Foreign policy is never a cutting-edge issue in U.S. presidential elections, and this year’s campaign is no exception. Even when the candidates have ventured into the territory, the focus has been on China, North Korea or the role of U.S. forces in Europe or Africa or even Haiti. When Japan makes the agenda, it’s usually in response to economic difficulties in the United States, with policymakers looking for a scapegoat. This year, however, the U.S. economy continues to hum along and Japan has gone virtually unmentioned.
Why is it, then, that three blue-ribbon groups in the U.S. have released reports in the last few months that try to chart a future course for the Japan-U.S. relationship? Both the security and the economic aspects of the alliance have come under intense scrutiny. That seems odd, given the relative lack of friction between the two countries just now.
Cynics might say it reflects the relative imbalance between the two countries. The U.S. is riding a wave of economic growth; Japan is still digging out of the worst recession of the postwar era. That disparity puts the U.S. in a prime position to restructure the bilateral alliance to its liking.
This time the cynics are overreacting. Japan isn’t on the U.S. policy agenda. “In much of Washington, Japan is simply off the radar screen,” observes Richard Katz, the author of “Japan: The System that Soured.”
That view is echoed by Adam Posen, a senior fellow at the Institute for International Economics, a Washington think tank. “On the economic side, the U.S. in general and most policymakers have just stopped caring about Japan,” he explained during a recent visit to Tokyo.
“They decided that the threat of taking over the world was exaggerated, and they’ve now decided that the threat posed by a weak Japan is also exaggerated. In 1997 and ’98, there was the fear that a real crisis in Japan would have a huge hit on the world economy. But Asia recovered and the U.S. wasn’t hurt by Japan’s weakness. So now there is no threat, positive or negative — and U.S. foreign policy runs on threats.”
Many in Tokyo consider the lack of attention a problem. Others in the U.S. view it as an opportunity — a chance to develop new policies that better prepare the two nations for the future.
A bipartisan group led by Republican Richard Armitage and Democrat Joseph Nye has called on the next administration in Washington to exercise “excellence without arrogance” when dealing with Japan. That is good advice.
The problem is that it’s hard to see how the U.S. can push the alliance further than it has gone. For the most part, the ball is in Japan’s court. Tokyo needs to implement the legislation for the security-guidelines revisions. And Japan has to develop a national consensus on the limits set by its Constitution, or on whether it wants to revise that document.
Those challenges must be met before Washington develops the more balanced relationship that Tokyo says it wants.
Thinking about the economy
Things are different on the economic front. There is a sense on both sides of the Pacific that Japan is in a transitional phase. Some may complain about the pace of change, but there is little doubt that change is occurring and that the U.S. has a chance to affect its direction.
Equally important is the recognition that the two economies have every incentive to start working together. The U.S. may be ascendant today, but the pendulum will inevitably swing back, and many of the old problems will return. It makes sense to lay the foundation for stable relations when things can be done in a relatively politics-free manner. It’s not without reason that Bruce Stokes, senior fellow at the U.S. Council on Foreign Relations, titles his study of the bilateral relationship “A New Beginning.”
Stokes’ approach is aggressive. He argues that the U.S. “must be willing to pursue a tough-minded approach to bilateral issues if and when Japan’s restructuring resolve falters.”
He acknowledges that the structure of Japan’s business environment is changing in profound ways. There has been reform, foreign direct investment is increasing and old exclusionary ways of doing business are breaking down.
But Stokes argues that change has been hesitant and begrudging. The point is not how far Japan has come, but how far it has to go to reach global norms: “Assessing the nation’s progress toward a new Japan using a global standard, not comparing it with the old Japan, the nation has a long way to go.”
Japan has to move faster, Stokes says, and the U.S. should do whatever it can to push that process along. Washington should embrace a “proactive trade policy.” “Gaiatsu,” or foreign pressure, is a must: “The new U.S. administration should be willing to use all available trade tools in dealing with Japan, including new structural and sectoral initiatives, stepped up unilateral trade action and multilateral pressure through cases before the World Trade Organization.”
Stokes’ muscular policies are unlikely to get a sympathetic response in a Republican administration. Even a Democratic president might shy away from his hard-nosed approach.
Posen laid out a less aggressive framework in an interview during his recent Tokyo stopover. Since he was a member of the Council on Foreign Relations Japan task force, it should be no surprise that his views and its recent report have a lot in common.
In Posen’s formulation, a modernized Japan-U.S. relationship will rest on three pillars. First is the recognition that U.S. advocates of change must ally with Japan’s own domestic reformers. That may seem obvious, but it has taken U.S. policymakers some time to recognize that they have the most influence when they work with allies within Japan.
The reforms that have been implemented to date have created opportunities to forge those kinds of alliances. Financial-sector liberalization appeals to consumers when Japanese banks offer only a paltry return on savings. The rapid drop in Japan’s telecommunications costs has strengthened the appeal of reform in the sector.
Both cases underline a subsidiary element of the new U.S. approach: the focus on strategic sectors that alter the economic environment. Posen explained, “Japan is changing, but this is happening through market forces, particularly financial market forces, not because the U.S. is pounding the table. The priority for the U.S. government has to be negotiating things that make foreign direct investment easier because that helps transform the business environment.”
The CFR report agrees: “The development of modern equity-based financial markets in Japan will ultimately affect the structure of the rest of its economy.”
Encouraging broader forums
The second dimension of the new U.S. approach is changing the tone of the discussions. In one sense, it means moving away, whenever possible, from a bilateral focus to a multilateral forum, be it the World Trade Organization, the G7, the G3 or regional organizations. This should help head off the friction that is invariably generated by head-to-head talks; multilateral negotiations are easier to characterize as win-win situations. That helps sidestep political pressure. And rules that are good for Japan and the U.S. should be good for the entire trading system. For example, it is more efficient to bring the Europeans into trilateral discussions than to have to deal with them separately at another time.
Bilateral negotiations are a fact of life, however. When they are the only option, Posen explained how they should focus on the private sector. “They should be talks, not negotiations. No deadlines, no targets. That will help keep them out of the press.”
Finally, the U.S. should encourage Japan to take a higher profile in regional and multilateral forums. Washington should stand by Japan as a real partner would, sharing responsibilities and burdens. Letting Japan take the lead will give Tokyo a higher stake in resolving those problems, as well as reinforce the institutions through which Japan works.
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