1998 Reports

A perspective on Japanese trade policy and Japan-US trade friction

Flath, David

In spite of Japan's full participation in multilateral tariff reductions, it frequently has been embroiled in contentious trade disputes with the United States. Before 1980, most of the friction was generated by U.S. industries seeking protection from Japanese imports, including textiles, steel, televisions, and automobiles. All of the cases just mentioned, and others, were ultimately settled when the government of Japan agreed to voluntarily restrain exports of the disputed items. By the mid-1980's, a substantial fraction of Japan's exports to the United States were subject to Japanese government restraints. Nevertheless, protectionist pressures in the U.S. seemed to grow rather than dissipate. To counterbalance the protectionist pressure, American politicians and government officials attempted to shift the focus of U.S. trade policy, away from Japanese imports and towards expanded sales of U.S. products to Japan, particularly in closed or regulated markets there. In a succession of bilateral negotiations since 1985, the U.S. government has demanded and obtained, under threats of retaliation, many Japanese concessions benefitting American exporters to Japan. The beneficiaries of this policy include American exporters of semiconductors, beef, oranges, wood products, insurance, telecommunications, auto parts, and other items. Through it all, Japan has only rarely lodged official protests against the trade policies or practices of the U.S.. From the onesidedness of the complaints, one might think that Japan-U.S. trade friction really is about Japan's "unfair" practices and "closed" markets. It is not. It is about how best to deal with, or deflect, the protectionist response in the U.S. to expanded Japanese exports.