This chapter, as part of an examination of the broader setting of Asia-Pacific Economic Cooperation (APEC), explores the trajectory of the US-Japan relationship. It examines the efforts of both countries to deal with the post-Cold War reality of the region. The end of the Cold War has cut Japan loose from its post-World War II domestic political and foreign policy moorings. A paradigm shift in the Japanese political system is under way, and Japan's leadership recognizes that the Shigeru Yoshida strategy, is no longer viable. The purposeful and well-coordinated advance of Japanese economic interests into Asia at the end of the 1980s provided a sharp contrast to the political immobilism that characterized Japan's response to the Persian Gulf War and the hesitant Japanese participation in Cambodian peacekeeping operations The Gulf War was the first international crisis of the post-Cold War era, and Japanese leadership was unprepared to deal with the new context of its foreign policy.