Japan’s potential participation in advanced military capability projects with the United States, Britain and Australia under their AUKUS security pact could not only enhance Japanese capabilities, but also provide a new set of opportunities to boost the country's defense industry.

Although nothing has been formally decided, last week’s announcement that the three partners are weighing inviting Tokyo to join the pact’s second program, known as Pillar II, reflects how the group sees potential benefits in tapping Japan’s strong industrial and technological capacity at a time when Tokyo has identified boosting defense production as a key national security pillar.

The announcement did not propose Japan’s participation in the pact’s first pillar, which involves delivering nuclear-powered attack submarines to Australia. Instead, Tokyo’s contribution would center around developing and sharing advanced capabilities in areas such as hypersonics, anti-submarine warfare and cyberweapons, as well as quantum computing and artificial intelligence.

But while joining AUKUS would certainly have benefits for Japan, it would also come with challenges and risks.

Not only are there lingering concerns about Japan’s lack of strong cyberdefenses and tough rules for guarding secrets, Tokyo’s participation would likely also deteriorate its already tense relationship with Beijing, since the pact is widely seen as part of U.S.-led efforts to counter China's regional assertiveness.

Why Japan?

Japan is the first country to be formally considered for Pillar II, ahead of other U.S. allies, including Canada and New Zealand, the two other members of the “Five Eyes” intelligence alliance that also groups the United States, United Kingdom and Australia.

The consideration is officially based on the recognition of both Japan’s “strengths” and its close bilateral defense partnerships with AUKUS countries.

But other factors will also play a role in this and other prospective Pillar II partnerships. These include a country’s technological innovation level, its industrial strengths, its ability to adequately protect sensitive data and information, and its impact on promoting peace and stability in the Indo-Pacific region.

At the same time, the decision to consider Japan first goes beyond just these aspects.

“It's also about strategic alignment and the need to turn that consensus into tangible outputs,” said Tom Corben, a defense and foreign policy expert at the United States Studies Center in Sydney.

While countries like Canada, New Zealand and South Korea are all ostensibly aligned with the AUKUS partners, there have been questions as to the degree that they are not only able, but also willing to act in concert.

Tokyo has made significant strides recently to bolster defense cooperation with all three AUKUS countries, including through joint military exercises, force posture agreements, industrial integration, as well as defense tech projects for counterhypersonics, next-generation air combat capabilities and unmanned systems.

Prime Minister Fumio Kishida’s willingness to engage Japan in a growing number of U.S.-led regional security constructs has also given Tokyo a leg up, as it doubles down on its alliance with Washington and tie-ups with partners amid what it sees as an “increasingly severe” international security environment.

What can Japan contribute?

AUKUS consultations with Japan and other prospective partners are set to begin later this year to determine specific areas they can contribute to — and benefit from. The overall aim is to address near-term military challenges by delivering potentially game-changing capabilities on accelerated timelines.

In practice, the extent of the cooperation will not only depend on military requirements, but also on the nature of specific arrangements on issues such as intellectual property, classified information-sharing and defense export control licensing.

While it is too early to anticipate the effects of Japan's participation, Ryosuke Hanada, a researcher at Sydney’s Macquarie University, described efforts to involve the country in Pillar II as a “natural strategic choice.”

“From an industrial perspective, Japan can provide both the workforce and the resources needed for the production of intermediate materials for military or dual-use equipment," he wrote in a paper earlier this year.

If Japan joined the grouping, he wrote, its contribution would be that of a “force multiplier,” enhancing the trilateral defense industrial base and innovation ecosystems, particularly in the areas of air and missile defense, autonomous systems and maritime security.

That said, there remains the possibility that the expanded participation may only take place on a project-by-project basis.

Why is Japan only being ‘considered’ instead of ‘invited’?

Already a work in progress, AUKUS Pillar II has in recent weeks seen the launch of a series of collaborative initiatives such as the AUKUS Electronic Warfare Innovation Challenge, the Advanced Capabilities Industry Forum and a Defense Investors Network.

However, talks are still ongoing about the exact terms and objectives of any formal expansion, as key conditions for future cooperation, including regulatory harmonization, joint financing and procurement models, have yet to be fully set.

What are the obstacles to Japan’s participation?

Hurdles remain for Japan, with AUKUS countries encouraging Tokyo to do more to strengthen its cyberdefenses and take tougher steps to protect classified data.

The latest official to emphasize this was U.S. Deputy Secretary of State Kurt Campbell, one of the White House’s chief architects of its Indo-Pacific policy.

"It's fair to say that Japan has taken some of those steps, but not all of them," Campbell said earlier this month.

Tokyo has already made important strides in this direction. The government has pledged to beef up its cyberdefenses by increasing the number of cyberspecialists in the Self-Defense Forces to approximately 4,000 while also introducing a bill into parliament that would craft a new “security clearance” system.

But even with these measures, Japan will have its work cut out for itself.

“There is still some way to go before these measures are implemented or are of a standard that Australia, Britain and the U.S. would accept as being up to scratch with their own — and that is already a high bar,” Corben said.

At the same time, Japan’s rules on arms transfer remain restrictive, meaning Cabinet approval would be needed in any transfer of AUKUS-made products to third countries, Hanada noted, pointing out that Japan also needs stronger anti-espionage laws and agencies.

But that’s not all. In the case of defense export controls, AUKUS effectively creates two tiers: one tier for the member countries, and another for potential partners, including Japan.

Corben argues that for a number of reasons, Japan would probably not receive the same waivers for U.S. defense export controls that are likely to be granted to Australia and Britain over the coming months, at least not in the near term.

“Unless the AUKUS countries can agree on distinct project-specific waivers or legal carve-outs for Japan between them, I can see these sorts of measures — however well-intentioned — potentially impeding Japan's participation in any given AUKUS Pillar II project,” Corben said.

What are the other risks?

A reason for the strong emphasis on data security is that expanded cooperation provides a bigger attack surface for espionage, which may lead to critical data leaks, said Andrew Dowse, director of RAND Australia.

But there are other potential issues.

As with all developmental efforts, there are risks that emerging technologies won’t deliver to their full potential and that the associated costs may result in limited investments in other more proven defense initiatives, Dowse said.

Another risk, he added, is that the participants might not enjoy full access to the developed technologies or cannot export them where they desire to, which is why clarifying the cooperation conditions at an early stage will be critical.