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A New Beginning: Recasting the U.S.-Japan Economic Relationship (A CFR Paper)

Author: Bruce Stokes

A New Beginning: Recasting the U.S.-Japan Economic Relationship (A CFR Paper) - a-new-beginning-recasting-the-us-japan-economic-relationship-a-cfr-paper
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Publisher Council on Foreign Relations Press

Release Date July 2000

Price $10.00 paper

110 pages
ISBN 0-87609-273-3

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Overview

President George W. Bush should challenge his Japanese counterpart to launch a joint initiative to create a U.S.-Japan “open marketplace”--free of tariffs, with minimal regulatory impediments, and an increasing freedom to do business--by the year 2010, argues Bruce Stokes in A New Beginning: Recasting the U.S.-Japan Economic Relationship.

The time is ripe for a bold new initiative to shape the U.S.-Japan economic relationship. The Bush administration will be working with a new U.S. Congress. A new Japanese government is in place. At the same time, the Japanese economy is struggling to emerge from its decade-long economic doldrums. And the American and Japanese economies are slowly integrating through bilateral foreign investment and trade growth.

Washington and Tokyo must seize this moment, Stokes contends. U.S. willingness to resolve mutual problems in a creative fashion, dependent on America’s continued economic good fortune, could turn sour in an economic downturn. Already, the U.S. trade deficit with Japan has never been higher. And the recent surge in U.S. investment in Japan is likely to result in a host of new bilateral problems as U.S. firms try to operate “inside the castle” of the Japanese economy. Moreover, Japan’s commitment to economic liberalization is tenuous at best. A more vibrant Japanese economy has a limited time to take root before the crushing weight of Japan’s mounting public debt and the burden of its aging and shrinking population foreclose its options.

A new, proactive U.S. policy toward Japan is needed to maximize the potential of the U.S.-Japan economic relationship and to cope with the inevitable problems in day-to-day ties between the world’s two largest economies. According to Stokes, the cornerstone of this new American economic posture toward Japan is the creation of a U.S.-Japan open marketplace by 2010. To further that goal, the next U.S. administration should press the Japanese government to restore economic growth and accelerate restructuring, expedite deregulation, strengthen competition policy, and reform corporate governance.

More About This Publication

Bruce Stokes is an adjunct fellow at the Council on Foreign Relations and a columnist for the National Journal, a Washington-based public policy magazine.

Members of the Study Group:

WILLIAM ARCHEY, American Electronics Association

C. FRED BERGSTEN, Institute for International Economics

JEFF BINGAMAN, U.S. Senate (D-N.Mex.)

STEVEN C. CLEMONS, New America Foundation

W. BOWMAN CUTTER, E.M. Warburg, Pincus & Co., LLC

ERIC GANGLOFF, Japan-U.S. Friendship Commission

MICHAEL GREEN, Council on Foreign Relations

AMO HOUGHTON, U.S. House of Representatives (R-N.Y.)

MERIT JANOW, Columbia University

CHARLES D. LAKE II, AFLAC Japan

TAMERA S. LUZZATTO, Office of Senator Rockefeller

EDWARD LINCOLN, The Brookings Institution

HARALD MALMGREN, Malmgren Group

PHILIPPA MALMGREN, Warburg, Dillon, Read

ROBERT A. MANNING, Council on Foreign Relations

RICHARD MEDLEY, Medley Global Advisors

MARGARET MIHORI, Japan-U.S. Friendship Commission

MARCUS NOLAND, Institute for International Economics

GEORGE R. PACKARD, U.S.-Japan Foundation

CLYDE V. PRESTOWITZ JR., Economic Strategy Institute

TIM REGAN, Corning, Inc.

RICHARD RIVERS, Attorney

JAY ROCKEFELLER, U.S. Senate (D-W.Va.)

SHERMAN ROBINSON, International Food Policy Research Institute

THOMAS C. SAWYER, U.S. House of Representatives, (D-Ohio)

LEONARD SCHOPPA, University of Virgina

IRA SHAPIRO, Long, Aldridge & Norman

JAMES J. SHINN, Princeton University

MICHAEL B. SMITH, Global USA, Inc.

RANDALL SODERQUIST, Office of Senator Bingaman

JIM SOUTHWICK, Dorsey & Whitney

BRUCE STOKES, Council on Foreign Relations

DANIEL TARULLO, Georgetown University Law Center

MARK TILTON, Purdue University

ROBERT VANWICKLIN, Office of Representative Houghton

STEVEN VOGEL, University of California, Berkeley

ALAN WOLFF, Dewey Ballantine LLP

IRA WOLF, Office of Senator Max Baucus

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