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U.S.-Japan RelationsFact sheet released by the Bureau of East Asian and Pacific Affairs, April 28, 1998 |
The United States' close and cooperative relationship with Japan is the cornerstone of U.S. policy in Asia and the basis of a strong, productive partnership in addressing global issues. Despite different social and cultural traditions, Japan and the United States have much in common. Both have open, democratic societies; high literacy rates; freedom of expression; multiparty political systems; universal suffrage; and open elections. Both have highly developed free-market industrial economies and favor an open and active international trading system. Japan is one of the three major industrial complexes among the market economies, along with North America and Western Europe. The U.S. supports Japan's goal of obtaining a permanent seat on the United Nations Security Council.Because of the two countries' combined economic and technological impact on the world (together accounting for a little more than 30% of world GDP and 60% of the Western industrialized nations' GDP), the U.S.-Japan relationship has become global in scope. The two governments have developed a partnership to address shared priorities. An example of that partnership is the U.S.-Japan "Common Agenda for Global Issues," a set of initiatives in areas such as the environment, technology development, and health. Under the Common Agenda, the United States and Japan are coordinating $12 billion in population and HIV/AIDS assistance to developing countries and are conducting joint research on advanced transportation and environmental technologies. The two governments are also cooperating closely on issues as diverse as ocean pollution, children's vaccines, narcotics demand reduction, the role of women in development, and the protection of forests and coral reefs.
Security Relations
The U.S.-Japan security alliance remains indispensable to the defense of Japan and to U.S. security strategy in East Asia.
The U.S.-Japan Treaty of Mutual Cooperation and Security came into force on June 23, 1960. Under the treaty, Japan hosts a carrier battle group, the III Marine Expeditionary Force, the 5th Air Force, and elements of the Army's I Corps. Since the end of U.S. occupation in 1952, U.S. military forces in Japan have decreased from more than 260,000 to fewer than 50,000, more than half of whom are stationed in Okinawa. Japan's Host Nation Support (HNS)--over $4 billion a year--helps to defray the costs of maintaining these forces in Japan.
Despite the changes in the post-Cold War strategic landscape, the U.S.-Japan alliance continues to be based on shared vital interests. These include stability in the Asia-Pacific region, the preservation and promotion of political and economic freedoms, support for human rights and democratic institutions, and the securing of prosperity for our people and other people of the region. In the fall of 1994, the two governments embarked on a high-level security dialogue aimed at reaffirming and strengthening the alliance in light of the changing international environment.
The East Asia Strategy Report, published by the Department of Defense in 1995, noted "There is no more important bilateral relationship than the one we have with Japan. It is fundamental to both our Pacific security policy and our global strategic objectives. Our security relationship with Japan is the linchpin of United States security policy in Asia. It is seen not just by the United States and Japan but throughout the region as a major factor for securing stability in Asia." Japan restated its own unwavering support for the security relationship in its long-range defense blueprint--the National Defense Program Outline--issued in November 1995.
In April 1996, during President Clinton's state visit to Japan, the President and Prime Minister Hashimoto issued a joint summit security declaration which noted the achievements of the bilateral alliance and projected its success into the next century. In September 1997, the United States and Japan issued the Defense Guidelines, which lay out the framework for cooperation between the United States and Japan.
U.S. economic policy toward Japan is aimed at increasing access to Japan's markets, stimulating demand-led growth in the Japanese economy, and raising the standard of living in both the U.S. and Japan.
The U.S.-Japan bilateral economic relationship is a strong and mature one. It also is an increasingly interdependent one based on enormous flows of trade, investment, and finance. The relationship is firmly rooted in the shared interest and responsibility of the U.S. and Japan to promote global growth, open markets, and a vital world trading system. In addition to their bilateral economic ties, the U.S. and Japan cooperate closely in multilateral fora such as the World Trade Organization (WTO), Organization for Economic Cooperation and Development, the World Bank, and the International Monetary Fund, and regionally in the Asia-Pacific Economic Cooperation forum (APEC).
