The Downside of Imperial Collapse
When Empires or Great Powers Fall, Chaos and War Rise
In the tangled international tapestry certain relationships dominate the pattern. The U.S.-Soviet struggle has colored almost all world politics for a generation. Franco-German entente has ended centuries of European warfare. One relationship which holds much potential for improving world conditions is that between Japan and the United States. This bilateral relationship, conducted within a dense multilateral web in which each nation has many other ties based on interest and sentiment, is now, and will be increasingly, central to any proper functioning of the world economy and polity.
These two nations, so drastically different in history, culture, geographic size and location, outlook and temperament, have been thrust together in an unlikely partnership. They must simultaneously reorder their bilateral arrangements while improving their skills of international leadership. The United States must learn to rely more on the power of persuasion and become more sensitive to the legitimate interests of others. Japan must give up its small-nation mentality. Moreover, each nation can help the other in this, and in cooperation they can help guide the world through one of its most dangerous and exciting eras.
In today's climate it may seem farfetched to speak of Japan and the United States working in close collaboration. Angry comments from senior officials in both countries reverberate, and the economic struggle between Japanese and American firms at times seems relentless and even vicious. American doubts about the fairness of Japanese competition are met by Japanese questions as to the continued vitality of the American economy. Are not these two voracious economies likely to become bitter competitors for the world's markets and the world's dwindling resources? Can nations which start from such different notions of the role of the individual, the group and the state really mesh their systems in a sustained way?
In the evolution of U.S.-Japanese relations, one thing is certain: the nature of that relationship in the coming decades will not only be of the greatest importance to both nations but also to the world at large. Their economic weight alone ensures this:
- Together they account for one-third of total world production and nearly half of the output of the non-communist nations.
- They provide the two largest sources of investment capital in the world.
- In several vital industries they are the world's two largest producers. Between them they share leadership in semiconductors, computers, steel, automobiles, earth-moving equipment and many other types of machinery.
- Together they import half of the oil imported by the advanced industrialized nations of the Organization of Economic Cooperation and Development (OEGD), and consume about one-third of the world's annual production of other raw materials.
- With a combined population equaling only eight percent of the world total, they contain the two largest communities of scientists and engineers in the non-communist world.
Moreover, both nations can depend upon a relatively high degree of internal stability and public support for the policies which they pursue internationally.
And finally, the problems which usually divide nations and which divided the United States and Japan in the past are not present today. The last territorial problem between Japan and the United States as a result of World War II ended in 1972 with the reversion of Okinawa to Japanese control. Neither conflict over ideology or territory nor rivalry for regional or world leadership now exists between them.
Yet, despite these advantages and, indeed, the record of cooperation between Japan and the United States for a generation, relations between them are still subject to periods of tension and even crisis. Furthermore, there is a tendency for these periods to take on an unpleasant emotional tone which suggests that the importance of the relationship is not fully appreciated, at least on the American side, and that the foundations on which it rests are not as yet secure.
The bilateral trade between Japan and the United States, amounting to well over $60 billion annually, is currently heavily in Japan's favor. In 1981 the Japanese bilateral trade surplus was nearly $16 billion; it could go higher in 1982 and 1983. The impact on particular industries such as automobiles and consumer electronics is severe, adversely affecting hundreds of thousands of American jobs.1 Even though the United States regularly has a sizable surplus with Japan in the service account and has not been in deficit globally in the current account, when adverse effects on employment of this magnitude are perceived as coming from a particular foreign country, a deleterious effect on the bilateral relationship is inevitable.
Speculation on the consequences of allowing U.S.-Japanese relations to deteriorate is helpful to understanding what is at stake. Extremes can be excluded, since a complete economic or diplomatic rupture is so totally contrary to the interests of both nations that ways will be found to avoid such costly developments. Worth considering, however, is the possibility of rising irritation and frustration which weakens mutual trust, causes each country to make a scapegoat of the other, and leads each to look for economic and diplomatic alternatives.
Worsening economic relations between Japan and the United States could well lead to growing mutual restraints on trade, planned and accidental disincentives for investment by one country in the other and a general lack of cooperation in economic matters. Each country would suffer directly economically, but the largest losses would probably occur as a result of the impact this would have on the world trade rules-mainly embodied in the General Agreement on Tariffs and Trade (GATT) and the world monetary system.
