The Price of Jeans in Japan
A joint survey by the U.S. and Japanese governments has confirmed what any American tourist casually window shopping in Tokyo--or any Japanese tourist who does the same in Los Angeles--instantly perceives. Item for item, most consumer products cost a lot more in Japan than they do in the United States. The results of the survey, conducted last month by the Commerce Department and Japan’s Ministry of International Trade and Industry, are being cited by American officials in support of longtime U.S. complaints that “structural barriers” effectively close many Japanese markets to foreign goods.
Structural barriers can include price fixing, bid rigging, market-allocation agreements and perpetuation of an antiquated distribution system whose inefficiencies force the price of imports so high as to all but exclude them from the marketplace. Besides helping to increase Japan’s international trade surplus, all result in Japanese consumers having to pay much higher prices for many goods than they would if the market were open.
The joint survey, conducted in four cities in each country, found that 84 of 122 products surveyed are more expensive in Japan, including Japanese-made cars. In the case of 40 of the products studied--among them wine, bed linen and golf clubs--prices in Japan were more than 50% higher than in the United States. Spark plugs cost 350% more in Japan than in this country. Average prices overall were 41.7% higher in Japan on such products as electric shavers, floppy disks, camera bodies and lenses, beer, cordless telephones, American-made blue jeans and American-made golf clubs. Only in the case of consumer electronic products, where U.S. manufacturers have dropped out of competition, were prices lower in Japan.
Until now the Japanese government has refused to acknowledge that retail prices on similar or identical products tend to be appreciably higher in Japan than overseas. The importance of the joint survey is that it provides hard evidence of just how great the price disparity can be. Japan has for many years insisted that poor sales of many U.S. and other foreign goods are due more to cultural preferences on the part of the Japanese than to real barriers to market access. But it’s hard to conceive of a cultural preference that would lead a typical Japanese consumer happily to pay $55.63 for a pair of American jeans if he had the chance to pay the same $32 that an American consumer pays.
Japan says that much of its trade imbalance with the United States is the fault of Americans who consume more than they produce, tolerate enormous federal budget deficits, save too little, and don’t try hard enough to market their products abroad. There’s a lot of truth in all those complaints. But it’s also true, despite persistent official denials, that the Japanese government allows and encourages a spectrum of anti-competitive practices whose aim is to exclude foreign goods while denying Japanese consumers freedom of choice and the chance to spend much less on products than they are now forced to spend. That fact promises to figure large in current trade talks. Certainly it deserves to.
