The Scylla and Charybdis of U.S.-Japan Relations

by Roger W. Benjamin, Loren Yager


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This report argues that the existing trade dispute institutions, such as the General Agreement on Trade and Tariffs (GATT) and the International Trade Commission, are no longer venues for the major economic fairness questions posed by American firms and industries against their Japanese counterparts. Instead, the political arena is now the preferred locus of action. One of the problems with the ad hoc managed trade now in place between Japan and the United States is that it does not address trade systematically through policy. The two nations are not aware of the policy dilemma that confronts them at this time. The fairness rules that governed most trade between Japan and the United States until a decade ago are no longer used to resolve disputes. However, it is politically unrealistic for the Japanese government to assume that the United States will not become much more aggressive in demanding access to Japanese markets in the presence of Japan's large trade surplus. The fairness problem should be recognized by leaders in both countries for the land mine that it is.

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