ABSTRACT
In the absence of a major GATT/WTO tariff-slashing round in the late 1980s and early 1990s there had been basically three strategies to address the bilateral trade deficit in a trade-enhancing – that is non-protectionist – fashion. First, through sectoral talks addressing seemingly technical issues one by one; second, focus on structural impediments of the Japanese market, like the US with little success in their Structural Impediments Initiative (SII) of 1989–1991 addressing the collusive features of the keiretsu conglomerates; and third, focus on macroeconomics and force a revaluation of the yen, which the US achieved in the Plaza Agreement of 1985 (which subsequently contributed to the asset inflation of the late 1980s after the Bank of Japan (BoJ) flooded the country with liquidity in consequence).
