ABSTRACT
US-Japan relations deteriorated significantly in 1991 and early 1992. The year began with a fight over Japan’s contribution to the US-led effort in the Gulf, continued with a host of bilateral sectoral trade disputes, and culminated in President George Bush’s trip to Japan. In private conversations with the Japanese, top Bush administration officials reportedly portrayed the US-Japan trade conflict as a political problem as opposed to an economic one. The argument was that Japan must make enough trade concessions to help the Bush administration keep the protectionists at bay. The United States should continue the Bush administration policy of pursuing process-oriented, bilateral negotiations in specific sectors where Japanese trade barriers can be identified. The United States should continue negotiations on Japanese policies and practices through the Structural Impediments Initiative, pursued by the Bush administration. The United States and Japan should negotiate ranges of acceptable outcomes, using international airline negotiations and agreements on capital-adequacy ratios for banks as models.
