International Trade in the 1970s by La Barca Giuseppe;

Author:La Barca, Giuseppe; [La Barca, Giuseppe]
Language: eng
Format: epub
ISBN: 1158301
Publisher: Bloomsbury Publishing Plc

First attempts by the EC and the US to manage bilateral trade with Japan on a comprehensive scale

The measures described above were confined to single industries. However, from the middle of the decade the problem started to be perceived no longer as concerning one or more domestic industries, but the entire economy and the cause was no longer attributed to a plurality of separate foreign industries but to a single economic entity: Japan. The total US merchandise trade deficit with its Asian partner soared from a manageable $1.4 billion in 1973 to $8 billion four years later and $11.6 billion in 1978 (respectively 26 per cent and 34 per cent of the total US deficit).

Actually, it was difficult to point the finger at particular failings in Japanese trade policy as a whole, that is, its lack of consistency with fair play rules in international trade. During the 1950s Japan adopted a strategy of export promotion and import control, but this policy was gradually abandoned in the 1960s when a growing number of non-traditional sectors of the economy achieved competitive advantage in the absence of governmental assistance, and the demand for import restrictions in the United States and Europe became stronger and stronger. In 1968 the Japanese government announced a programme of liberalization on 60 items and partial liberalization on 12 by the end of 1971. At the end of 1972, when pressure on the yen mounted despite realignment, the government cut tariffs by 20 per cent and even adopted measures to control the rise in the export of certain products to particular countries.24 By the mid–1970s tariff rates in Japan, averaged over dutiable imports and over all imports, were lower than in the US.25 Thus it was reasonably arguable that the loss of share by the United States in nearly all categories of trade in modern manufacturing was due to the lack of competitiveness of US companies relative to the Japanese industrial juggernaut rather than to deliberate policies of the Japanese government.26 The same could be said of the growing trade gap between the EC and its Far East trading partner.

This is not to say that all barriers to imports from the United States and elsewhere had fallen. The Japanese approval procedures for product marketing hindered imports more than the explicit and independent procedures across the Pacific and public policy companies, including the Telephone and Telegraph Public Corporation or the National Railways, went on using product specification that hampered bids from outsiders, thus favouring Japanese firms and in turn making them more competitive in the international market.27 It is arguable that the removal or the ease of these restrictions should have formed the subject of concessions in the ongoing multilateral negotiations. A possible compensation might have been the repeal of the Buy American Laws. On the other hand, the gaping deficit was perceived in Washington as a bilateral and urgent issue and the outcome of the Tokyo Round negotiations was still an uncertain prospect.

The US executive effectively exploited the bugbear

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