The U.s. And the World Economy: Policy Alternatives for New Realities by John Yochelson

Author:John Yochelson [Yochelson, John]
Language: eng
Format: epub
ISBN: 9780813370033
Goodreads: 4934111
Publisher: Westview Press
Published: 1985-04-19T00:00:00+00:00

Very roughly, these obstacles sort themselves out as industrial or developing country issues, simply by virtue of differences in economic development and degrees of integration into the international trading system and adherence to its codes of conduct. Vis-à-vis Europe and Japan, procurement, subsidies, and standards are more troublesome, while in developing country markets, traditional trade barriers and performance requirements represent the greater burden.

It is no accident that complaints against and negotiations with the Japanese have received the most emphasis. As the world's second largest market, Japan theoretically presents unparalleled export opportunities for U.S. businesses. A strong U.S. presence in the Japanese market would facilitate access to that country's rapid advances in product and process technology and strengthen the U.S. competitive position in third country markets. According to statistical trends in bilateral trade, however, the United States is losing rather than gaining market share in such products as semiconductors, computers, and telecommunications equipment. Japan has the lowest level of foreign direct investment of any major industrialized country.

The fact that the United States is not doing especially well is not necessarily evidence that the Japanese are behaving badly, at least to the extent of maintaining a "fundamentally closed" market. Contrary to the conventional wisdom, there may be nothing grossly abnormal about Japan's admittedly unique trade structure (exceedingly low imports of manufactured goods), when allowance is made for international differences in resource endowments, labor and capital quality and quantity, distance from trading partners, and other factors that determine comparative advantage.11 In essence, Japan is compelled to run a large trade surplus in manufactured goods to pay for its imports of raw materials and services.

Historically insular and protectionist, Japan reversed course in the 1970s by adopting a series of trade liberalization policies under intense domestic and international pressures. It cut tariffs on average below levels prevailing in the United States and Europe; limited quotas primarily to agricultural commodities; relaxed controls on internal capital markets and foreign investment; and more recently concluded agreements on product standards and safety testing, public procurement, domestic and export subsidies, and access to government-sponsored research and development projects and their proprietary results. At best, additional formal liberalization measures promise marginal improvement in the overall U.S. trade balance with Japan.

For particular U.S. industries, however, a series of subtle constraints can add up to major impediments to U.S. exports and investments in a critical market. In electronics and telecommunications, for example, the constraints probably include uncertain protection of semiconductor designs and software programs, the "buy national" proclivity of the public telecommunications monopoly Nipon Telegraph and Telephone Public Corporation (NTT) and protection of the infant Japanese communications satellite industry.

Progress continues to be made on some sectoral issues through bilateral discussions, but other subjects of vigorous complaint relate to aspects of industrial and financial structure that do not lend themselves readily to negotiation. The harmonization of Japanese economic institutions with prevailing international practice will continue to be a slow, incremental process driven as much by internal change as by external demands.

Technical Resource Deficiencies. There

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