ABSTRACT
Whether the current upheaval in Japanese politics will affect its economies for good or ill is unclear. If the political reformers like Mr. Hata and Mr. Ozawa are more concerned than their predecessors with the lot of Japanese consumers and taxpayers, the effect should be salutary. It's more doubtful that the effect will please America's most vehement critics of Japan's trade policy because their expectations are misconceived. Japanese consumers and taxpayers would surely benefit, and American exporters would perhaps benefit, if Japan opened its markets more fully, eliminated its often subtle nontariff barriers to imports of services as well as goods, and removed existing restrictions on participation by foreign firms in Japanese government procurement contracts. Absent a rise in US savings, or a fall in US investment, increased US exports to Japan will simply lead to increased US imports from Japan or elsewhere, or reductions in other US exports, without changing the overall US current account deficit.
