The Course of Economic Relations

Although the large and persistent trade and investment imbalances constitute the central feature of the overall U.S.-Japan relationship in the minds of most Americans, there is considerable disagreement in the United States over the causes, desirable remedies, or even the ultimate importance of these imbalances. Further, in contrast to security interests, which are defined and pursued by a few key agencies in each country and thus at least theoretically amenable to straightforward policymaking and implementation, economic interests are defined and pursued mainly in the private sector by millions of Americans in their roles as consumers and producers.

Still, since U.S. economic strength ultimately provides the foundation for national security, defining and pursuing economic interests should not pose a conflict with security interests in the long term. There is no reason for the United States to refrain from pursuing reciprocal access to markets and technology with Japan and other nations if this advances overall U.S. strategic interests. As discussed above, the “terms of trade” illustrated in Figure 2-1 have already shifted somewhat.

Managing the economic, security, and global partnership aspects of the U.S.-Japan relationship is likely to be challenging for both countries in the coming years. In particular, the long-term course of economic interactions and how both sides perceive the balance of mutual benefits will continue to have a significant impact on the overall atmosphere for cooperation. Leaders in both countries will continue to reevaluate the role of the alliance. Despite the challenges to effective management, however, the U.S.-Japan security alliance and other aspects of the overall relationship continue to serve the fundamental interests of Japan, and the United States continues to have leverage in the relationship as a result. For reasons that will be explored in the following chapters, however, exercising this leverage in defense technology relationships is by no means easy or straightforward.

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