ABSTRACT
Bruce Stokes argued in a report for the Council on Foreign Relations that the United States has little stake in Japan's recovery unless that recovery entails greater openness to imports and foreign direct investment (FDI). Japan will find it very hard to institute reform without allowing more imports and FDI. Reform is a direction in which Japan will increasingly want to go. In many cases where the forces of reform and resistance are stalemated, the United States can help tip the balance. A 1995 US-Japan Financial Services Agreement “pushed the envelope” by introducing major changes in such areas as cross-border flows, introduction of new products, and asset management. Sometimes Japanese ministries have invited some foreign entry, hoping it will make Japanese players “leaner and meaner.” The Ministry of Transport reportedly encouraged the alliance of United Airlines with All Nippon Airways as a way of taking Japan Airlines down a peg.
