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US-Japan Trade : A Phase of Conflict from Co-operation

by Md Akramuzzaman
WITH the changing climate of the post-cold war world economy.
US-Japan trade conflict has recently reached the level which has drastically wrought both the US-Japan economic relationship and the more significant benefits that they had already produced. For more than a decade. US and Japan have had strains in their economic relations due to the enormous imbalance in their trade. Although both the countries are working well to remove this phase of controversy over trade but are only get constrained with many questions of disagreement.
Recently, the controversy intensified more while the negotiators from Japan and US failed to reach any more agreement on the trade question after a heavy discussion in Washington last July. Over the prevailing situation, many trade officials from US have expressed their, suspicion that the frequent break-down in the trade talks between the two economic superpowers would seriously undermine the concept of new economic world order. From the historical perspective, even if the success of the Uruguay Round had universally created some optimism, but ultimate consequences of trade war between these two great trading nations may endanger the previous economic achievement and usher in a competitive age of
high tariff walls, non-tariff barriers and escalating retaliatory measures in the world trade. This may not only undermine the success attained in Geneva but turn the whole world toward a phase of war in trade in which all the progresses achieved for establishment of free trade may simply be lost.
In the new matrix of world economic relations, the recent US-Japan trade tension is seen be many trade officials as one of the major economic tensions of the day. Historically. Japan has been the largest trade partner of US for decades, but today, the US is suffering from a massive trade deficit of nearly 6 billion doF lars with Japan. US-Japan relation is getting more adverse and also seems to be yielding a conflicting phenomenon in the rest of the world.
For the last four decades, shortly after the World War II, US-Japan relationship has been that the United States guaranteed the security of Japan deploying its armed forces In Japan. This security relief left Japan to concentrate fully on its economic development which ultimately has put the country in large economic surplus. During the cold war US used the Japanese territories to contain the emerging threat of communism in east Asia and south Pacific region while, ofcourse. also protecting Japan. And staying under
the US umbrella Japan was able to bring a tremendous prosperity in its economic and technological development. In the late 80s. the prosperity of Japan attained such a great level that simply could not be imagined two decades before.
With the end of US occupation In Japan in 1952. the two countries concluded some economic and military contacts. However. Japan became US's most important post-war client for its external market in the cold-war age. Since the 1950s. US popular products swept the world market. But in the early days of 1980s Japan had ostensibly taken another policy to reduce the large trade deficit. As a consequence. Japan reportedly implemented a long-term policy to liberalize Its trade an.d economic flow which even hurt some Japanese companies but brought tremendous benefits to Japan and to the rest of the world as well. In 1983 Japanese direct investment specially in US reached a total of 16.2 billion dollars whereas in the western Europe and Asia the figures were only 6.4 and 1.2 billion dollar respectively. Later on. in the 1980s. however, most of the Japanese companies initiated a common arrangement in trade with US and western European companies In order to resolve the
trade disputes.
As we know, shortly after the large-scale destruction of Hiroshima and Nagasaki on the 6th and 9th August of 1945. Japan paid a great attention , only to economic reconstruction and made all the efforts to meet the enormous responsibilities and within a few decades, with its advancing technology reached the apex of development and became equal trade partner of US. But the recent Japanese Yen bloc and what they call Yen imperialism. developed almost throughout the world, have seriously undermined the US trade-investment policy all over the world. For example, today Japanese investment has reached 45% of the total world Investment and is likely to exceed to 50% by the end of this decade.
Reviewing the post-cold war economic scenario Michael Armscost, the former US Embassador to Tokyo finds two things which easily attribute to the US trade deficit with Japan. One is macro economic concept evolved with the demise of cold war and the open policy of market economy. The other, however, is market penetration but the
real phenomenon of trade war can be precisely traced in other words: Japanese products and technology have achieved a new degree of monopoly in the world market due to their superior quality and comparatively low price.
And due to the high exchange rate of dollar, US products began to lose their demand In the world market even if they excelled in quality — selling at 20%-30% higher rate than that of similar Japanese products. This rapid economic flow to Japan has eventually turned the nation to a large trade surplus against WS.
■ Now. in the prevailing situation. some US trade officials seem to believe that it can be rather imperative to use congressional presure with imposition of a high tariff barrier on Japanese import to achieve quicker breakthrough In negotiation with Japan. But the strategy might not work well due to the world-wide demand and support for no-less-superior Japanese products available at obviously-less' price. However, Japan, at the same time, the get rid of US attack on Its products, has adopted the policy of alternative products which will not have any similarity with the same prod-
ucts of US.
On the other hand the end of the cold war has reduced Japanese dependence on US neuclear defence shield. At the same time, ft has already paved the way for a settlement of its bilateral problems with Russia and China. And even if. North Korea remains a source of neuclear concern but the overall situation is vastly different from the days of the cold war
In the post-cold war political context, emotional tensions and mutual suspicions have swollen like a tidal wave on either side of the Pacific. Both the countries need to act with sufficient caution staying away from saying and doing anything that might unconsciously turn into further Misunderstanding and misgiving in their relations. And In spite of all the unexpected circumstances and consequences, It can be explicitly said that US-Japan post-cold war cooperation is almost imperative for the maintenance of an economic balance also between the developed and the developing countries • throughout the world.
The writer is an MSS final year student in the Department of International Relations. Dhaka University.