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