US-JAPAN RELATIONS : A STRATEGIC TRADE POLICY ANALYSIS

This article provides an analysis of US-Japan relations through the lens of strategic trade policy. It examines the intense trade frictions that characterized the relationship in the late 1980s and early 1990s, particularly in sectors like automobiles and semiconductors. The study applies the concepts of strategic trade theory, which analyzes trade policy in the context of imperfect competition and international oligopolies, to explain the nature of the bilateral economic rivalry. The research assesses the policy tools used by the United States, such as Super 301 and voluntary export restraints, to pressure Japan to open its markets and address the persistent trade imbalance. The paper argues that the US-Japan trade relationship was not a simple matter of free market competition but a highly politicized process of strategic bargaining between the world's two largest economies. The analysis concludes by evaluating the effectiveness of this strategic trade policy approach in achieving US objectives.

The economic relationship between the United States and Japan, while a cornerstone of the global economy, was also a source of constant friction and political tension. This paper utilizes the framework of strategic trade policy to analyze this complex dynamic. The study begins by outlining the core tenets of strategic trade theory, which deviates from classical trade theory by acknowledging that in industries with significant economies of scale, government intervention can potentially shift profits from foreign to domestic firms. The core of the article applies this framework to the high-profile trade disputes between the US and Japan. It provides a detailed analysis of the disputes in the semiconductor and automotive industries, which were dominated by a few large firms from each country. The paper examines the specific policy instruments used by the US, such as the threat of sanctions under Section 301 of its trade law, as a form of strategic leverage to force concessions from Japan. It argues that these were not simply measures to correct unfair trade practices but were strategic moves in a global economic competition. The findings suggest that while these policies had some success in opening specific sectors of the Japanese market, they also created significant political tension and were of questionable long-term economic benefit. The paper concludes that the US-Japan case is a prime example of how international trade, particularly in strategic industries, is often an extension of national power politics.