The program is the biggest military procurement program in Australia’s history and could have a considerable impact on the Australian economy. The Australian Department of Defence has also identified ‘Australian industry involvement and interoperability with our alliance partner, the United States’ as important points of consideration in the evaluation process. These factors have made the project highly political. The Adelaide-based shipyard, the Australian Submarine Corporation (ASC), will be hugely impacted by whatever business the SEA1000 program brings. And a lack of substantial workshare for the ASC in the SEA1000 program will deliver a devastating blow to both it and the Adelaide region’s economy.

In the context of Australian politics, the huge potential economic impact of the SEA1000 program has generated a great deal of pressure on the Australian government to pick the proposal that offers meaningful workshare and technology transfer to Australia. This pressure has been so great that then prime minister Tony Abbott reversed his government’s initial position, which clearly preferred Japan’s Soryu-class submarines regardless of the amount of workshare or technology transfer to Australia.

The Japanese SEA1000 bid is important for Japan for two main reasons. First, this bid may be a critical litmus test that gauges how competitive Japanese defence industries are in foreign markets. Japan had to climb a steep learning curve throughout the bidding process — including appreciating the political nature of such a large scale defence acquisition program — as well as the desire of indigenous industry in Australia for workshare as well as technology transfer.

More importantly, the bid for SEA1000 is important for Japan in the overall context of deepening security ties with Australia. Although the goal of pursuing stronger security relations with Australia has enjoyed strong bipartisan support in Japan, Prime Minister Shinzo Abe has taken the relationship to new heights since he returned to office in December 2012.

His 2013 National Security Strategy identified Australia as an important security partner not only as a fellow US ally, but also as a regional partner that shares Japan’s key strategic interest in upholding an international order based on the fundamental norms that have underpinned the post-WWII world. Such norms include the rule of law, freedom of navigation and the non-use of coercive measures to assert diplomatic positions.

As the competitive evaluation process for the SEA1000 program draws to a close, some have begun to wonder about the potentially adverse effect on the security relationship between Tokyo and Canberra in the event that Japan’s proposal is not selected.

From the perspective of Japan’s defence industry, it would certainly be a big disappointment. In the months leading up to the submission of the proposal and the months that have followed, Japan has mounted an all-out national effort to push its proposal. The desire to win the bid was so strong that, in a reversal of its earlier position, Tokyo pledged to build the new submarines in Australia and to share its advanced software and engineering technologies with local industry. Since the establishment of the new Three Principles on the Transfer of Defense Equipment and Technology in April 2014, the Japanese government has been eager to set a precedent under these new guidelines.

Tokyo also hopes that a successful bid in Australia would help reassure those in the Japanese defence industry who are still ambivalent about the reforms by demonstrating in a tangible manner the economic benefit the new guidelines can bring. The failure of the bid would indeed serve as a convenient excuse for Japan’s defence industry to look inward again, reverting back to its old pattern of only looking to the Japan Self-Defense Forces as its customer.

But an unsuccessful Japanese bid would not change the reality that a deeper security partnership with Australia is in Japan’s interest. As Japan continues to implement its ‘proactive contributions to peace’, cooperation with Australia — an active participant in international efforts for peace and stability, including coalition operations and UN-mandated peacekeeping operations — remains critical.

With critical bilateral defence cooperation agreements — including the Acquisition and Cross-Service Agreement (ACSA), the General Security of Military Information Agreement (GSOMIA) and the Defence Equipment and Technology Cooperation agreement — now all in place, the security relations between Australia and Japan have a resilience that can endure these disappointments. What often goes unappreciated, particularly in Japan, is the fact that much of the efforts for the institutionalisation of the relationship predates the Abe–Abbott honeymoon period. A case in point: both ACSA and GSOMIA were signed under Abe’s predecessor Yoshihiko Noda and Abbott’s predecessor Julia Gillard, whose political parties are both currently in opposition.

So will it be a disappointment for Japan if it does not win the pending submarine bid? Absolutely. Will it affect Japan’s perception of Australia so much that Tokyo begins to reassess its security relationship with Canberra? If the progress in the relationship in the last several years is any guide, bilateral security relations have already progressed beyond that.

Yuki Tatsumi is Senior Associate of the East Asia Program at The Stimson Center, Washington, D.C.