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Japan FOREIGN TRADE POLICIES
Export Policies
For many years, export promotion was a large issue in
Japanese
government policy. Government officials recognized that
Japan
needed to import to grow and develop, and it needed to
generate
exports to pay for those imports. After the war, Japan had
difficulty exporting enough to pay for its imports until
the mid1960s , and resulting deficits were the justification for
export
promotion programs and import restrictions.
The belief in the need to promote exports is strong and
part of
Japan's self-image as a "processing nation." A processing
nation
must import raw materials but is able to pay for the
imports by
adding value to them and exporting some of the output.
Nations grow
stronger economically by moving up the industrial ladder
to produce
products with greater value added to the basic inputs.
Rather than
letting markets accomplish this movement on their own, the
Japanese
government feels the economy should be guided in this
direction
through industrial policy.
Japan's methods of promoting exports has taken two
paths. The
first was to develop world-class industries that can
initially
substitute for imports and then compete in international
markets.
The second was to provide incentives for firms to export.
During the first two decades after World War II, export
incentives took the form of a combination of tax relief
and
government assistance to build export industries. After
joining the
IMF in 1964, however, Japan had to drop its major export
incentive-
-the total exemption of export income from taxes--to
comply with
IMF procedures. It did maintain into the 1970s, however,
special
tax treatment of costs for market development and export
promotion.
Once chronic trade deficits came to an end in the
mid-1960s,
the need for export promotion policies diminished.
Virtually all
export tax incentives were eliminated over the course of
the 1970s.
Even JETRO, whose initial function is to assist smaller
firms with
overseas marketing, saw its role shift toward import
promotion and
other activities. In the 1980s, Japan continued to use
industrial
policy to promote the growth of new, more sophisticated
industries,
but direct export promotion measures were no longer part
of the
policy package.
The 1970s and 1980s saw the emergence of policies to
restrain
exports in certain industries. The great success of some
Japanese
export industries created a backlash in other countries,
either
because of their success per se or because of allegations
of unfair
competitive practices. Under GATT guidelines, nations have
been
reluctant to raise tariffs or impose import quotas. Quotas
violate
the guidelines, and raising tariffs goes against the
general trend
among industrial nations. Instead, they have resorted to
convincing
the exporting country to "voluntarily" restrain exports of
the
offending product. In the 1980s, Japan was quite willing
to carry
out such export restraints. Among Japan's exports to the
United
States, steel, color television sets, and automobiles all
were
subject to such restraints at various times.
Data as of January 1994
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