JDA Director General Yoshinori Ono told a news conference in Tokyo that the Japanese and U.S. governments concluded a memorandum of understanding in March this year for the licensed production arrangement.

The deal marks a striking achievement for Prime Minister Junichiro Koizumi who has long been an enthusiastic advocate both of deepening U.S.-Japanese defense ties and of beefing up Japan's military-industrial and high-tech base. Koizumi is also a champion of developing world class ballistic missile defense capabilities for the densely populated island nation of 120 million people as quickly as possible.

The deal will not come cheaply for Japan and is a welcome boost for the prime U.S. contractor Lockheed Martin. The costs of developing the massive industrial and technological infrastructure needed to make the PAC-3s in Japan will be vastly greater than if the Defense Agency bought them off the shelf from the United States.

However, Koizumi, ever the visionary, wants use the deal to establish the foundation for an independent Japanese ABM production capability. And Ono defended the agreement on the ground that the long-term costs, including upkeep, of the Patriot missile batteries would be less. The program would also be a huge boost to Japan's own missile production technologies, he said.

Although Ono tactfully did not say it, Japan's once ambitious space and missile programs have long languished with engineering problems and clearly needed a shot in the arm.

"Licensed production would secure Japan's technological and production bases. The cost will be higher in the short-term, but when we think about the costs of inviting technicians from the United States for maintenance and repair, it would balance out in the long run," Ono said.

According to Kyodo News, Japan's Mitsubishi Heavy Industries is expected to conclude a contract with Lockheed Martin by March 2006 to produce the PAC-3 surface-to-air missiles domestically for deployment starting fiscal 2008.

Japan plans to deploy an anti-missile shield consisting of the land-based PAC-3 as well as the seaborne Standard Missile-3 (SM-3), which intercepts ballistic missiles when they reach their highest point outside the atmosphere.

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