The growth of international trade since the end of World War II has been substantially more rapid than economic growth generally, and this trade is now essential to the prosperity of most nations. Trade as a percentage of the gross national product for many nations is one-quarter to one-third or higher. For both the United States and Japan the ratio is somewhat lower, with exports amounting to 7.8 percent of U.S. GNP in 1981 and 14 percent of Japan's in that same year.2 Thus, for the United States, international trade is important while for Japan, which must import four-fifths of its energy requirements and most industrial raw materials, international trade is vital. This vast global exchange of goods, now amounting to over two trillion dollars per year, has been reasonably well guarded for 35 years from the incessant demands of those in all countries who would protect local markets from foreign competition.
The GATT consists of a set of multilateral agreements and undertakings which set the ground rules for the conduct of world trade. Each nation which accepts the GATT provisions, including most of the industrialized democracies, undertakes to extend equal treatment to all the other participants. Should this multilateral undertaking seriously weaken, the impact on world trade and world prosperity would be profound. If the United States and Japan, the two largest national economies in the system, began to restrain their bilateral trade on a large scale, the consequences for the GATT system are reasonably clear. The encouragement such an example would give to protectionists in all countries is bound to be great indeed.
Trade between Japan and the United States is not now free from legal and informal restraints on both sides. Nevertheless, the policy has generally been moving toward reducing barriers further. Should that trend reverse, some of the exports of both nations would be diverted to third markets. Both Japan and the United States have substantial trade surpluses already with the nations of Western Europe. Although the situation is more varied as regards other markets, only certain of the oil-exporting nations have the ability to expand imports significantly. Inevitably then, other nations would begin to erect new barriers against exports from both the United States and Japan. Furthermore, the domestic forces within Japan and the United States, leading each nation to restrict imports from the other, would surely react against the third country exporters seeking to exploit the new opportunities apparently created by the decline in U.S.-Japanese trade. The unraveling of the GATT structure would proceed inexorably.
While the United States could adjust to a reduction of world trade, though at a cost, the effects on Japan would be calamitous. The most prosperous, stable, democratic nation in Asia would be subjected to intense economic pressures, which would surely have social and political repercussions. The prosperity of all other nations would be likewise threatened. Although the manner in which these pressures would find release cannot be predicted, that the peace and prosperity of the world would suffer drastically cannot be doubted.
Aside from the obvious advantages each nation gains from the bilateral trade-expanded markets for efficient producers, greater opportunities for consumers, technology transfer, and the related benefits-each nation also has a beneficial effect on the other through the force of competition. The impact of Japanese competition on American producers in numerous fields is palpable. This has been painful for American workers and companies, but one must ask whether the American automobile industry would have reacted as quickly as it did to rapidly rising petroleum prices if it had not been for the harsh competition from abroad, mainly from Japan. If the competitiveness of American steel has declined, is it not better to discover this now through the market mechanism while there is time to take the necessary corrective action? Indeed, in both automobiles and steel, as well as in electronics, the emerging pattern is one which involves both competition and important technical cooperation. Spurred by Japanese competition, helped by the study of Japanese methods, and aided by technology exchange agreements with Japanese firms, American industry is altering production methods to cut costs and prices while improving quality.
It is also worth recalling that the American economy is still, overall, the most productive in the world, even though the rate of increase in productivity is low. American firms in fields such as aircraft, heavy electrical equipment, genetic engineering, computer software, and health technology are still the pacesetters for the world. American agriculture and distribution systems are much more productive than Japan's. The exciting potential for fruitful interaction between these two dynamic nations would be lost if this interaction were retarded.
The likely diplomatic consequences of allowing U.S.-Japanese relations to weaken as a result of economic tensions are also ominous. The United States and Japan have remarkably similar diplomatic interests in the world. Both favor a liberal economic order, a world which is open to trade and capital movement. For both, open democratic societies are preferable to autocratic regimes with their inherent propensity to violence and sudden foreign policy changes. Both are eager for an end to Soviet expansionism and for a continuation of the evolution in the People's Republic of China toward moderation. Japan has been as supportive of the United States in the cases of Iran, Afghanistan and Poland as any of America's allies. Both Japan and the United States benefit from and support the growing prosperity of the Association of Southeast Asian Nations. Expanding Japanese foreign aid has increasingly been directed to countries considered strategically important by the United States, such as Pakistan, Turkey and Egypt, as well as to the nations of Southeast Asia.
