SENIOR INTERDEPARTMENTAL GROUP ON INTERNATIONAL ECONOMIC POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-01156R000200260007-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 17
• Document Creation Date: December 22, 2016
• Document Release Date: September 7, 2010
• Sequence Number: 7
• Publication Date: December 3, 1984
• Content Type: MEMO

EXECUTIVE S...:RETARIAT
ROUTING SLIP
 .4E SECRETARY OF THE TREASURY
WASHINGTON 20220
UN D
(With Confi
MEMORANDUM FOR
Attachment)
THE
VICE PRESIDENT
THE
SECRETARY OF
STATE
THE
SECRETARY OF
DEFENSE
THE
SECRETARY OF
AGRICULTURE
THE
SECRETARY OF
COMMERCE
THE
SECRETARY OF
TRANSPORTATION
Executive Registry
[84- ~10026
DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
DIRECTOR OF CENTRAL INTELLIGENCE
UNITED STATES TRADE REPRESENTATIVE
ASSISTANT TO THE PRESIDENT FOR NATIONAL SECURITY AFFAIRS
ASSISTANT TO THE PRESIDENT & DEPUTY TO THE CHIEF
OF STAFF
ASSISTANT TO THE PRESIDENT FOR CABINET AFFAIRS
CHAIRMAN, COUNCIL OF ECONOMIC ADVISORS
ASSISTANT TO THE PRESIDENT FOR POLICY DEVELOPMENT
SUBJECT Senior Interdepartmental Group on
International Economic Policy (SIG-IEP)
A meeting of the SIG-IEP is scheduled to be held on Wednesday,
December 5, 3:00 p.m., in the Roosevelt Room.
The agenda is as follows:
1. Strategies to Address U.S.-Japan Economic Issues.
A discussion paper on U.S.-Japan economic issues is attached.
Attendance will be principal, plus one.
UNCLASS
(With Caa~ ntial Attachment)
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A ._oposed Negotiating Strate,
INTRODUCTION
Japan has become a key player in the international economy.
However, its participation has not been balanced -- the Japanese
economy has not opened up to foreign goods to a degree commensurate
with its size and strength despite continued efforts by the U.S.
extending back nearly two decades. Intensified efforts by the
Reagan Administration have produced some improvement, but the
pace and degree of progress toward opening the Japanese economy
remain inadequate.
The time has come to consider a fresh approach, specifically
tailored to the nature and severity of the problem. The time for
decision is short. The severity of the problem demands attention
at the highest level. We need to decide on a cohesive strategy
for addressing this problem to present to the President prior
to his upcoming meeting with Prime Minister Nakasone, which
represents a perfect launching-pad for a fresh effort on trade.
This paper sets out two alternative approaches:
-- a market-oriented, sector-selective (MOSS) approach which
aims at reorienting the Japanese economy through intense talks
to make manufactured imports in beachhead sectors fully responsive
to market forces; and I
-- an import target approach which sets target levels for
manufactured imports and leaves it to the Japanese to decide how
to meet them.
We believe these alternatives provide a good basis for deciding
on a course of action in timely fashion.
In recent years Japan has consistently run large trade and
current account surpluses. These surpluses are viewed by others
as a source of severe pressure on the system -- in part due simply
to their size, but also to the perception that Japan is an "outsider"
rather than a full participant in the system. Its markets remain
relatively closed, it does not import products which displace its
workers, it does not invest and produce in its principal foreign
markets, it plays the system for its own narrow advantage.
However, closer analysis shows that Japan's surplus is much
more than a simple reflection of its "outsider" role. Japan is a
rich industrial country which has become a substantial net creditor
Domestic savings exceed domestic consumption by a substantial
margin, and Japan is therefore a net lender abroad. It has long
been accepted as "good" that rich nations run trade and current
account surpluses in order to finance net flows of real resources
to poorer countries. It should also be recognized that the com-
position of Japan's trade reflects its resource base; an island
poor in raw materials will not, logically, have the same export/
import mix as a resource-rich country. Broadly speaking, the
basic structure of Japan's trade is not inconsistent with the
principle of comparative advantage, which forms the intellectual
basis for the open, liberal trade and payments system.
 Thus some portion of the Japanese trade surplus is structural
in this very fundamental sense; Japan's Economic Planning Agency
(EPA) has estimated the "structural" component accounts for roughl
one-half of the surplus. The portion which is not "structural"
reflects other, in principle policy-related, factors such as
exchange rate movements, market imperfections, and purely
cyclical factors.
A significant reduction in the Japanese surplus -- and, in
turn, a substantial reduction in pressures on the system -- could
result from actions which attack the non-structure component of
the Japanese trade surplu 2 A 4
,
Such a progra would constitute a direct response to the
current high-level U.'. Government -- and private -- frustration
R, 'V
with Japan's autar trade, industrial, and financial policies,
which represents a dangerous situation for both countries. It
would respond in ways which remove the root causes of the frus-
tration: the alternative is a conflict so serious as to threate
international economic cooperation.
