Japan, being the worlds most dynamically competitive nation, is facing an ironic balance in trade with the U.S. The Japanese economy relies too heavily on exports, especially to the U.S., causing increasing trade surpluses. They have been in a repetitive cycle for the last 25 years in which the government allows the yen to fall against the dollar to boost exports and restrict domestic growth to dampen imports. The Japanese government has set too many trade restrictions on U.S. imports, trying to compete against and keep out American imports.This all began during the postwar period when Japan imposed heavy import barriers. Virtually all products were subject to government quotas, many faced high tariffs, and the Ministry of International and Trade Industry (MITI) had authority over the allocation of foreign exchange that companies needed to pay for any import. These policies were justified at the time by the weakened position of the Japanese industry and the countrys chronic trade deficits. By the late 1950s, however, they had regained balance and could not justify their payment system. Despite Japan's rather good record on tariffs and quotas, it continued to be the target of complaints and pressure from its trading partners during the 1980s. These complaints revolved around non-tariff barriers other than quotas, which included standards, testing procedures, government procurement, and other policies that were be used to restrain imports.Import PoliciesIn 1984 the United States government initiated intensive talks with Japan on four product areas: forest products, telecommunications equipment and services, electronics, and pharmaceuticals and medical equipment. The Market Oriented Sector Selective (MOSS) talks were aimed at routing out all overt and informal barriers to imports in these areas. The negotiations lasted throughout 1985 and achieved modest success. Supporting the view that Japanese markets remained difficult to pene...
