By Sachiko Sakamaki – Jul 26, 2010

A Japanese government panel will propose shifting defense policy to allow the transportation of U.S. nuclear weapons within the country and lift a ban on arms exports, the Asahi newspaper reported today.

The recommendations, in response to threats from North Korea and the rise of Chinese military spending, will be submitted to Prime Minister Naoto Kan next month. The panel recommends boosting Japan’s submarine capabilities as Chinese naval vessels are active in the area, the Asahi said, citing a draft of the proposal.

Kan’s government by December will update national defense guidelines based on the recommendations of the panel, headed by Keihan Electric Railway chief executive Shigetaka Sato. Other recommendations include allowing joint weapons development with other countries besides the U.S., the paper said.

Implementing the proposals would mark a shift away from Japan’s three anti-nuclear principles of never developing, possessing or permitting nuclear weapons on its soil. The principles were adopted after World War II, which ended with the U.S. atomic bombings of Hiroshima and Nagasaki. Japan has also barred the export of weapons since 1976.

Japan in March confirmed the existence of long-denied Cold War agreements that permitted U.S. nuclear-armed warships to visit the country’s ports. The U.S. provides for Japan’s security under a 1960 bilateral treaty, and almost 50,000 American troops are stationed on Japanese soil.

To contact the reporter on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net