Only as regards the Middle East is there a significant diplomatic difference between Japan and the United States. Japan's dependence on Middle East oil (nearly 60 percent of all Japanese energy needs as compared to 7.5 percent for the United States), plus the absence in Japan of a special tie to Israel, has caused the Japanese to pursue a policy in that region which seeks, while trying to avoid antagonizing the United States, to maintain friendly relations with the oil exporters.
A weakening of the close diplomatic cooperation which has developed between the United States and Japan in recent years would be serious for both. Both would be more vulnerable to manipulation by the Soviet Union, the People's Republic of China, and other nations as well, if either could be played off against the other. Support for the United Nations and other world institutions, which, with all their shortcomings, are still a moderating presence in many of the world's conflicts, would be weakened if Japan and the United States did not coordinate approaches on many issues.
A slackening in U.S.-Japanese diplomatic cooperation would come at a particularly unfortunate time for Japan. The trauma of defeat and occupation for Japan (which included the destruction of Hiroshima and Nagasaki by the atom bomb) was a national experience of deeper impact than anything which has occurred in the United States, at least since the Great Depression and possibly even since the Civil War. For at least three decades following the war, Japan deliberately sought a low profile in world affairs and relied heavily on U.S. leadership. With self-confidence largely restored, Japan is cautiously making its own decisions in foreign affairs as, for example, in regard to Vietnam and the Middle East. Close cooperation with the United States, however, remains the oft-stated cornerstone of Japanese foreign policy. If Japan should feel alienated from the United States, it is impossible to say what direction Japanese foreign policy would take, but every conceivable course, from accommodation with the Soviet Union to a massive rearming, including production of nuclear weapons, would be highly disadvantageous to the United States.
The implications of any weakening in Japanese-American security relations are truly alarming. Such a development would put in jeopardy American bases and supply lines which are essential for the American forces in the western Pacific. The U.S. divisions in Korea would be much less secure. Their withdrawal would represent a gamble which no American Administration for over 30 years has wished to take, but faced with uncertainty about Japanese cooperation, this policy would have to be reevaluated. The defense of the Philippines, Australia, New Zealand and the other nations of East Asia would be put in doubt, and the security of the United States would be seriously weakened.
Yet the possibility of our defense ties with Japan reaching such a sorry state looms ever greater as the perception in the United States grows that Japan simply is not assuming its fair share of the defense burden. Coming under increased American pressure, and in response to the Soviet arms buildup, the Japanese government has called for annual increases in defense spending-up 7.34 percent this year-in an otherwise zero-growth budget. The problem with this figure is that while above and beyond the three-percent growth target that most NATO members are failing to meet, total Japanese defense spending amounts to less than one percent of Japan's total GNP. This summer a Pentagon Report on Allied Contributions to the Common Defense concluded that "Japan appears to be contributing far less than its share or what it is capable of contributing."3 How long Congress will allow the United States to provide some 53 percent of the total, collective military budget of the allies, when Japan provides less than four percent of the total, is anybody's guess. The issue in most American officials' minds is not one of lack of funds but lack of political will. Unless evidence of that will is more forthcoming from the Japanese, we could witness a serious retrenchment of U.S. forces abroad and in the Pacific in particular.
The effect on Japan of such a breakdown in the security relationship would be severe. At present under the 1960 Treaty for Mutual Security and Cooperation, Japan essentially relies on the United States for its security. Should Japanese confidence in American protection decline to the point where the Japanese were faced with developing an alternative, three principal choices would be open to them. One, they could attempt to fashion a security arrangement based on cooperation with the People's Republic of China and such other nations as might be associated. This would require a much larger Japanese military establishment with the disadvantages discussed below plus, in all probability, Japanese help in the arming of the P.R.C. This would, of course, be seen as highly threatening by the Soviet Union and other nations of Asia as well. It would certainly carry a heavy burden of tension and potential conflict while offering only modest hope.
