WE are currently on the verge of a trade war with Japan. This
conflict is the direct result of 40 years of failed trade policies
and the inability or unwillingness of Japan to open up its domestic
markets. Over the past decade, the United States merchandise trade
deficit with Japan has ballooned to record proportions, with no
relief in sight. It is now time to move beyond the failed "managed
trade" negotiations of the past and push toward a new policy that
will take advantage of the comparative economic strengths of both
In 1987, then US Ambassador to Japan Mike Mansfield called for
the establishment of a US-Japan free trade agreement to
depoliticize trade issues and improve the economic relationship
between two of the world's economic superpowers. This "bold" idea
immediately captured the attention of businesses and politicians
around the globe. Leaders in both countries called for studies on
the advantages and disadvantages of free trade discussions.
Unfortunately, free trade momentum quickly evaporated into the
fog of protectionist rhetoric and political one-upmanship. Congress
rejected the concept of free and fair trade, preferring instead to
wallow in the degenerative status quo.
Recent congressional trade legislation has continued to rely on
confrontation and retaliation, as represented by the 1988 Omnibus
Trade Act and the so-called Trade Expansion Act of 1992.
The future calls for a new vision of trade freedom. Domestic and
global conditions that made US-Japan free trade negotiations
somewhat tepid in the 1980s have now been dramatically transformed.
Efforts to produce a multilateral trade agreement in Uruguay (as
part of GATT) have largely failed, and global trade has begun a
rapid devolution into regional trading blocs.
Europe, Asia, and the Americas have each developed a
regional-exclusive trading relationship which, if unchecked,
threatens to destroy international trading diversity and economic
interdependence. Establishing permanent free trade with Japan is
necessary to maintain our economic ties to one of the globe's
strongest developing regions.
For the US, the primary benefit of free trade with Japan is
unlimited access to a relatively untapped market of 124 million
Japanese consumers. While Japan has the third largest economy in
the world, Japanese private consumption ranks near the bottom in
the industrialized world, according to a 1991 Organization for
Economic Cooperation and Development (OECD) survey. In fact, Japan
spends only 8 percent of its total gross national product on
imports, a percentage far below the 19 percent average among major
OECD countries. …