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Japan United States and Canada
The United States has been Japan's largest economic
partner,
taking 31.5 percent of its exports, supplying 22.3 percent
of its
imports, and accounting for 45.9 percent of its direct
investment
abroad in 1990.
Japan's imports from the United States included both
raw
materials and manufactured goods. United States
agricultural
products were a leading import in 1990 (US$8.5 billion as
measured
by United States export statistics), made up of meat
(US$1.5
billion), fish (US$1.8 million), grains (US$2.4 billion),
and
soybeans (US$8.8 billion). Imports of manufactured goods
were
mainly in the category of machinery and transportation
equipment,
rather than consumer goods. In 1990 Japan imported US$11.1
billion
of machinery from the United States, of which computers
and
computer parts (US$3.6 billion) formed the largest single
component. In the category of transportation equipment,
Japan
imported US$3.3 billion of aircraft and parts (automobiles
and
parts accounted for only US$1.8 billion).
Japan's exports to the United States were almost
entirely
manufactured goods. Automobiles were by far the largest
single
category, amounting to US$21.5 billion in 1990, or 24
percent of
total Japanese exports to the United States. Automotive
parts
accounted for another US$10.7 billion. Other major items
were
office machinery (including computers), which totaled
US$8.6
billion in 1990, telecommunications equipment (US$4.1
billion) and
power-generating machinery (US$451 million).
From the mid-1960s, the trade balance has been in
Japan's
favor. According to Japanese data, its surplus with the
United
States grew from US$380 million in 1970 to nearly US$48
billion in
1988, declining to approximately US$38 billion in 1990.
United
States data on the trade relationship (which differ
slightly
because each nation includes transportation costs on the
import
side but not the export side) also show a rapid
deterioration of
the imbalance in the 1980s, from a Japanese surplus of
US$10
billion in 1980 to one of US$60 billion in 1987, with an
improvement to one of US$37.7 billion in 1990.
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. The
United
States had pressured Japan to open its markets since the
early
1960s, but the intensity of the pressure increased through
the
1970s and 1980s.
Tensions were exacerbated by issues specific to
particular
industries perhaps more than by the trade imbalance in
general.
Beginning with textiles in the 1950s, a number of Japanese
exports
to the United States were subject to opposition from
United States
industry. These complaints generally alleged unfair
trading
practices, such as dumping (selling at a lower cost than
at home,
or selling below the cost of production) and patent
infringement.
The result of negotiations was often Japan's agreement
"voluntarily" to restrain exports to the United States.
Such
agreements applied to a number of products, including
color
television sets in the late 1970s and automobiles in the
1980s.
Some innovative approaches emerged in the 1980s as
United
States companies strove to achieve greater access to
Japanese
markets. MOSS negotiations in 1985 addressed access
problems
related to four industries: forest products,
pharmaceuticals and
medical equipment, electronics, and telecommunications
equipment
and services.
Problems of access to Japanese markets were among the
motivations for the United States Trade Act of 1988, which
included
a provision calling on the president to identify unfair
trading
partners of the United States and to specify products for
negotiation with these countries. In the spring of 1989,
Japan was
named as an unfair trading partner under this provision
and three
areas--forest products, telecommunications satellites, and
supercomputers--were selected for negotiations. This
action
exemplified the continuing mood of dissatisfaction over
access to
Japanese markets at the end of the decade
(see Import Policies
, this ch.).
At the same time, the United States initiated broad
talks
concerning the structural factors inhibiting manufactured
imports
in Japan, in the Structural Impediments Initiative. These
talks
addressed such areas as the law restraining the growth of
large
discount store chains in Japan, weak antitrust law
enforcement,
land taxation that encouraged inefficient farming, and
high real
estate prices.
As elsewhere, Japan's direct investment in the United
States
expanded rapidly and is an important new dimension in the
countries' relationship. The total value of cumulative
investments
of this kind was US$8.7 billion in 1980. By 1990 it had
grown to
US$83.1 billion. United States data identified Japan as
the second
largest investor in the United States; it had about half
the value
of investments of Britain, but more than those of the
Netherlands,
Canada, or West Germany. Much of Japan's investment in the
United
States in the late 1980s was in the commercial sector,
providing
the basis for distribution and sale of Japanese exports to
the
United States. Wholesale and retail distribution accounted
for 32.2
percent of all Japanese investments in the United States
in 1990,
while manufacturing accounted for 20.6 percent. Real
estate became
a popular investment during the 1980s, with cumulative
investments
rising to US$15.2 billion by 1988, or 18.4 percent of
total direct
investment in the United States.
Japan's balance of trade with Canada tends to be in
deficit
because Canada is a supplier of raw materials to Japan. In
1990
Canada was the destination for 2.3 percent of Japan's
exports and
the source of 3.6 percent of its imports. Canada is a
major
supplier of food (particularly wheat), wood and wood pulp,
and
coal. Japan's deficit with Canada in 1990 was US$1.6
billion.
Data as of January 1994
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