According to Customs clearance statistics of the Ministry of Finance, Japan's trade surplus vis-a-vis the United States recorded a record high of US$55 billion in 1994, and according to the 1994 Commerce News published by the U.S. Department of Commerce, the U.S. trade deficit with Japan was a record US$65.7 billion.
However, after we entered 1995, during the period from January through August, Japan's imports from the United States increased an average of 18.4% a month in terms of value, and the average volume index of Japan's imports from the U.S. reached 121 (1990 volume=100), indicating that Japan's trade surplus with the United States is tending to decrease. Further, the ratio of Japan's carrent account surplus to GDP in 1994 was 2.8%, and it is expected to be 2.3% in 1995 and 2.0% in 1996, as projected by the World Economic Outlook (WEO) of the IMF. These figures clearly indicate that Japan's current account imbalance is being rectified. The following is an analysis centering of Japan-U.S. trade statistics giving an overall breakdown of the state of Japan-U.S. trade relations.
Steadily Expanding Imports into Japan from the United States
Japan's imports from the United States are expanding steadily (all figures are on a dollar basis and come from Customs clearance statistics of the Ministry of Finance). During the period of January through August 1995, there was an average increase of 18.4% over the same months of the previous year. (In particular, April, May, June and July recorded over 20%.) Looking at the first six months of 1995, from January through June, total imports into Japan have expanded on a worldwide basis of 28.5% compared to the same period of the previous year, with a 37.0% from the EU, 38.8% from the People's Republic of China, 35.7% from the Asian NIEs, 25.9% from ASEAN and 18.3% from the United States.
At the same time, the Commerce News of the U.S. Department of Commerce shows that for the 20 months from December 1993 through July 1995, there has been a steady and continuous expansion of exports of goods to Japan each month over the same month of the previous year. From January through July 1995, American exports of goods to Japan increased by 20.4% over the same period of the previous year, surpassing the rate of expansion of American exports to the world, which was 15.7%.
Taking a look at product-specific imports from the United States, we see a tremendous increase in office equipment, including computers; electronic parts, including semiconductors, and automobiles and other manufactured products. (All figures are on a dollar basis and come from Customs clearance statistics of the Ministry of Finance for January through August 1995.)
| Japan's Product-Specific Imports from
the United States (Jan. 1995-Aug. 1995: comparison to previous year) |
||
| Lumber and wood products | 11.4% | US$2.33 billion |
| Office equipment | 19.1% | US$2.99 billion |
| (Computers) | 25.6% | US$1.96 billion |
| Semiconductors and other electronic parts | 45.5% | US$3.21 billion |
| Automobiles | 45.8% | US$1.87 billion |
| Engines | 47.4% | US$1.32 billion |
(Source: Ministry of Finance)
Japan's imports are steadily increasing on a volume basis, too; the volume index for imports from the United States has been increasing on an annual basis (1990 volume=100): 100.6 for 1993 and 110.4 for 1994. During the January through August 1995 period, the average was 121.0, making it certain that the annual figure for 1995 will record a major increase over last year.
The volume index for imports from the world is moving at a higher pace than that for imports from the United States (1990 volume=100): 107.9 for 1993 and 122.4.for 1994. During the January through August 1995 period, the average was 134.0. (All figures come from Customs clearance statistics of the Ministry of Finance.)
Japan is the largest importer of American agricultural products, and imports of manufactured products from the United States are increasing as well. During the first half of 1995, the share of manufactured imports in total imports from the United States climbed to 65.5%, which is a 21.4 point increase over the 44.1% of 1980. On a value basis, the first half of 1995 saw a 35.9% increase on total imports from the world compared to the previous year, amounting to US$94.2 billion, with imports from America recording a 20.5% increase, amounting to US$23.9 billion.
| Trends in the Share of Japan's Imports of Manufactured Products According to Major Regions (Unit: % of total imports) | ||||||
| 1980 | 1988 | 1990 | 1993 | 1994 | 1995(first half) | |
| World | 22.8 | 31.0 | 50.3 | 52.0 | 55.2 | 57.7 |
| United States | 44.1 | 55.2 | 62.0 | 61.8 | 64.4 | 65.5 |
| Canada | 16.6 | 17.2 | 24.2 | 20.7 | 20.2 | 25.7 |
| European Union | 86.4 | 84.2 | 89.1 | 85.1 | 86.1 | 87.4 |
| Asian NIEs | 67.3 | 57.8 | 73.4 | 74.2 | 77.4 | 79.2 |
(Source: Trends in Manufactured Imports, JETRO)
Japan's Falling Trade Surplus with the United States
According to trade statistics of the Ministry of Finance, the Japanese trade surplus with the United States has been decreasing steadily since the beginning of 1995, and on a yen basis, there were six consecutive months of decrease of the trade surplus with the United States compared to the same months of the previous year, from March through August 1995. On a dollar basis, there has been a trend toward decrease since June 1995.
