EAS321 Unit 5 lecture slides
- 1. Last Week: Japan-US Political Relations •Structure: highly constrained by the bilateral alliance in the post-war period – having to align with its sole ally during the bi- polar structure of the Cold War. •Agency: forged close political ties at the elite level with US bureaucrats and policy- makers – participating (logistically) in US-led wars, but also seizing opportunities to normalize relations with communist powers. •Norms: close adherence to bilateralism – countered to a degree by domestic strength of anti-militarism.
- 2. Unit 5 Japan’s Economic Relations with the United States Prof. Glenn Hook
- 3. Aim • To apply the concepts and theoretical approach introduced to Japan’s economic relations with the United States.
- 4. Objectives 1. To introduce Japan’s economic development and identify the relative importance of structure, agency and norms in explaining the US-Japan economic relationship; 2. To introduce how structure, agency and norms can be applied to the issue of trade imbalance between the US and Japan; 3. To employ structure, agency and norms to discuss trade conflicts, capital flows and investment, and economic agreements in the US-Japan bilateral relationship.
- 5. Main stages of Japan’s economic development • Global economic ascent of Japan (1950s to 1990s); • Economic downturn (1990s to early 21st Century); • Temporary upturn (2004); • Continued stagnation up to (2007); • Substantial downturn caused by global economic crisis and triple disaster (2008-2012); • “Abenomics” early in his second term in office, PM Abe pushes through a huge stimulus package in an effort to kick-start the economy – weakening the yen and boosting exports (2013).
- 6. US-Japan Bilateral Economic Relationship: Structure, Agency and Norms • Structure: dominated by the US economy with an increasing trend of multilateralism (APEC, WTO, etc.); • Agency: • economic ministries and agencies (MITI/METI, MOF, MOFA); • pro-US prime ministers and big businesses; • Norms: Developmentalism; Economism; Bilateralism/ Multilateralism.
- 7. US-Japan Trade Relationship: Structure, Agency and Norms • Trade relations: • Exports; • Imports; • Trade imbalance;
- 8. Power of the Yen Source: Wikimedia Commons Old One Yen silver convertible note
- 9. Steep Appreciation of Yen (1997-2012) Source: United States Federal Reserve Bank of New York The Yen has weakened considerably in 2013 as a result of “Abenomics” - $1/¥93
- 10. Japan’s trade surplus –v– the US From 2009 Japan’s trade surplus-v-the US has risen year-on-year (US$40 billion 2011) Sources: Office of the United States Trade Representative / Japan Ministry of Finance
- 11. US-Japan Trade Conflicts: Structure Agency and Norms • Automobiles: Situation: cause of Japanese trade surplus –v– US Japan’s response: appealed to a multilateral institution, the WTO; Outcome: Japan appealed to the international norms of multilateralism to supplement bilateralism or to offset the US power/pressure. Honda Accord Meets Its Makers
- 12. • Semi-conductors: Situation: lack US access to Japanese market Japan’s response: to expand foreign access to the home market in semi-conductors Conflict Resurfaced: set-up a multilateral forum for dealing with future disputes in this sector. US-Japan Trade Conflicts: Structure Agency and Norms
- 13. • Steel: Situation: Japanese opposition to US anti-dumping measures/tariffs Japan’s response: brought a petition to the WTO under the dispute settlement mechanism; Outcome: The US lifted the tariffs; Japan has dealt with a major bilateral economic conflict through multilateral mechanisms; US-Japan Trade Conflicts: Structure Agency and Norms
- 14. • Beef: Situation: Japanese ban on US beef Japan’s response: centering around the standard to be adopted in regard to the Japanese consumer’s exposure to risk; Outcome: Japan banned all US beef imports in 2003. Japan resumed buying beef in 2006 after a bilateral trade agreement setting new safety standards; US-Japan Trade Conflicts: Structure Agency and Norms
- 15. Reasons for the change in US-Japan bilateral trade conflicts • The change in the alliance relationship following the Gulf War and the greater willingness of Japan to cooperate with the US; • The change in the relative strengths of the two economies; • The establishment of mechanisms for dialogue between the two sides: (from Structural Impediments Initiative to US-Japan Economic Partnership for Growth, 2001); • An Abe-led LDP seen as, essentially, pro-alliance, but ongoing fiscal pressures could lead to future trade conflicts – uncertainty due to the TPP in both camps.
- 16. Capital flows and investment relations • Creation of large trade surpluses (1971-1991) • Rapid appreciation of the Yen (1985-2012) – countered by Abenomics (2013) • Globalized manufacturing base • Inability of Japan to transfer financial power into political power. • Opening up of financial markets – to allow access from US and other foreign actors. • JETRO encouragement of foreign investments
- 17. Japan and the US in regional projects and free trade agreements • Possibility of FTA or TPP as Japan seeks to keep competitive edge in Asia-Pacific region • Japanese endorsement of NAFTA – allowing access to cheaper Mexican labour markets • Active participation in APEC • Maintenance of developmental and economist norms
- 18. Conclusion • Japan changed from a devastated economy through a second-tier economy, to a challenger to the US economic dominance; • Case studies demonstrate US dominance and pressure in the trade disputes; • In the Post-Cold War period, Japan has learned to use the multilateral institutions to seek a solution more favorable to its national interests.