Trade conflicts between Japan and the United States over market access; the case of automobiles and automotive parts

Abstract

The conspicuous feature of bilateral trade conflicts between Japan and the United States in the 1980s and early 1990s was the shift from protecting the US market from Japanese exports to negotiating greater US access to the Japanese market. This paper takes the negotiations over automobiles and automotive parts as a case study to examine why the market-access policy evolved in the United States and how Japan responded. The US government had two main strategies: a managed-trade approach and a harmonisation approach. The managed-trade approach of the Framework Talks in the early 1990s was intensely resisted within Japan, and the Japanese government rejected the approach. The harmonisation approach has been consistent with Japanese policy, as represented by the Mayekawa Report, and the Market-Oriented, Sector-Specific (MOSS) and Structural Impediments Initiative (SII) talks between the United States and Japan were more successful and harmonious. The intensity of the trade conflicts in the early 1990s has not been a feature of trade talks in recent years, and the paper looks into the factors behind this change.