United States--Japan Trade:

Issues and Problems

ID-79-53: Published: Sep 21, 1979. Publicly Released: Oct 9, 1979.

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From 1976 to 1978, the deficit in U.S. trade with Japan grew two and a half times, from $5.3 billion to $11.6 billion. Total Japanese world trade between 1975 and 1978 showed mounting surpluses, while the United States experienced growing deficits in that category. Trade figures available for 1979 suggested that the U.S. world trade deficit was decreasing; showed substantial reduction in the U.S. deficit with Japan; and indicated a sharp decrease in Japan's global trade surplus. GAO examined the broad underlying factors affecting both countries' world trade posture and used case studies from the computer, automobile, telecommunication, color television, machine and tool, log and lumber, and soybean industries to illustrate the corporate experiences of U.S. firms attempting to market in Japan.

Traditionally, Japan pursued a policy of aggressive world marketing of its own manufactured goods while protecting home markets through high tariffs and nontariff barriers. Although official trade policies lowered these barriers in all of the industries studied except telecommunications, attitudes on the part of U.S. businessmen and mid-level Japanese government officials failed to keep pace with official policy and exerted a drag on change in the trade imbalance. GAO discussed factors affecting the trade performance of the two countries and contrasted their trade policies. Five general areas of difference emerged from this analysis: (1) Japan enjoyed a far higher ratio of personal savings to disposable personal income than the United States, leaving a higher percentage available for investment in new plants and equipment; (2) while the United States spent proportionately more on research and development, the Japanese share of U.S. patents awarded to foreign nationals nearly doubled from 1970 to 1977, showing Japan's rising capability in this area; (3) Japanese industry lost far less time to strikes than U.S. industry, enhancing Japan's international competitiveness; (4) traditional Japanese reliance on foreign trade engendered a higher level of export consciousness than has developed in the United States; and (5) Japan, unlike the United States, made careful, long-range analysis of world market trends and the capacity of its industries to meet these trends, and encouraged its stronger industries to compete for contested world markets.

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