Rules of Engagement: Psychological and Diplomatic Dynamics of American-Japanese Relations

Abstract

During the forty years from 1953 to 1993, the geoeconomic power balance between the United States and Japan shifted dramatically from American to Japanese predominance. America's trade surplus with Japan turned to a deficit by the mid-1960s, its foreign investment surplus to a deficit by the early 1970s, and its financial, manufacturing, and technology supremacy was eclipsed or equaled during the 1980s. In 1993 the United States suffered deficits of $60 billion in trade and $110 billion in accumulated foreign investments with Japan. What accounts for this shift in geoeconomic power, and how has it affected the relationship? Although many primary and secondary forces contributed to the power shift, it is largely the result of nearly a half-century of sustained asymmetrical macroeconomic, industrial, and trade policies by the two countries. American liberalism and Japanese neomercantilism complemented each other in simultaneously developing Japan's geoeconomic power and relatively diminishing America's. Since the 1950s, virtually all conflicts between the United States and Japan have resulted from Washington's attempts to readjust the relationship's relative balance of costs and benefits that were set during the Occupation (1945-52). Over the past half century, in return for an alliance with Tokyo, Washington has guaranteed Japan's military security under a conventional and nuclear umbrella; allowed Japan to maintain high import and investment barriers, an undervalued yen, and virtually unlimited access to American markets, technology, and finance; sponsored Japan's membership in international organizations such as the United Nations, GATT, and OECD; and