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Japanese-American Trade Relations Essay

It is necessary to outline that nowadays relations between the United States of America and Japan are claimed to be very close trade and economic cooperation, as well as great cultural proliferation. Japanese-American economic relations affect economic growth and development of both countries making them more powerful on the global scale. Actually, for many years the United States of America have been the largest economic and trade partner of Japan. In particular, America takes about 32% of Japanese export and supplies about 23% of Japanese import.

Furthermore, the United States of America account more than 45% of Japanese direct investment abroad during the 1990s. According to statistics, in 2004 America took up 22. 7% of Japanese export and 14% of Japanese export, whereas the rest was picked up by China providing 20. 7% of American import. (Strauss 1996) Nowadays, the United States export to Japan various manufactured goods and raw materials. In 1990s the country was a leading importer of agricultural products.

According to the United States statistics, the country exported $8. 5: $1.5 billion was made up of met, $1. 8 billion of fish, $2. 4 billion of grains and, finally, $8. 8 billion of soybeans. As to manufactured goods, America exported to Japan mainly machinery and transportation equipments, whereas little attention was paid to exporting consumer goods because China was leading in this field. During 1990s The United States improved their trade relations with Japan and exported $11. 1 billion of machinery, especially computers and related computer parts – $3. 6 billions Export of computer parts formed the largest single component.

Japan also imported transportation equipment – $3. 3 billion of aircraft and automobile pats accounted for about $1. 8 billion. (Strauss 1996) The next moment to mention is that Japan exports to the United States of America entirely manufactured goods. The largest single category is automobile parts accounted for about $21. 5 billion in 1990. It was 24% of total Japanese export to America. Automobile parts in 1990 accounted for $10. 7 billion.

The other export items are office machinery including computers and computer parts accounted in 1990 $8.6 billion. Japan also initiated export of telecommunication equipment accounting for about $4. 1 billion annually and power-generating machinery accounting $451 billion relatively. (Strauss 1996) Nevertheless, it is necessary to underline that since 1960 the trade relations between countries has been mostly in favor of Japanese trade. Japanese statistics claim that surplus with the United States of America has grown from $380 million in 1970s up to $48 billion, though the growth declined to about $38 billion on the middle of 1990s.

According to official data in the United States of America, the trade relations between countries has shown swift deterioration and caused imbalance in the 1980. However, official statistics differs slightly because both Japan and America included transportation costs depending on import instead of export side. The United States stated that Japanese surplus was $10 billion in 1980, whereas in 1987 in was increased up to $60 billion. Later, in 1990s the situation improved up to $37. 7 billion in favor of American trade. (Strauss 1996)

One researcher notes that “the general deterioration and the very modest improvement in the trade balance after the yen rose in value after 1985, contributed greatly to strained economic relations”. (Barnhart 1995) The situation changed when the United States decided to pressure Japan to make its markets open and free for new foreign entrants since 1960s and the intensity was on the peak during 1970-1980s. Nevertheless, it is argued that pressures and tensions were exaggerated mostly by specific industries rather than by trade imbalance in general.

Since 1950s Japanese export of textile to America was strongly opposed and prevented by the United States industries. As the result lots of controversies alleged unfair trade relations and practices such as, for example, dumping meaning that products were sold at a lower price that at domestic markets – products were sold below the production costs. Constrained trade relations caused also patent infringement meaning that during the negotiation between Japan and the United States, American government forced Japan to voluntarily restrain exports to the country.

Actually, restrains were applied to a number of products such as, for example, color televisions and automobiles during the late 1970s and early 1980s. During this period trade relations were worsen because of import barriers and artificial limitations of market share of the American firms who was selling in Japan. However, in 1986 a new agreement was signed which allowed Japan to increase their export prices and to increase the United States share of the Japanese market. (Strauss 1996)

The critical point was complaints of the United States that Japan had failed to carry out obligations noted in the trade agreement and, as the result, retaliation imposed 100% tariffs on Japanese export. Consequently, significant rise in export prices led to partial elimination of the sanctions, but some sanctions remained till the United States market share in Japan increased. Researchers think that such episode was very controversial, especially countries should bother about specifying acceptable market share of the American manufactured goods in Japan.

(Barnhart 1995) Slight improvement in Japanese-American trade relations was observed during the period of 1970-1908s when administrations of the Unites states decided to initiate negotiations in order to find new approach to resolve trade disputes with Japan. The found approach significantly limited the disputable areas. Nevertheless, that approach caused widespread negative publicity and because of instable economic and security conditions both countries were forced to re-evaluate and re-think their trade agreements.

Researchers write that “notable outpourings of the United States congressional and media rhetoric critical of Japan accompanied the disclosure in 1987 that Toshiba has illegally sold sophisticated machinery of United States origin to the Soviet Union, which reportedly allowed Moscow to make submarines quiet enough to avoid United states detection, and the United States congressional debate in 1989 over the Japan-United States agreement to develop a new fighter aircraft for the Japan Air Self-Defense Force”.

(Pyle 1992) One more negative moment of Japanese-American relations was Nixon Shock. In 1971 US President Nixon decides to visit the People’s Republic of China with the purpose to initiate normalization of economic relations between countries. However, the United States didn’t inform Japan, their closest ally in East Asia, about their intentions prior to announcement. Such ignorance is known in Japan as Nixon Shock. Nixon’s motivation wasn’t to isolate Japan.

Instead, he wanted to make relations with China friendlier and warmer within the context of Cold War with the USSR. Nevertheless, Prime Minister of Japan suggested that the United States were rather afraid of stable Japan positions in Asia. Japanese public asserted that the United States were willing to weaken country’s secure positions and to exploit comfortable relations between two countries ignoring the interests of Japan. (Strauss 1996)

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