| Trends of the Japanese Trade Surplus with the United States (Units: US$100 million, 10 billion yen) | |||||||||||||
| 1990 | 1991 | 1992 | 1993 | 1994 | 1995 Jan. |
Feb. |
Mar. |
Apr. |
May |
June |
July |
Aug. |
|
| Dollar basis | 360 | 382 | 436 | 502 | 549 | 32 | 49 (12.0) |
51 (3.1) |
45 (3.1) |
33 (8.9) |
42 (-10.4) |
39 (-31.2) |
29 (-15.4) |
| Yen basis | 547 | 513 | 550 | 557 | 561 | 32 | 48 (2.1) |
48 (-8.0) |
39 (-15.1) |
28 (-11.1) |
36 (-26.8) |
33 (-40.6) |
27 (-23.3) |
| (Source: Ministry of Finance) (Figures in parentheses are monthly comporison to previous year) |
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Japan's Falling Trade Surplus with the World
Japan's trade surplus with the world as whole is falling at an even faster rate than its trade surplus with the United States. Japan's trade surplus with the world as a whole in 1994 decreased 7.3% in comparison to the previous year on a yen basis; although it marked a record high on a dollar basis, the growth rate was only 0.5%. Japan's trade surplus with the European Union decreased 23.4% on a yen basis, and decreased 16.2% on a dollar basis in comparison to the previous year - a major factor in a effecting the overall reduction in the trade surplus.
Economic Issues
Current State and Recent Trends In Japan-U.S. Trade Relations
Since the beginning of 1995, the trend toward a falling trade surplus with the world has continued. On a monthly basis, January on a yen basis was 58.6% down from the previous year, and during the period of February through August, this continued to decrease on a monthly basis by 15.5% on average. On a dollar basis, except for February, May and June, the surplus decreased, and in particular, fell for two consecutive months during July and August. The first half of 1995 amounted to a reduction of 3.8% from the previous year, indicating two consecutive periods of reduction, and there are strong expectations that the trend toward reduction will continue.
| Trends in Japan's Trade Surplus with the World(Unit: US$100 million, 10 billion yen) | |||||||||||
| 1992 | 1993 | 1994 | 1995 Jan. |
Feb. |
Mar. |
Apr. |
May |
June |
July |
Aug. |
|
| Dollar basis | 1066 | 1202 | 1209 | 28 (-53.5) |
113 (3.8) |
139 (-0.2) |
109 (-1.9) |
70 (7.3) |
117 (2.8) |
94 (-23.0) |
60 (-1.3) |
| Yen basis | 1348 | 1338 | 1239 | 28 (-58.6) |
112 (-5.4) |
130 (-11.2) |
93 (-19.6) |
59 (-12.2) |
99 (-16.0) |
81 (-33.4) |
54 (-10.8) |
| (Source: Ministry of Finance) (Figures in parentheses are monthly comparison to previous year) |
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The Steadily Falling Ratio of Japan's Current Account Surplus to GDP
The ratio of Japan's current account surplus to GDP is decreasing steadily from the 1992 figure of 3.2% to the 1994 figure of 2.8%. Further, according to the World Economic Outlook of the IMF for October 1995, it is expected to decrease to 2.3% for 1995 and 2.0% for 1996.
| Trends in the Ratio of Japan's Current Account Surplus to GDP (Unit: %) | ||||
| 1992 | 1993 | 1994 | 1995 | 1996 |
| 3.2 | 3.1 | 2.8 | 2.3 | 2.0 |
(Source: World Economic Outlook, International Monetary Fund)
Japan's Falling Share of the U.S. Trade Deficit
Japan's share in the U.S. trade deficit is steadily falling. In 1991, it was 65.0%; in 1994, it was 43.6%, representing a 21.4 point improvement. From April through July 1995, there has been a decrease for four consecutive months, and in particular, in July, there was a 29.0% decrease.
The growth in the United States 1994 trade deficit with Japan of 10.6% was lower than the growth in the U.S. trade deficit with the world and with other major trading partners of the United States. This trend is continuing in 1995 with U.S. trade deficit growth vis-a-vis the world at 30.3%, with Canada at 29.7%, with the European Union at 733.2% (France: 53.0%, Germany 30.0%) and with China at 29.5%.
| Trends in Japan's Share of the U.S. Trade Deficit (Unit: %) | |||||||||||
| 1980 | 1985 | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 Jan. July |
Apr. |
May |
June |
July |
| 33.8 | 36.5 | 40.4 | 65.0 | 58.7 | 51.4 | 43.6 | 40.4 | 48.6 | 42.2 | 35.5 | 29.0 |
(Source: Commerce News of the U.S. Department of Commerce)
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