ABSTRACT
In the previous chapters we focused our attention primarily on the US-Japan nexus. The reason for doing so was that the main challenge to the stability of the trading system could be located in the dynamics of their bilateral trade relations. We argued that if Japan was to emerge as a system supporter, there had to be an easing of trade tensions between the two countries, arising from the perception that unfair Japanese trade practices were to blame for their trade imbalances. Accordingly, the earlier chapters concentrated on how Japan, in recent years, had attempted to manage its relations with the United States and defuse the protectionist threat to liberal trade. In the case of the auto dispute, an important consideration of the Japanese government was to assist in the revitalization of the American auto industry. Similarly, in the case of their trading imbalance, Japan took the initiative to phase out many of the non-tariff barriers to imports and to restructure its economy to make it less dependent on export demand. These were important because the large, and growing, trade imbalance between the two countries had become the main vehicle for the protectionists demanding trade retaliation.
