ABSTRACT
This chapter assesses US-Japanese economic relations in the early 1990s with a special focus on the bilateral trade imbalance problem. The role of what can be termed the postwar US-Japanese economic structure is crucial in such a perspective. US-Japanese monetary relations have experienced a tremendous transformation. The postwar US-Japanese economic structure consists of two specific economic relationships between the United States and Japan-one in trade relations and the other in monetary relations. The US policy was to incorporate Japan into the US-led liberal trade framework of the General Agreement on Tariffs and Trade. US markets have been important for Japan as export markets—partly because Japan has to earn the dollar in order to pay for its imports, which are mostly denominated in the dollar. Japan has replaced Germany as a major financial supporter of US hegemony. The credibility or utility of protectionist threats by the United States against Japan has decreased considerably.
