The Political Economy Of Japanese Trade Policy

This study provides up-to-date coverage of the most important domestic and external political and economic influences on Japanese trade policy, as well as the evolutionary dynamics of that policy in the post-war period.

David Ricardo's law of comparative advantage and his finding that free trade increases the wealth of all participating nations is one of the very few economic laws which is accepted by almost all economists. But economic reason and economic policy do not always follow the same path. This especially applies to trade policies. A substantial and growing part of trade between Japan, Europe and the US does not follow the principles of free trade, but is more accurately managed trade. The management of international trade, international trade negotiations, and the political dynamics of trade conflicts create a complex reality which follows its own laws without regard to economic policy prescriptions. This political-economic reality was the subject of the conference 'The Political Economy of Trade Conflicts' organizedjoindy by the German Institute for Japanese Studies and the Friedrich-Ebert-Foundation together with the Institute of Modern Political Science and Economics of Waseda University in December 1993. We present the results of the conference in this reader. Three issues were of special importance: the US-Japanese conflict over the reduction of trade imbalances via quantitative import targets; the liberalization of trade in agricultural products, especially the opening of the Japanese rice market; and the trade tensions between the European Union, the US and Japan in high technology industries. The conference took place immediately before the conclusion of the Uruguay Round, and yet its subject continues to be of high political importance. In early 1994, the US-Japan conflict around quantitative import targets became more tense.

This book explores the process of policy-making in Japan providing a valuable insight for academics and policy-makers into Japan's massive trade surpluses and the resultant mounting international pressure to resolve the situation.

In a few years, the United States has gone from worrying about Japan's economic might to worrying about its meltdown. The rise and fall of America's 'results-oriented' trade policy towards Japan captures this turnaround. John Kunkel traces this Japan policy to a crisis in the institutions, laws and norms of the US trade policy regime in the first half of the 1980s. This arose from the erosion of America's post-war international economic dominance (especially vis-à-vis Japan) and the unintended consequences of Reaganomics. The crisis in turn led to the progressive ascendancy of a coalition of 'hardliners' over 'free traders' after 1985. Kunkel combines research in economics, politics and history - including interviews with key policy-makers - to illuminate this important case study of American trade policy. His book offers theoretical insights and practical lessons on the forces shaping US trade policy at the start of the twenty-first century.

The balancing of competing interests and goals will have momentous consequences for Japan—and the United States—in their quest for economic growth, social harmony, and international clout. Japan and the United States face difficult choices in charting their paths ahead as trading nations. Tokyo has long aimed for greater decisiveness, which would allow it to move away from a fragmented policymaking system favoring the status quo in order to enable meaningful internal reforms and acquire a larger voice in trade negotiations. And Washington confronts an uphill battle in rebuilding a fraying domestic consensus in favor of internationalism essential to sustain its leadership role as a champion of free trade. In Dilemmas of a Trading Nation, Mireya Solís describes how accomplishing these tasks will require the skillful navigation of vexing tradeoffs that emerge from pursuing desirable, but to some extent contradictory goals: economic competitiveness, social legitimacy, and political viability. Trade policy has catapulted front and center to the national conversations taking place in each country about their desired future direction—economic renewal, a relaunched social compact, and projected international influence. Dilemmas of a Trading Nation underscores the global consequences of these defining trade dilemmas for Japan and the United States: decisiveness, reform, internationalism. At stake is the ability of these leading economies to upgrade international economic rules and create incentives for emerging economies to converge toward these higher standards. At play is the reaffirmation of a rules-based international order that has been a source of postwar stability, the deepening of a bilateral alliance at the core of America's diplomacy in Asia, and the ability to reassure friends and rivals of the staying power of the United States. In the execution of trade policy today, we are witnessing an international leadership test dominated by domestic governance dilemmas.

Exploring the political and economic determinants of trade protection, this study provides a wealth of information on key American industries and documents the process of seeking and conferring protection. Eight analytical histories of the automobile, steel, semiconductor, lumber, wheat, and textile and apparel industries demonstrate that trade barriers rarely have unequivocal benefits and may be counterproductive. They show that criteria for awarding protection do not take into account the interests of consumers or other industries and that political influence and an organized lobby are major sources of protection. Based on these findings, a final essay suggests that current policy fails to consider adequately economic efficiency, the public good, and indirect negative effects. This volume will interest scholars in economics, business, and public policy who deal with trade issues.

The contributions in this book provide a unique view of its emergence and growth in a number of different national settings in an area of the Third World where the industry is most advanced. In The Political Economy of Japanese Monetary Policy, Cargill, Hutchison, and Ito investigate the formulation and execution of monetary and financial policies in Japan within a broad technical, political, and institutional context.Their emphasis is on the period since the collapse of the Bretton Woods system of fixed exchange rates in the early 1970s, and on the effects of policies and institutions in shaping the modern Japanese economy. The authors present basic themes and recent developments, as well as their own research findings.They also review and integrate the large literature in the area. They consider theoretical arguments and empirical evidence for each topic discussed. Topics covered include Japan's low inflation record (despite the central bank's lack of formal independence from the government); politically motivated business cycles and the timing of elections; exchange rate policy and international policy coordination; the historical development of central banking; Japan's "bubble economy" of the 1980s; and the causes, magnitude, and regulatory responses to Japan's banking and financial crisis of the 1990s.

East Asian countries are now pursuing greater formal economic institutionalization, weaving a web of bilateral and minilateral preferential trade agreements. Scholarly analysis of “formal” East Asian regionalism focuses on international political and economic factors such as the end of the Cold War, the Asian financial crisis, or the rising Sino-Japanese rivalry. Yet this work pays inadequate attention to the strategies of individual government agencies, business groups, labor unions, and NGOs across the region. Moreover, most studies also fail to adequately characterize different types of trade arrangements, often lumping together bilateral accords with minilateral ones, and transregional agreements with those within the region. To fully understand this cross-national variance, this book argues that researchers must give greater attention to the domestic politics within East Asian countries and the U.S., involving the interplay of these subnational players. With contributions from leading country and regional trade specialists, this book examines East Asian and American trade strategies through the lens of a domestic bargaining game approach with a focus on the interplay of interests, ideas, and domestic institutions within the context of broader international shifts. With respect to domestic politics, the chapters show how subnational actors engage in lobbying, both of their own governments and through their links to others in the region. They also trace the evolution of interests and ideas over time, helping us to generate a better understanding of historical trends in the region. In addition to scholars of East Asian and comparative regionalism, this book will be of interest to policy-makers concerned with international trade and U.S.-Asia relations, and those interested in understanding the rich trade institutional landscape that we see emerging in the Asia-Pacific.