ABSTRACT

Japan remains the EU's most important economic partner in East Asia, but also that with which its most problematic economic relations have been maintained. The country's ascendancy to economic superpower status has been at the relative expense of European industrial power. During the post-war period, the EU has had to come to terms with the Japanese competitive threat on various fronts. Consequendy, the EU-Japan economic relationship has been mostly characterised by persistent trade conflicts. Japan's rise has also altered the global balance of power and thus the nature of the international economic system in which the EU operates. The emergence of a tripolar structure of economic power, or Triad (i.e. the USA, Japan and the EU) became evident by the late 1980s with the demise of the Soviet Union and longer-term decline in American hegemony. We shall discuss later how Triadic relations provided the essentially context for EU-Japan economic relations during the 1990s. It will also be shown how the recent escalation of Japanese foreign direct investment (FDI) in Europe has significandy transformed the complexion of these relations. Before analysing these issues in some depth, we shall examine the nature of the Japanese economy.