs). These established longer-term precedents for the kind of expenses that Japan would undertake and expanded Japanese support.

What have past host nation support SMAs looked like?

The current and previous agreement, which ran from fiscal 2011 to fiscal 2015, were for five-year periods. They listed categories of expenses the Japanese government would take care of, including an expansion in areas such as labor and welfare costs for Japanese people employed by the U.S. armed forces.

The current fiscal 2016-20 agreement calls on Japan to pay hourly and daily wages, as well as different kinds of allowances to Japanese employees depending on the nature of their work. Under the agreement, Japan is paying 100% of the salaries of Japanese workers on U.S. bases, with an upper limit of about 23,178 employees to be covered.

In addition, about 61% of annual utility costs and roughly 75% of training relocation costs are being covered by Japan.

What is the state of current negotiations?

Under the fiscal 2011-2015 agreement, Japan paid ¥188 billion annually, and under the fiscal 2016-2020 agreement, that amount increased to about ¥200 billion annually.

In the fiscal 2020 budget, ¥199 billion will be spent on host nation support. This includes ¥128.7 billion on civilian labor costs and ¥22.3 billion on utility costs for U.S. bases, family housing and recreational facilities. Another ¥26 billion goes on social security payments, and about ¥21 billion will be spent on facility maintenance.

For fiscal 2021, the Defense Ministry’s proposed budget includes a host nation support request for just under ¥203 billion. However, it appears unlikely that the current round of negotiations will produce another five-year agreement before the end of this year, when the next fiscal year budget proposal needs to be finalized.

This is because the U.S. has pushed Japan to increase the amount of money it spends on hosting U.S. troops. Pressure by U.S. President Donald Trump to pay more had been particularly strong. According to former U.S. National Security Advisor John Bolton’s memoirs, Trump considered asking Japan to pay four times that annual amount beginning next year, and suggested withdrawing U.S. troops as a negotiating ploy.

But with Trump having lost the election and time running out to strike a deal, the Japanese government is looking at a one-year extension of the current ¥200 billion per year agreement.

Faced with rising social security costs due to a graying, declining population and the economic damage due to the coronavirus, Japan’s negotiation strategy has been to try to convince the U.S. it doesn’t need to drastically increase the host nation support budget because it is contributing elsewhere, including paying some of the costs to relocate 4,000 U.S. Marines from Okinawa Prefecture to Guam. Last month, Foreign Minister Toshimitsu Motegi touched on Japan’s cooperation with the U.S. in space, cybersecurity and regional security.

In terms of a possible longer-term host nation support agreement for specific annual amounts, however, Japan’s strategy is to negotiate that after Biden takes office.

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