‘Unlevel Field’ Debunked : Trade: Japan is not nearly the villain that Americans--and politicians--believe.
Washington is now awash in protectionist fervor, with Japan as the target. Much of this hostility, however, is simply based on false or misleading information about the level and impact of U.S. imports from Japan. Japan is not nearly the villain on trade that many Americans--and politicians--believe. The following are five of the most common myths about Japanese trade with the United States:
Myth No. 1--Japan exports far more products to the United States than any other nation. In 1989 the U.S. Department of Commerce reported that the United States imported slightly more products from Japan ($97 billion) than from our second leading trading partner, Canada ($90 billion).
However, if we standardize our trading policies on the basis of the population size of each country, a different picture emerges. Americans imported $3,400 from Canada per capita, versus only $800 from Japan per capita. Moreover, as a percentage of each nation’s gross national product, Japan ranked a distant fourth as a trader. Exports to the United States account for 3% of Japan’s GNP versus 18% of Canada’s, 16% of Mexico’s and 11% of Korea’s. New trade barriers would hurt our neighbors more than they would Japan.
Myth No.2--The Japanese don’t buy U.S. products. On a per-capita basis, the Japanese purchase $372 worth of U.S. goods and services a year--more than virtually any European country, including France, Germany, Italy and Spain. The British buy about the same amount per person as the Japanese. We do not, however, see George Bush rushing across the Atlantic to jawbone the Europeans to buy more U.S. goods.
Myth No. 3--Americans purchase more products from Japan than the Japanese purchase from the United States. In 1990, the typical American purchased $357 worth of Japanese products--slightly less than the $372 that the average Japanese purchased from the United States. If anything, the Japanese should be scolding Americans for not buying more of their goods.
Myth No. 4.--The scope of Japanese investment in the United States is dangerous. Japanese investors want to purchase the Seattle Mariners baseball team. From the public outcry one might think that the Japanese were buying the Washington Monument and shipping it back to Tokyo. The normally level-headed Fay Vincent, major league baseball commissioner, hinted that foreign ownership might jeopardize the great American pastime.
The predictions about the Japanese buying up America’s land, buildings, corporations and baseball teams are frightening but without much factual foundation. Japanese investment amounts to $70 billion a year--or less than 1.5% of America’s $5.5 trillion GNP. That is hardly a frightening number. The British invest roughly $120 billion a year in the United States--almost twice Japan’s investment. When was the last time that Rep. Richard A. Gephardt (D-Mo.), resident protectionist on Capitol Hill, spoke of America being sold off part and parcel to the Redcoats?
Myth No. 5--America cannot compete in global markets against the Japanese. American firms are penetrating foreign markets at a faster pace than any other industrialized nation. According to statistics compiled by the Washington-based Citizens for a Sound Economy, over the past six years U.S. exports have surged by 91%--three times as fast as the increase for Japan or any of our other trading competitors. Since 1986, U.S. exports to Japan have more than doubled. American exporters are a major source of job growth in today’s otherwise stagnant economy. New trade barriers would clearly cost America jobs in many key industries.
When Republicans, such as Pat Buchanan, begin their tirades about foreign products stealing American jobs, they drape their rhetoric in an “America First” theme. The media has been quick and often correct to charge that this slogan, which sometimes includes inflammatory anti-immigration rhetoric, smacks of racism masquerading as an economic policy.
Yet what of the supposedly progressive Democrats on Capitol Hill? When Sen. Ernest Hollings (D-S.C.) and Gephardt lead the charge for protecting American jobs through an economic strategy of “fair trade” and reciprocity, the nation that we are to be protected from is not Canada; it is not England. It is Japan and in some cases other Asian nations, such as Korea. Could it be that the Democrats’ new mantra of “fair trade” is just a buzzword for stirring up racial fears?
