, with each side feeling threatened by the other, and accusing it of bad faith.
The following discussion will seek to examine the sources and course of the automobile trade dispute between Japan and the United States since the early 1970s. The argument to be presented here is based on the premise that the controversy over Japanese automobile imports can only be fully understood in the context of the overall development of the American automobile industry during this period.
It will be argued that the American industry was already in a state of incipient crisis before Japanese imports became a serious force in the American domestic market. Well before the surge of Japanese imports, the Volkswagen "Bug" had succeeded in making substantial inroads in the American market, inroads gained partly by price, and partly by the imponderable of customer appeal. The success of the Japanese, it will be suggested, was primarily achieved by building upon the potential already demonstrated by Volkswagen. The Japanese gained further momentum from the quality problems that plagued American cars during the 1970s; Japanese automobile makers succeeded in exploiting the resulting perceived quality gap to the full.
The question to be addressed, then, is whether or not the whole success of Japanese automobile imports in the American domestic market--and the corresponding failure of American automobile makers to gain any significant foothold in the Japanese domestic market--is entirely to be explained by these structural factors. The Japanese would say that it is. Their American critics, while conceding the importance of these factors, would none the less argue that Japanese trade practices made an important, perhaps decisive, contribution to the Japanese automakers' success; thhey would point out, for example, that a tangle of formal regulations and informal barriers has limited IBM, the world leader in mainframe computers, to less than te...