Did the FAA and EASA move the goalposts after the design of the jet was finalised and prototype production commenced? I would have assumed that the designers would have known what the FAA and EASA requirements were and these would have been designed into the plane from the get-go?
Not suggesting that the goalposts were moved to deliberately stop the Japanese.
The program had been in development for 15 years in various iterations. That made it unlikely that production & sales would ever recover the costs.
FAA and EASA did have regulation changes that went into effect during this time, specifically with regard to EWIS (wiring). The jet began it's design life under Japanese certification requirements, then expanded to include the US scope clause and FAA/EASA requirements after much of the work had been done.
The problem this presents is in the level of certification documentation that is required by FAA/EASA, which must begin at the earliest design stages. If you take an existing design and then go back through it to develop the documentation, you encounter numerous instances of non-compliance and incomplete information. To remedy all of them can require extensive redesign, which then may invalidate the other certification and testing work already performed.
You can see how this can snowball into basically starting the entire process over, which means repeating all those costs again. At some point it becomes untenable.
This is why the Chinese initially had hoped to certify the C919 with FAA/EASA, but eventually gave up. They will try again in the next development effort. But China has a large enough domestic market to support the aircraft with only Chinese certification, whereas Japan does not.
This points also to why the costs for adding CAS to the 737 were so high. It would require a complete redesign of EWIS, which would trigger numerous recertification issues, and large costs.
Many people think aircraft certification is a formality, but it's actually a huge component of the design process, that informs every aspect of design. The two activities can't really be separated.
Cobham found this out when the USAF requested civilian transport certification for their refueling systems, in the KC-46. That has dragged on for years, even though the equipment is used by militaries all over the world. When you introduce civilian type certification, it's a whole different universe.