A second major option would involve a Finland-like accommodation with the Soviet Union, a move which would be congenial to the pacifist and neutralist elements in Japanese thought. The Soviet need for Japanese technology, and the Japanese need for Soviet raw materials, could possibly provide the basis for such an accommodation. However, the Soviet attack on Japan in the closing days of World War II, and the subsequent imprisonment of hundreds of thousands of Japanese soldiers, many of whom never returned; the Soviet occupation and arming of islands considered by the Japanese to be part of their homeland; difficult negotiations on many subjects including fishing rights; and growing evidence of Soviet aggressiveness have created such a deep distrust and even dislike in Japanese minds that an accommodation of this sort would probably be the least attractive course for Japan. Even if it were adopted as an expedient, there would be continuous efforts to escape from the arrangement, which would mean constant uncertainty and trouble in East Asia.
Three, they could seek to build an independent military force adequate to provide whatever security they could reasonably expect to attain without assurance of U.S. help. This would involve nuclear as well as substantially increased conventional forces. As regards strategic defense, the basis for policy would have to be somewhat similar to that announced by General de Gaulle-to the effect that Japan could not escape annihilation if the Soviets chose to attack with nuclear forces, but the Japanese could at least in retaliation tear off a Russian limb. A strategy based on raising the cost of aggression to unacceptable levels to the aggressor would also apply to Japanese conventional forces.
The cost to Japan and to the world of such a course would be high indeed. Not only would all of Japan's neighbors be alarmed at the specter of a large military buildup, but many Japanese also find this frightening. The memories of the results of military rule in Japan in the 1930s, as well as of the horror of nuclear weapons, are still living realities for many Japanese. There is concern that the rise of a powerful military-industrial complex in Japan would have a baneful effect on Japanese life and even on the health of democracy there. To a world already burdened with the great strategic arms race, plus several regional arms races, would be added the potential of yet another.
This brief discussion of the results of a weakening in the U.S.-Japanese alliance suggests how dismal the consequences are likely to be if this should be allowed to happen. Since there are many inherent bases for Japanese-American misunderstanding, there is a danger that things will unravel unless both countries maintain conscious and vigorous efforts to develop closer ties.
The obstacles to Japanese-American cooperation are deeply embedded in the history and social structure of each nation. That Japan is homogeneous and the United States heterogeneous is self-evident, but the overwhelming importance of this singular difference cannot be appreciated until it has been experienced in both nations. There is nothing in the collective American experience that compares with the intensity of being Japanese. To be Japanese is to be aware from birth that one is part of a nation small in area and unique in language, culture, history and geographic location. No major nation has lived so completely unto itself; the heritage of two and one-half centuries of nearly complete isolation is still strongly felt. No other advanced nation has a similar continuity of institutions extending into prehistory. Japan is a creation of nature. An energetic and intelligent people, working to refine their society in isolation, the Japanese have created the world's most highly articulated large community, in which institutions, mores and individual aspirations have been brought into a much more precise connection than in any other large country.
America, by contrast, is composed of loosely integrated ethnic and racial groups united by agreement on methods of governance and dispute settlement. The United States was a deliberate intellectual creation based on institutional diversity compounded by a still-growing ethnic diversity. Whereas the intense, binding Japanese experience has produced in that country a pervasive understanding of what constitutes proper conduct in all normal circumstances, Americans have only a limited set of such generally agreed rules. To a degree unthinkable in the United States, therefore, the Japanese can settle disputes, decide on policy, and so govern themselves without benefit of the formalistic laws and regulations through which a heterogeneous population must make explicit that which is not implicit.
Since Japan is such a highly unified nation, there is no constitutional presumption of diversity of rule-making as there is in the federal structure of the United States. This has important practical significance. For example, Japan has no objection to national banks in addition to regional banks. Banks which are free to draw on the resources of an economy half that of the United States will clearly be strong competition for American banks which are still struggling to find ways to operate across state boundaries. The national newspapers in Japan have circulations five to six times those of the largest American papers and, as a result, much greater resources. Since the Japanese family subscribes on the average to 1.5 papers, often including a national and a regional paper, the Japanese population is better and more uniformly informed about national and international events than is the American population. A national educational system provides a relatively uniform and high-quality secondary education. A much more hierarchical system of national universities, public and private, helps to maintain the leadership cadre, public and private, selected largely on merit and much more united by bonds of friendship and common outlook than is possible in the United States. From the Japanese perspective Japan looks small and America large; from the viewpoint of the American firm, the massed power of Japan-including national banks working closely with allied production and marketing firms and supported by a cooperative government bureaucracy, notably the Ministry of International Trade and Industry and the Ministry of Finance-seems very large indeed. For example, MITI has recently decided on a 30-year program to make aircraft a "target industry of the 21st century"-a clear long-term threat to aircraft manufacturers in the United States and Europe.
