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Japan Import Policies
Japan began the postwar period with heavy import
barriers.
Virtually all products were subject to government quotas,
many
faced high tariffs, and MITI had authority over the
allocation of
the foreign exchange that companies needed to pay for any
import.
These policies were justified at the time by the weakened
position
of Japanese industry and the country's chronic trade
deficits.
By the late 1950s, Japan's international trade had
regained its
prewar level, and its balance of payments displayed
sufficient
strength for its rigid protectionism to be increasingly
difficult
to justify. The IMF and GATT strongly pressured Japan to
free its
commerce and international payments system. Beginning in
the 1960s,
the government adopted a policy of gradual trade
liberalization,
easing import quotas, reducing tariff rates, freeing
transactions
in foreign exchange, and admitting foreign capital into
Japanese
industries, which continued through the 1980s.
The main impetus for change throughout has been
international
obligation, that is, response to foreign, rather than
domestic,
pressure. The result has been a prolonged, reluctant
process of
reducing barriers, which has frustrated many of Japan's
trading
partners.
Japan has been a participant in the major rounds of
tariffcutting negotiations under the GATT framework--the Kennedy
Round
completed in 1967, the Tokyo Round completed in 1979, and
the
Uruguay Round completed in 1993. As a result of these
agreements,
tariffs in Japan fell to a low level on average. Upon
complete
implementation of the Tokyo Round agreement, Japan had the
lowest
average tariff level among industrial countries--2.5
percent,
compared with 4.2 percent for the United States and 4.6
percent for
the European Union (known as the European Community before
November
1993).
Japan's quotas also dropped. From 490 items under quota
in
1962, Japan had only twenty-seven items under quota in the
mid1980s , and that number dropped again late in the decade to
twentytwo with further agreements scheduled to come into effect
in the
early 1990s, which would reduce the number again. But
those
products still under quota proved to be highly visible and
were the
object of complaints by exporting countries. The reduction
of
controlled items in the late 1980s resulted from Japan's
loss of a
GATT case brought by the United States concerning import
restrictions on twelve agricultural products. In addition,
heavy
pressure from the United States led to an agreement that
Japan
would end import quotas on beef and citrus fruit in 1991.
The one
restricted product that continues to prompt objections
from other
countries is rice, imports of which until 1994 were
prohibited.
Rice has traditionally been the mainstay of the Japanese
diet, and
farm organizations played upon the deep cultural
importance as a
reason for prohibiting imports. Farm organizations also
had a
disproportionate political voice because of the shift of
the
population to the cities without any significant
redistricting for
seats in the Diet
(see The Electoral System
, ch. 6).
Despite such
entrenched political and cultural opposition, foreign rice
gradually found its way into Japanese markets and even on
to the
emperor's dining table by 1994.
Despite Japan's rather good record on tariffs and
quotas, it
continued to be the target of complaints and pressure from
its
trading partners during the 1980s. Many complaints
revolved around
nontariff barriers other than quotas--standards, testing
procedures, government procurement, and other policy that
could be
used to restrain imports. These barriers, by their very
nature,
were often difficult to document, but complaints were
frequent.
In 1984 the United States government initiated
intensive talks
with Japan on four product areas: forest products,
telecommunications equipment and services, electronics,
and
pharmaceuticals and medical equipment. The Market Oriented
Sector
Selective (MOSS) talks were aimed at routing out all overt
and
informal barriers to imports in these areas. The
negotiations
lasted throughout 1985 and achieved modest success.
Supporting the view that Japanese markets remained
difficult to
penetrate, statistics showed that the level of
manufactured imports
in Japan as a share of the gross national product
(GNP--see Glossary)
was still far below the level in other developed
countries during the 1980s. Frustration with the modest
results of
the MOSS process and similar factors led to provisions in
the
United States Trade Act of 1988 aimed at Japan. Under the
"Super
301" provision, nations were to be named as unfair trading
partners
and specific products chosen for negotiation, as
appropriate, with
retaliation against the exports of these nations should
negotiations fail to provide satisfactory results. Japan
was named
an unfair trading nation in 1989, and negotiations began
on forest
products, supercomputers, and telecommunications
satellites
(see United States and Canada
, this ch.).
By the end of the 1980s, however, some internally
generated
changes in import policy appeared to be under way in
Japan. The
rapid appreciation of the yen after 1985, which made
imports more
attractive, stimulated a domestic debate over nontariff
barriers
and other structural features of the economy impeding
imports.
Greater openness in policies and structures began to be
sought in
response to domestic pressures rather than in response to
foreign
pressure and international obligation.
External pressure for change also increased when the
United
States initiated a series of bilateral talks in 1989
parallel to
negotiations under the "Super 301" provision. These new
talks,
known as the Structural Impediments Initiative, focused on
structural features in Japan that seemed to impede imports
in ways
outside the normal scope of trade negotiations. Issues
raised in
the Structural Impediments Initiative, and by the Japanese
themselves in domestic discussions, included the
distribution
system (in which manufacturers continued to have unusually
strong
control over wholesalers and retailers handling their
products,
inhibiting newcomers, especially foreign ones) and
investment
behavior that made it very difficult for foreign firms to
acquire
Japanese firms. These discussions highlighted some of the
fundamental differences in the Japanese and United States
economies, but how quickly change might result from the
talks is
unclear.
Data as of January 1994
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