The US and Japan: Old Rivals, New Issues?


© Carey Goodman
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"If the Japanese don't want to buy our cellular telephones, fine, they shouldn't have to. The United States can't talk about free trade on the one hand and force other countries into buying products because we don't like their rules". - Former US House Minority Whip (later Speaker) Newt Gingrich (June 1994).

Emerging Asian economic strength causes tremendous controversy for American foreign policy. If applied, some arguments intended to promote free trade would actually result in protectionist policies. Supporters of multilateral organizations such as the WTO often stand accused of "selling out" American industry for the sake of removing trade barriers. Then there are some theorists who argue in cultural terms and blame Western imperialism for all Asia's troubles. These advocates do not acknowledge that many Asian states now enjoy strong industry, well developed resources, democratic-oriented governments, and educational opportunities because of their colonial legacies. The free market knows no cultural or class distinctions. This is one of its best attributes. Not all Asian states are free markets, but most governments strive towards that goal. Consider the example of Japan.

It is no secret that since the late 1970s when US manufacturers realized global competition would harm them, the US government has applied a detrimental trade policy towards Japan. When Japanese and German manufacturers undertook the vast initiative to rival American industries, Americans (particularly in the electronics and automobile industries) wrongly assumed they would always hold the lead. Rather than ensuring they could compete on fair terms in all markets, they blamed low cost foreign labor for their declining status. Rather than collective responsibility and diligent efforts to reinvigorate their workers, they whined about job protection and expected a strong interventionist response from the US government. Non-intervention prevailed; US manufacturers were forced into the sink-or-swim style of international free markets.

During the next decade many sank. By the early 1990s the whining and anti-Japanese sentiment returned. Americans were upset that they bought more Japanese products than Japanese bought American products. In 1993 Clinton administration trade representative Mickey Canter declared that the US sought an "even playing field" with Japan to rectify the mounting trade deficit. But it is typical competitive and capitalist practice that consumers will purchase the best quality item at the most rational price. To suggest that Japanese consumers should suddenly start purchasing American cell phones, cars, and other products is an assertion which contradicts market logic. The idea of the level playing field is a very nice theory. Balanced trade and multilateral tariff cuts are lofty goals. Since the 1950s Japan has applied very consistent and successful trade policies. Given the dollar/yen fluctuation, the lack of a semblance of monetarism only serves to impede reduction of lingering barriers.

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