At Prime Minister Nakasone's request, President Reagan wil
meet with him in Los Angeles in January. We suspect the GOJ
request reflects a similar concern on the part of the Japanese;
such concerns usually take the form of a desire to defuse or
otherwise deflect demands that would force Japan to alter the
status quo in ways they dislike. We need a sharply focused trade
strategy which the President would "kick-off" in his January
meeting.
OBJECTIVES: WHAT DO WE WANT?
Our real trade problem with Japan centers on the failure of
the international adjustment process to work in the Japanese
case. The problem is a complex one -- it includes social as
well as economic institutions, selective government intervention
in the economy, parochialism, and simple inertia. But Japan
must assume its fair share of the costs of adjustment of a
dynamic international economy. This means that Japans economy
should be more open to foreign goods, especially manufactures,
even where there is domestic production.
In terms of our bilateral economic relationship, the problem
can be analyzed in three broad areas -- financial, traditional
trade policy and structural. The financial aspect has been ad-
dressed in the Yen/Dollar Agreement. That Agreement, when fully
implemented, will yield a system on which relative prices --
interest rates, the value of the yen -- will give accurate
market-determined signals for resource allocation in Japan and
the rest of the world. Over time, the yen should strengthen;
Japanese trade and current account surplus should adjust; and
the non-structural portion of the net capital outflow from Japan
 should decrease. In this way, the Agreement will make a
contribution to the adjustment process which transcends the
bilateral U.S.-Japan relationship; it will reinforce the global
open, liberal trade and payments system, influencing Japanese
exports to U.S. and third-country markets as well as foreign
competitiveness in Japanese markets. Continued follow-up to
ensure full implementation at the highest level is a major
element in our overall strategy.
which will be so sensitive as to require special, individua
attention on a priority basis.
The third broad area affecting U.S.-Japan economic relation-
ships is institutional -- the apparent failure of the Japanese
economy to respond to trade liberalization with a change in the
level and composition of its imports. The primary symptom of
this unresponsiveness -- and a major source of frustration --
is a lack of market penetration by foreign suppliers to Japan.
Several indicators of this lack of openness are shown in
an attachment.
Up to now, our efforts to deal with the trade composition
aspect of the problem have had only fragmentary success. Often,
talks have focussed on lists of specific items rather than on
the underlying problem. There was a lack of clear-cut, consistent
ranking in terms of priorities, in part reflecting the multiple
criteria -- political, economic, game-strategic -- being applied.
A fundamental aspect of preparation for the approach set out
below would be the establishment of priorities -- based on criteria
for areas where substantial and lasting gains can be made. At
the top of the list would come products with strategic importance
in reorienting the Japanese economy toward greater acceptance
of manufactured imports.
PROPOSED ALTERNATIVE APPROACHES
What is needed is a systematic change in the way the
Japanese economy works in its interaction with the rest of the
world. Central to this would be a program to make growing
imports of manufactures a normal part of Japan's evolving trade
pattern. Removal of barriers to market access for foreign manu-
factures, over time, would be expected to strengthen market
forces within the Japanese market, and generate self-sustaining
consumer pressure for access to a wider variety of goods. Such
a process on the structural adjustment side would complement the
Yen/Dollar Agreement on t e rna side. In addition, however; -25X1
there needs to be a fundamental change in Japanese attitudes
toward foreign product_In Japan, such changes are reflected
down from the highest levels -- hence the need to start at the
top.
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Two quite different approaches have been suggested: the
Market-Oriented, Sector-Selective (MOSS) approach, and the ,
Import Target approach. I/
THE MARKET-ORIENTED SECTOR-SELECTIVE APPROACH
The "MOSS" approach uses a framework similar to that ound L
effective in negotiating the Yen/Dollar Agreement, and in sub-
sequent follow-up talks. Those talks were based on a unifying
principle or theme -- liberalization of capital markets and inter-
nationalizing the yen. With this theme in mind, the structure
and operation of Japanese financial markets were analyzed in
detail to reveal exactly how and where the observed results
deviated from a market-determined outcome. In turn, negotiations
were held on a detailed program to adjust the structure and
operation of the financial market to produce a market response.
Each detailed point was dovetailed to the overall objective of
market liberalization/yen liberalization. Specific quantitative
outcomes -- e.g., how much interest rates must change by, or the
volume of issues for the Euroyen bond market -- were not discussed.
Specific features of the MOSS approach:
1. Obtain Prime Minister's commitment to basic objective of
market access in key industrial sectors.
2. Focus on a coherent industry/product group. Point to how
individual negotiating demands work jointly towards
mutually agreed objective.
3. One negotiating team, headed by Under Secretary or above,
for each key sector; team stays together throughout
the talks. No delegation of detail to staff negotiations.
Keep Vice-Minister at table, do not negotiate with Director
General of International Bureau; include domestic Director
General as well.
4. only relevant players in the room. Yen/dollar was strictly
Treasury/MOF. Where possible isolate to one-on-one Ministry
talks. (if agricultural products then only include
Agricultural Ministries.)