Integrated Japan versus decentralized America is vividly demonstrated in the different relationship between government and business in the two countries. The difference can be characterized as that of coach versus referee. Since 1854, when Japan reopened its doors to the world, the drive has been to catch up with the West, and the government has seen its role as the inspirer, leader and protector of private firms seeking to battle their way into world markets. Government and business in Japan for well over a century have shared a partnership-at times strained but nonetheless effective-pitting Japan against the competition. America, also insular but content in its continental size, viewed the outside world from the mid-nineteenth century until quite recently as intrusive, disturbing, even exciting, but not for the most part of great importance economically. The role of government was seen as the rule setter and system manager, guarding against monopoly and other abuses, unmindful of any cost that this imposed on American firms and their need to be competitive internationally.
The intense inward-focused Japanese experience has produced a set of values which puts the group-family, village, school class, firm, nation-higher on the value scale than is common in America, where the individual has been exalted. Commitments to jobs and to long-established relationships go much deeper in Japan. Human relationships based on mutual trust are built slowly, but once built are expected to endure. The operational significance for business and government relations is highly important and creates difficult obstacles for U.S.-Japanese cooperation.
There is also a discontinuity in mood between Japan and the United States which adds to the problem of cooperation. Japanese frequently display a legitimate pride over their astounding achievements, which at times borders on arrogance. This is combined, however, with an acute sense of vulnerability springing from their near-total dependence on a world economy over which they feel they have little control. They compare the ordered efficiency and peace of Japan to the disorder in other countries and in the world; understandably, they are reluctant to engage their destiny with foreigners any more deeply than necessity requires.
The mood in America contrasts sharply. The recent decline in American influence, associated in part with the decline in the relative size of the U.S. economy, as well as with the scars left from Vietnam, has darkened American optimism. Key industries appear to have lost their competitive edge. A mood of doubt and self-doubt has replaced the easy self-confidence of the early 1960s. With some feeling of self-righteousness, Americans now expect the newly powerful Japanese to help with the burdens of world leadership, just at a time when Japanese doubts about American reliability and durability are on the rise.
New efforts are therefore needed by both nations to ensure the continuation of the collaboration which has been so fruitful for both. Fortunately, the actions needed in each country, although involving in some cases significant short-term costs, are clearly in the long-term best interest of each, regardless of the requirements of the bilateral relationship.
On the American side, the essential need is a generally reinvigorated economy. This must include bringing inflation under control and creating the confidence that it will be kept under control. Savings and productive investment, including research and development, must be increased. Interest rates and unemployment must be brought down to acceptable levels. By now, these goals are generally accepted, though there is continuing debate as to how they are to be achieved. With a restrengthened American economy, many of the current economic problems between Japan and the United States would diminish to secondary importance or disappear altogether.
Japanese competition is only the early warning signal of the much more competitive international climate in which we are moving. If we attempt to turn off the warning signal through protectionist measures, we will inevitably lose time in our efforts to readjust to the world market, thus making the inevitable readjustment more costly and more painful. The damage done to our relations with Japan would only be compensated by ephemeral gains.
Assuming that America rises to the challenge, as it must in its own interest, the United States also needs to adjust the handling of its foreign policy. At the root of American difficulties in sustaining a sensible policy vis-à-vis Japan is the widespread lag in American perception of Japan's unusual importance to this country. Generally speaking, in the circles which shape policy, including government officials, businessmen, journalists and educators, there is still an inadequate grasp of the potential for gains and losses inherent in the U.S.-Japanese relationship. Although American awareness and knowledge of Japan have increased remarkably in recent years, much remains to be done. Parenthetically, it is interesting to note that both the Nixon-Ford and Carter Administrations had difficult times with Japan in their early years, but as they came to understand Japan and its importance, relations between the two countries became much more amicable. Toward the end of the Nixon-Ford Administration, Henry Kissinger stated that bilateral relations had "never been better in thirty years." President Carter's unprecedented attendance at Prime Minister Ohira's funeral demonstrated a regard for Japanese sensibilities which was notably lacking at the start of his term.
