The Future of American-Japanese Trade

With the end of the Cold War and the dissolution of the Soviet Union, the conflicts between nations will increasingly be economic rather than military, but the existing international instruments for dealing with trade conflicts are antiquated and inadequate. The General Agreement on Tariffs and Trade (GATT), as a foundation for global trade, is fundamentally flawed. Japan has ignored its GATT obligations, taking advantage of open markets wherever it can while keeping its markets closed through a variety of formal and informal barriers. In contrast to Europe, the United States' response has been passive, resulting in a long history of failed process-oriented bilateral negotiations with Japan. In the final analysis, the difficulty lies not with Japan but with the United States. The solution is a result-oriented agreement with Japan. While this can be achieved through a variety of means, the guiding principle is results. That means an agreement that concentrates on outcomes, timetables and mutual responsibilities, levels of permissible trade imbalances, the composition of trade, allowable market shares, investment in both countries, and practices like dumping in third markets.