US Japan Trade Economy
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The past two decades have witnessed extensive bilateral trade negotiations between the U.S. and Japan. Known as the Structural Impediments Initiative (SII), these negotiations focused on “the barriers inside the Japanese and U.S. economies that impeded international flow of goods and services” (Fauver and Stewart, 2002, A9). While the U.S. and Japan have traditionally clashed in terms of trade with respect to automobiles, electronics, and steel, today the two countries seldom go toe-to-toe in the same industry. One of the reasons for this is that the U.S. has gained competitive advantage in many high-tech electronics products, from software to computer chips. Another reason is that even though Japan has created a tremendous impact on the U.S. auto industry, Japanese investment in the U.S. because of it is a boon to the economy, “For years the Japanese have been plowing profit back into the U.S., where they collectively built 2.4 million cars and trucks in 2001” (Guth, Phillips and Hutzler, 2002, A1). While the high yen against the U.S. dollar gave Japan competitive advantage for years, this is no longer the case. Japan’s economy is in the last throes of a slow dance of death, with a declining yen, an unstable and a banking system in danger of collapse. Yet world trade patterns have changed significantly over the past two decades and despite the Bush Administration’s tariffs on steel, farm subsidies, and other barrier
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rong U.S. currency reflects that fact that America has performed extremely well and attracted foreign investment, driving up the dollar. Japan, on the other hand, has been performing far below its potential for a decade” (Guth et al., 2002, A1).
The supply of useable land, lack of business competition due to barriers, and inefficiency operation of businesses and agricultural processes create a lack of foreign investment in Japan that the U.S. enjoys on a high level. Cartels still operate that decrease competition, increase inefficiency, and act as a drag on the economy and the creation of new economic and trade structures. Recently officials from the U.S. and Japan met to discuss what is called the “Investment Initiative”, a plan to help Japan restore its ailing economy in a similar manner to the U.S. during the 1980s (i.e., obtaining higher levels of foreign investment). As Allan Larson, under secretary of state for the economy, noted, “There has been a very, very sharp increase in foreign investment in Japan, but the level overall is still small. Direct investment between the U.S. and Japan last year was only one-seventeenth of that between the U.S. and Europe” (Woodside, 2002, 1).
For the economy of Japan to improve, not
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Approximate Word count = 1579
Approximate Pages = 6 (250 words per page)
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