RECENT TRENDS IN JAPAN-U.S.
ECONOMIC RELATIONS

Free market Forces Yield Balance of Trade Improvement

The Government of the United States

The Committee of Economic Advisors Report (February 14, 1996)

The sectoral agreements with Japan are beginning to produce results. The Framework set up mechanisms, including qualitative and quantitative criteria, for both countries to use in reviewing the progess made on these agreements. Although it is still too early to judge the effects of the 1995 agreements, the results from the agreements concluded in 1993 and 1994 have generally been positive. By any measure, growth of U.S. exports to Japan has been striking, especially given that country's coutinuing economic stagnation. Overall U.S. exports to Japan were 20 percent higher in the period from January through November 1995 than in the previous year, and 47 percent higher than when the Administration took office. Growth of U.S. exports to Japan has been even stronger in those goods sectors covered by the Administration's trade agreements with Japan (Chart 8-1).

United States Trade Representative Mickey Kantor, at a press conference on February 7, 1996

But let me note as a footnote here that we reached a framework agreement in July of 1993 which had three parts: Japan agreed to lower its trade surplus as percentage of its GDP. They have done it and done it dramatically. Number two, Japan agreed to reach structural and sectoral results oriented agreements which would result in more market share or market impact for US and other foreign competitive products.That has worked.
It is interesting to note the CEA did a study about two months ago which indicated that under the areas that we reached agreement under the framework, we've increased our exports between fifty and eighty percent which is much faster than we increased generally for Japan. They were up 20% anyway which is impressive. Third we have cooperated with Japan on a lot of other agreements such as trying to work on issues such as AIDS and environmental problems. I think that it would be fair to say that the President and the government of Japan deserves great credit in the respect of making the framework agreement work in every aspect.