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Summit ’86 Problems Great But Benefits Greater in US-Japan Trade

April 26, 1986

TOKYO (AP) _ President Reagan, in his trip to the Tokyo summit, will become one of more than 2 million Japanese and Americans who cross the Pacific this year in one of the world’s most abiding two-country relationships.

Despite trade problems such as Japan’s $50 billion trade advantage and American irritation with the pace of Japan’s market-opening efforts, that relationship continues to flourish, both culturally and economically.

Former Assistant Secretary of State Paul D. Wolfowitz once called the U.S.-Japanese partnership ″one of history’s greatest success stories.″

Total bilateral trade last year was $95 billion, or 17 percent of total U.S. overseas dealings, second in volume only to U.S.-Canada trade. The $72.38 billion in imports from Japan, 20 percent of all U.S. imports, for the first time topped those from Canada.

Although Americans complain, sometimes justifiably, that barriers to foreign goods remain, Japan’s purchases of $22.63 billion made up more than 10 percent of U.S. exports.

In simple terms, every American bought $310 worth of Japanese goods and sold $97 worth of U.S. products to Japan.

Japan’s biggest seller, automobiles, took a $17 billion chunk of Japan’s exports.

Japan also sold $7.7 billion in electric appliances, $6.5 billion in industrial machinery and $6.3 billion in computers and other office equipment.

Japanese bought $1.5 billion in American chemical products, $1.5 billion in feed grains, $1.4 billion in commercial aircraft and parts, $1.3 billion in computers and $937 million in soybeans, according to U.S. figures.

Total trade of $95 billion was up 13 percent from 1984 and more than six times the $14.7 billion total in 1972.

But the U.S.-Japan partnership is far more than a lopsided exchange of goods.

Japanese invested $17 billion in the United States in 1985, topped only by Britain and the Netherlands. More than 300 Japanese manufacturers are now located in the United States, employing close to 100,000 people.

Last year alone, Toyota and General Motors began joint production in California, Mazda broke ground for an auto plant in Michigan, Mitsubishi Motor Corp. and Chrysler announced a joint venture in Illinois and Toyota said it wouldinvest $800 million in a Kentucky assembly line.

Also last year, Toshiba said it would employ 500 at a new telephone and medical equipment plant in California, Fanuc began building an industrial robot plant in Michigan to employ 800 and Canon decided to produce office automation equipment in Virginia, providing 1,000 jobs.

American culture permeates Japan. McDonald’s and Kentucky Fried Chicken restaurants are fixtures. Tokyo Disneyland draws millions of Japanese. Cities offer a dazzling array of American movies, concerts by American pop stars and translated American bestsellers.

Baseball fans root for American sluggers on their favorite Japanese pro teams. About one-third of Japanese newlyweds honeymoon in Hawaii, and young Japanese who haven’t visited Hawaii, Guam or the U.S. West Coast are becoming a minority.

This closeness makes solving trade issues even more important.

″The stakes are high,″ said Johns Hopkins University experts in a study published earlier this year. ″No other relationship between an Asian nation and a Western nation comes even close to matching this one ... in mutual benefits.″

Sen. John C. Danforth, the Missouri Republican notorious in Japan as a hardliner on protectionist legislation, said here recently that Japan must reduce its trade surplus because ″the bond between our two countries is essential to the peace and stability of the world itself.″

Japan’s Prime Minister Yasuhiro Nakasone agrees, telling the Diet (parliament) in a recent speech that Japan must make ″every effort″ to solve trade problems because furthering U.S.-Japan relations ″is an important cornerstone for peace and stability in the Asia-Pacific region and all the world.″

Nakasone is widely applauded for initiating measures to remove tariffs and other barriers, encouraging Japanese to import more and, most recently, endorsing recommendations that Japan switch from reliance on exports to emphasis on expanding the domestic economy and improving its living standards.

He insists the trade imbalance will begin to narrow this fall, when trade figures show effects of the yen’s 30 percent appreciation against the dollar over the past seven months.

The stronger yen makes Japanese exports costlier and should make U.S. products more competitive in Japan. Already, Japanese automakers have raised U.S. sticker prices an average $1,000, and the government, which supports a stronger yen as bitter but necessary medicine, has been forced to bail out smaller export companies facing bankruptcies.

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