The authors look at four trade policy options for Japan and the United States. They evaluate each option for each country based on its impact on international relations and economic growth and its political and practical feasibility and conclude that the best option for both nations is to move forward cooperatively with the Trans-Pacific Partnership agreement.

The United States, Japan, and Free Trade

Moving in the Same Direction?

Julia F. Lowell, Shujiro Urata, Megumi Naoi, Rachel M. Swanger

ResearchPublished Apr 23, 2012

The direction charted by two of the world's largest economies and biggest advocates of unfettered global trade — Japan and the United States — will have a profound impact on the fate of the free trade regime. This paper examines the factors that influenced Japan's decision to join the Trans-Pacific Partnership (TPP) and the U.S. decision to make the TPP a focus of its trade policy. The authors look at four options for the two nations:

  1. working together to restart the multilateral Doha Round of the World Trade Organization (WTO),
  2. signing a bilateral free trade agreement (FTA),
  3. participating in the formation of the multilateral, regional TPP, and
  4. pursuing independent trade strategies.

They evaluate each option based on its impact on international relations and economic growth and its political and practical feasibility, and conclude that moving forward with TPP negotiations is the best option is for both countries.

Key Findings

Japan's decision to join the Trans-Pacific Partnership (TPP) negotiations was the right one, and U.S. policymakers should welcome Japanese participation in the TPP.

  • Participation in the TPP will provide Japan with an opportunity to strengthen its ties to the United States without risking a repeat of the bilateral trade friction of the 1980s.
  • Although it is unclear what the short-run impact of joining the TPP will mean for the United States or Japan, they may already be benefiting from their participation insofar as the TPP has caused global business to see them as more attractive destinations for investment.
  • The long-run economic impact of the TPP promises to be significant if participants can bring most import tariffs down to zero.

The economies in the United States and Japan are both in need of outside stimulus to propel them forward.

  • A commitment to the TPP could provide at least a temporary economic boost.
  • If the TPP fulfills its promise to be comprehensive and broad-based, it should generate significant longer-term stimulus.

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  • Copyright: RAND Corporation
  • Availability: Available
  • Year: 2012
  • Print Format: Paperback
  • Paperback Pages: 56
  • Paperback Price: $17.00
  • Paperback ISBN/EAN: 978-0-8330-6040-2
  • Document Number: OP-363-CGP

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RAND Style Manual
Lowell, Julia F., Shujiro Urata, Megumi Naoi, and Rachel M. Swanger, The United States, Japan, and Free Trade: Moving in the Same Direction? RAND Corporation, OP-363-CGP, 2012. As of September 5, 2024: https://www.rand.org/pubs/occasional_papers/OP363.html
Chicago Manual of Style
Lowell, Julia F., Shujiro Urata, Megumi Naoi, and Rachel M. Swanger, The United States, Japan, and Free Trade: Moving in the Same Direction? Santa Monica, CA: RAND Corporation, 2012. https://www.rand.org/pubs/occasional_papers/OP363.html. Also available in print form.
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The research described in this report was sponsored by The Japan Foundation Center for Global Partnership and was conducted within the RAND Center for Asia Pacific Policy (CAPP) under the auspices of the International Programs of the RAND Corporation.

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