The executive and legislative branches of the federal government are still critically understaffed with people who are deeply knowledgeable about Japan, or have the ability to work easily in the Japanese language. Congress is involved regularly with legislation affecting U.S. relations with Japan, but the number of congressional staff members with adequate knowledge of Japan is pitifully inadequate. The Department of State has a well-qualified group of Japan specialists, although none at the most senior levels. The many other agencies of government which also are regularly involved with Japanese affairs, including the Departments of Defense, Commerce, Agriculture, Energy, Education and Justice-plus independent agencies such as the U.S. Trade Representative, the Securities and Exchange Commission and the International Trade Commission-have few officials who are fully conversant in Japanese. The National Security Council and the White House are also involved with Japanese affairs on a continuing basis without benefit of enough expertise. This shortage of specialists on Japan is a self-inflicted handicap in managing U.S.-Japanese relations.
Consideration should be given to a special ten-year effort to create within the many involved federal agencies a corps of Japanese specialists, trained in language as well as other relevant aspects of Japanese society. In addition to recruiting Japanese specialists into the career service, a special training program might be established for up to 100 individuals a year, open on a competitive basis to appropriate career officials in all designated departments and agencies who are willing to undertake special training. This would include intensive language and cultural training in the United States and Japan, accompanied by a commitment by those who benefited from the program to work on Japan-related matters for a designated period at the pleasure of the government. Ideally, this program should be monitored on a government-wide basis to ensure that these specially trained individuals are maintaining and improving their competence and also to keep track of the way that they are being used by their respective agencies. It is to be hoped that many of these Japanese specialists would eventually be promoted to positions of broader responsibility involving more than just Japan-related official issues. The fact is that Japan and Japanese experience are now relevant to vast areas of American life.
Another possibility would be an adaptation of a successful program which has developed better understanding between European Community officials and their American counterparts. Under this program, matched exchanges of middle-level officials are carried out with each partner acting as the host for the visitor. The officials being in the same field, e.g., agriculture or central banking, each is able to arrange for the other the most useful program possible. In the course of reciprocal visits of several weeks, the paired officials have an opportunity to become well acquainted, and their friendships have helped to lubricate the contacts between the European Community and the U.S. government.
American multinational corporations, particularly those operating in Japan, could also benefit from a greater effort to recruit, train and utilize Japanese specialists. Firms now operating in Japan could use them to advantage both there and as specialists in their headquarters. Corporations not now operating in Japan could well afford at least some staff expertise on Japan to keep them informed of opportunities and risks, since for the foreseeable future Japanese firms are going to be the most important competitors and/or collaborators for American firms. American corporations, as a matter of simple prudence, should be well informed about Japanese methods and systems whether or not they are now involved with Japan.
The high premium the Japanese set on personal relations and the difficulty of mastering the language and culture suggest the wisdom of not rotating executives in and out of Japan as though this were an ordinary assignment. Among the American business community in Japan there are today some individuals who have learned the language and, with the cooperation of their firms, made Japan a long-term commitment. Many more of these are needed-not least because of the substantially greater profits which foreign investors earn on the average in Japan.
A growing cadre of professionals-journalists, lawyers, economists, accountants-knowledgeable about Japan would also be a national asset. The creation by the Congress in 1975 of the Japan-U.S. Friendship Commission, a federal foundation devoted to expanding educational and cultural contacts between the two countries, gives recognition to this, and the Commission has provided substantial encouragement to the training of Japan specialists who are also professionally skilled.
Private, nonprofit organizations operating in both countries can also contribute to the task of helping these two nations work together more effectively. In 1980, in a unique experiment, a special group of private citizens from both countries, the so-called "Wise Men," was asked by the two governments to review U.S.-Japan economic relations. Their report particularly urged both governments "to support the efforts of private sector and parliamentary groups willing to give close attention to the United States-Japan economic issues. Such groups can plav an important role in educating public and political colleagues."4
There are two areas where greater American sensitivity to Japanese concerns deserves special mention-food and energy. In both these areas Japan is critically dependent on imports. Japan imports one-half of its foods by caloric value. Although Japan is more than self-sufficient in rice, so that literal starvation would not be an immediate problem if trade were interrupted, the near-starvation at the close of World War II is still vivid in the nation's memory. The case of energy is, if anything, even more significant. The Wise Men estimated that a substantial disruption in world oil production would have serious consequences for the United States-but would be truly catastrophic for Japan. Japan's vulnerability and consciousness of this vulnerability is almost inconceivable for Americans.
