Public Perceptions of U.S.-Japan Trade Relations in the 1990s

By Enomoto, Carl E.; Chinen, Kenichiro | Multinational Business Review, Spring 2001 | Go to article overview

Public Perceptions of U.S.-Japan Trade Relations in the 1990s


Enomoto, Carl E., Chinen, Kenichiro, Multinational Business Review


Arguments are made that Japan's markets are very closed to U.S. goods while U.S. markets are very open to Japanese goods. In part, these arguments arise from the fact that the U.S. has had a large and growing trade deficit with Japan. The Bush and Clinton administrations have attempted to reduce this problem with different initiatives that have had limited success. The purpose of this paper is to determine how American perceptions towards Japan have changed over time with different trade strategies being negotiated from 1993 to 1996. This study concludes that both countries need to take steps to eliminate trade barriers, open up markets, and promote free trade, for both to gain in the years ahead.

INTRODUCTION

From 1990 to 1999, the United States continued to experience trade deficits with its third largest trading partner, Japan. These figures are reported in tables 1 and 2. In October of 1999, the year-to-date U.S. trade deficit with Japan was $60,587.83 million; the largest U.S. trade deficit with a single country. The second largest yearto-date U.S. trade deficit for October of 1999 was with China and was equal to $56,571.57 million. These figures have led to considerable debate over U.S.-Japan trade policies and have often been the source of hostilities between U.S. and Japanese producers. Many U.S. businesses who compete with Japanese products would favor a more restrictive policy on U.S. imports of Japanese goods, while U.S. exporters of pharmaceuticals, certain agricultural products, automobiles, cosmetics, and other products, complain about Japan's restrictive policies towards imports. U.S, and Japanese consumers stand to gain the most from free trade; a wide variety of products, competitively priced. The purpose of this paper is to examine recent U.S.Japan trade policies and analyze public perceptions in the U.S. of trade relations with Japan. If an overwhelming majority of Americans perceive that trade relations are deteriorating between the two nations or that unfair trade practices are being engaged in, changes in existing policies may be called for. By taking steps to promote cooperation and mutual respect, the U.S. and Japan can set the standard for the management of global affairs in the future. The outline of this paper is as follows. First, a brief review of the arguments for the existing trade imbalances will be given, followed by trade policies initiated by the Bush and Clinton administrations towards Japan. Second, the results of two U.S. surveys, one given in 1993 and the other in 1996, will be presented and compared where possible. The last section will contain a summary of the results.

Review of the Literature

Some factors that have been cited as sources of U.S. trade deficits with Japan include high U.S. budget deficits, a strong U.S. dollar, growing U.S. incomes, a low U.S. savings rate, and a Japanese recession. Trade barriers and Japanese business practices have also been cited.

In a report by the Japan Economic Institute of America, Inc. (1988), it was noted that there does exist several nontariff barriers and practices that should be addressed in Japan. In some cases the Japanese government has set standards that have led to the exclusion of American imports into Japan. The report cited that after Japan imposed a safety design standard on baseball bats, American-made metal baseball bats were basically eliminated from the Japanese market.

Another example of a barrier to American products includes an abundance of required documentation and lengthy delays at Japanese customs. This is particularly harmful if the shipment contains perishable items. Once the U.S. shipment passes through Japanese customs, U.S. exporters then face the difficult task of gaining access to distribution channels within Japan. Japanese distributors often prefer to work with Japanese companies that they have become accustomed to working with and are at times, reluctant to enter into new relationships with a U. …

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