The United States and Japan are the two largest economies in the world. Japan is a major market for many U.S. manufactured goods, including chemicals, pharmaceuticals, photo supplies, commercial aircraft, non-ferrous metals, plastics, and medical and scientific supplies. Japan is also the largest foreign market for U.S. agricultural products, with total agricultural imports valued at close to $17 billion in 1996.
Overall U.S. exports to Japan have grown dramatically since the 1980s. Between 1986 and 1997, they rose from $27 billion to $66 billion. Since 1993, U.S. exports to Japan have risen at a rate slightly faster than with the rest of the world. The U.S. bilateral trade deficit with Japan declined from $59 billion in 1995 to $48 billion in 1996. It was $56 billion in 1997.
These improvements have come about as the U.S. has pursued broad trade initiatives as well as bilateral trade agreements with Japan. The U.S.-Japan "Framework for a New Economic Partnership" (the Framework) was signed in June 1993 by President Clinton and then-Prime Minister Miyazawa and renewed in June 1995. The Framework addresses sectoral, structural, and macroeconomic issues in the U.S.-Japan bilateral economic relationship. In addition, the Framework includes the aforementioned "Common Agenda for Global Issues," the highly successful program of U.S.-Japanese collaboration on a wide range of global matters, including health, the environment, and population.
Since January 1993, the U.S. and Japan have signed 34 trade agreements, most of them under the Framework, plus four agreements under the GATT Uruguay Round. U.S. and Japanese negotiators concluded Framework agreements on government procurement of telecommunications and medical technology products and services in November 1994; agreements on intellectual property rights, insurance, cellular phones, and various agricultural products--including apples--were also signed in 1994. Agreements were concluded on flat glass in January 1995, financial services in February 1995, autos and auto parts in August 1995, civil aviation on cargo services in April 1996, semiconductors in August 1996, and insurance in December 1996. More recently, the U.S. and Japan renewed and strengthened the NTT Telecommunications Agreement in September 1997 and reached an agreement on port practices in November 1997 and on civil aviation in January 1998. The U.S. also settled a WTO dispute with Japan over its distilled spirits regime in December 1997.
The Framework follows two earlier bilateral initiatives that led to market-opening in Japan: the MOSS (Market-Oriented, Sector-Selective) talks on specific sectors of interest, initiated in 1985 and the Structural Impediments Initiative, begun in 1989. Through these initiatives, both countries committed themselves to comprehensive measures to reduce impediments to competitive imports as found, for instance, in marketing and distribution systems, savings and investment patterns, and government-business relations.
In addition to these broad initiatives, the United States and Japan have over the last decade signed bilateral agreements to open Japan's markets. These agreements cover a wide range of sectors, including computers, beef, citrus, manufactured tobacco products, paper, and semiconductors. There have been some encouraging trends. In certain sectors, U.S. firms have gained a significant or even dominant market share in the Japanese market. As part of the GATT Uruguay Round agreement, Japan agreed in December 1993 to open its rice market, which had historically been closed to foreign rice. It also agreed to cut or eliminate tariffs and eliminate quotas on a wide range of other goods.
There are considerable investment flows between the United States and Japan. U.S. direct investment in Japan was $39.2 billion at the end of 1995, much of it in finance, banking, and manufacturing; this was up from $6.4 billion in 1982. Many American companies have found Japan to be a profitable market. Nevertheless, American firms continue to encounter a range of formal and informal barriers to investment in Japan, and Japan continues to host a far smaller share of global foreign direct investment than any of its G-7 counterparts. Japanese direct investment in the United States rose dramatically in the late 1980s, then leveled off somewhat in the 1990s. Japanese direct investment in the United States stood at $108.6 billion at the end of 1995, mostly in manufacturing, real estate, and finance.
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