eas321 unit 5 lecture slides
TRANSCRIPT
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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.
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Unit 5 Japan’s Economic Relations with the
United States
Prof. Glenn Hook
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Aim
• To apply the concepts and theoretical approach
introduced to Japan’s economic relations with the
United States.
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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.
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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).
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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.
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US-Japan Trade Relationship: Structure, Agency and Norms
• Trade relations:
• Exports;
• Imports;
• Trade imbalance;
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Power of the Yen
Source: Wikimedia Commons
Old One Yen silver convertible note
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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
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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
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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
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• 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
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• 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
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• 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
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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.
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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
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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
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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.