The United States can do more than it has done so far to give Japan the assurance of reasonable access to food and energy in normal times and in crises. The U.S. legislative barrier to the sale of Alaskan oil to Japan, reflecting an American desire to retain full use of this domestic source in the event of a crisis-even though it would be more economical to sell some of this oil to Japan-is a continual reminder that the United States does not recognize the degree of interdependence which already exists. The joint development of coal in the western United States, as well as joint research on energy conservation and on new sources of energy, would also be mutually beneficial. If the United States and Japan together approached the problem of ensuring stable energy supplies, they would improve their security and bring an added element of stability to the world energy picture. Sale of U.S. energy to Japan would also significantly improve the bilateral trade balance in America's favor.
Better assurances that the United States will be a reliable supplier of food are needed. The short-lived controls on soybean exports instituted by the United States in 1973 are still remembered in Japan and pointed to as an example of what happens in the event of shortages in the United States. Long-term commitments on U.S. food supplies, incorporating confidence-creating arrangements, are needed.
Japan must also adjust if this bilateral relationship is to achieve its full potential in the world. The fundamental need is for the leadership and the Japanese public to grasp the full implications of Japan's great economic weight in international affairs. The Japanese habit of thinking only of what is good for Japan, on the implicit assumption that the world trade and monetary system will be unaffected by Japanese behavior, must give way to thinking about what needs to be done to preserve that system on which Japanese survival depends.
However, a change in Japanese perception in this direction is coming with increasing speed. In April 1982, the Keidanren, the organized voice of Japanese business, issued a far-reaching call for a further opening of the Japanese market to foreign goods. This was followed by the second package of measures in six months to reduce Japanese barriers to trade and a special statement by Prime Minister Zenko Suzuki on May 28, 1982, in which he called on responsible officials and private individuals to welcome foreign goods and investment. Together, these constitute a significant forward movement.
The practical effects of a thorough Japanese recognition of its leadership position would be profound and not fully predictable. The remaining obstacles which still inhibit imports into Japan would presumably be further reduced, although no nation has ever opened its borders completely to imports. Japanese overseas investment, which is itself a powerful force toward greater internationalization of Japanese society, would continue at an accelerated pace. Japanese foreign aid would continue to rise and the terms on which that aid is extended would continue to be liberalized. The yen would steadily move toward key currency status with all that this implies for further opening of the Japanese capital market to foreign borrowers and greater freedom for foreign holders of yen to transfer in and out of the currency.
Substantially increased Japanese leadership in this area would also mean a heightened cooperation between Japan and the United States in the affairs of international institutions. Japan is already the third largest contributor to the U.N. budget, but its role in the international institutions is still too modest.
The United States and Japan, in cooperation with other like-minded nations, can offer the world badly needed leadership. Ironically, war created the basis for a much closer collaboration between these two Pacific powers than might otherwise have been possible. Some of the elements of a joint agenda which will make this collaboration most fruitful have already been suggested. That agenda will require more extensive and continuous consultation between the many relevant government departments on both sides, including a resumption of periodic, cabinet-level meetings of all these departments. These and the many other steps which will benefit both nations are likely to develop naturally once the United States fully accepts the exceptional role Japan will play in its future and once the Japanese recognize fully the major influence they inevitably exert-and will exert-in world affairs.
1 C. Fred Bergsten ("What to Do about the U.S.-Japan Economic Conflict," Foreign Affairs, Summer 1982, p. 1061) cites an estimate of over 500,000 jobs in the United States affected by the bilateral trade in 1980 when the Japanese surplus was much lower.
2 Figures supplied by the Office of the U.S. Trade Representative, Washington, D.C.
3 Report on Allied Contributions to the Common Defense, report to Congress by Secretary of Defense Caspar Weinberger, July 21, 1982.
4 Report of the Japan-United States Economic Relations Group, prepared for the President of the United States and the Prime Minister of Japan, January 1981, Washington: GPO, 1981, p. 100.