Bergsten, C. Fred
June 1982
Foreign Affairs;Summer82, Vol. 60 Issue 5, p1059
Academic Journal
This article explores three episodes of major economic conflict between the U.S. and Japan that occurred between 1970s and 1980s. The first episode led to the U.S. import surcharge of August 1971 and a U.S. threat to invoke the Trading With the Enemy Act against its chief Pacific ally. The second episode produced major U.S. pressure on Japan during 1977-78 to boost its domestic growth rate. In the third episode, the U.S. joined as demandeur by the European Community, with racist overtones causing the rhetoric and frustration of both sides of the Pacific, and with spillover onto the reemerging issue of security relations between the two countries. There has been fairly steady tension between the U.S. and Japan over economic issues since Japan emerged as a major industrial power. Six hypothesis have been developed to explain U.S.-Japanese trade friction. There is some merit in each of the hypothesis, and policy in both countries needs to take each of them into account. Of the six possible causal factors, only exchange rate misalignments were present in each of the three periods and go far to explain the difficulties which have arose on each occasion.


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