Management of the United States-Japan trade relationship and its implications for the Pacific Basin economies

This short paper focuses on the three main dimensions of the U.S.-Japan trade relationship: macroeconomic, namely the overall immense respective trade and current account deficits and surpluses; microeconomic, namely sectoral issues of American business access to Japanese markets (and, less marred by bilateral frictions but of systemic importance, the nature of restrictions of Japanese access to U.S. markets); and systemic, namely the way in which the resolution of bilateral trade issues affect the rules of the game and nature of the GATT-based, multilateral, relatively open international trading system. Recent trends and their causes are assessed, as are current policy issues and actions, and the important implications are drawn. In the final section the effects on other Pacific Basin economies are considered; that discussion is relevant for the world as a whole though the management of the U.S.-Japan trade relationship has a particularly large Pacific Basin impact