5. Detailed analysis of industry needed to isolate specifics
of necessary Japanese actions and to draw on in actual
conduct of negotiations.
6. Same team for follow-up and monitoring.
This approach is extremely time- and manpower-intensive.
It requires large amounts of time for very senior officials; the
detailed analysis takes considerable staff time and knowledge of
specific industries.
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In view of this, and the sheer magnitude of industries and
products potentially involved, the MOSS approach would need to
be selective -- priority targets would be identified and a short
list of, say, five industries or product groups would be selected
for an initial effort over the course of the next 12-18 months.
-- market size in Japan (not in U.S.)
-- Japanese market growth potential
-- U.S. has world-class capability
-- sector has high visibility in Japan
-- coherence. Component products have generalizable, identifiable
characteristics (eg. "telecommunications"); not specific ("receivers")
or meaninglessly broad ("agricultural products"). Sector operates
within an identifiable domain -- regulatory framework; responsible
ministry/ministries; industry structure.
These criteria would ensure that negotiations in a selected
set of industries would have (a) maximum potential for direct
dollar impact; (b) maximum demonstration or precendential effect;
(c) maximum "spillover". Examples which would be immediate
candidates would be telecommunications, forest products; non-
examples would be autos, consumer electronics, walnuts.
This approach is open-ended in the sense that we are
limited only by resource availability. The resource-intensive
nature of the "MOSS" approach is its major drawback by contrast
with the "target" approach. In addition, it offers less immediate
gratification than the target approach (at least at first blush).
But it has several major advantages:
-- It establishes "beachheads" in the Japanese market for
products with po en is ripple effects.
-- It's philosophically consistent with our overall commitment
to free markets, reduced government intervention, and an
open liberal trade and payments system.
-- It offers the most direct attack on the Japanese "system,"
which we suspect is a major part of the problem we are
trying to solve; therefore offers better prospect for
lasting gains.
-- It works in the direction of co-opting Japan into the
world-wide trading system and bus ocess, rather
than accepting their "outsider" stance and developing a
separate set of rules for dealing with Japan.
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THE IMPORT TARGETS APPROACH
The central feature of this option is the setting of target
figures for Japan's imports of manufactures,. leaving it to the
Japanese to use their system to meet those targets. In addition,
some general barriers would be addressed and rules for industrial
policy would be negotiated. Specifically:
1. Japan should adopt as a national goal a scenario of rising
target figures for imports of manufactured goods as a proportion
of total output of manufactures. The target would be decreed
as an objective by the Prime Minister; the formal powers of
government would be dedicated to that goal.
2. Specific targets would be set for key sectors such as telecom-
munications, forest products, cigarettes, and space equipment.
3. Japan must end the excessive barriers caused by its system of
product standards. Japan has made promises and not carried
them out. we should again insist that all standards-setting
bodies should be required to admit foreign producers; test
data generated by foreign labs should be accepted; and border
procedures should be simplified.
4. Some minor irritants (such as tariffs on specific products)
also need to be removed.
5. Japan should reform its industrial policies by agreeing, in
writing, to: full transparency of policies, objectives, and
methods; treatment for foreign firms equal to that given to
the "most favored" domestic firms; and import targets for
"sunrise" and "sunset" sectors.
The main advantage of this approach is that rather than
engaging in a confrontational effort to transform the unique
Japanese economic, social, and cultural system into one like
ours, it tries to use that system to obtain our objective ---
increasing participation in the Japanese market. It thus is
likely to be acceptable to Japan and to produce real results
quickly.
mental cultural barrier to imports in Japan: the sense of social
responsibility. Japanese consumers and industrial buyers often
do not buy imports if it would displace a Japanese-made product,
especially if domestic producers and workers would be hurt as
a result. In a sense the proposal turns this sense of social
cohesion to our advantage by making increased imports a national
priority.
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On the other hand, the import target approach has several
major drawbacks:
1. The target approach explicitly recognizes a continuing,
central role for MITI and the whole GOJ apparatus in setting
import priorities, rather than increasing scope for market forces
to determine import (and export) patterns. Under the quota
approach, MITI could continue to implement industrial policy --
directing structural change, picking import growth sectors
that are least meaningful in terms of breaking down structural
rigidities or fostering adjustment of Japanese industry. Indeed,
the Japanese have always preferred non-market schemes for "adjust-
ment" of trade problems, since these leave their basic system
intact (and allow maximum scope for gimmickry such as stockpiling
and leased aircraft). The MOSS approach alters the system.
2. We have no basis for establishing what the target should
be (except "higher"); any specific number would be totally arbi-
trary. Indeed, it could be very difficult to select a target which
is credible to both U.S. and Japanese audiences, given the vast
differences between Japan and other countries' import structure.
3. Psychologically, a target approach probably reduces the
pressure. The Japanese greatly dislike uncertainty -- they want
to know specifically what they need to do to "get off the hook."
The MOSS approach, by not providing a finite measure of "success"
and thereby keeping the pressure on, may actually produce more
lasting, fundamental change. (As an aside, it might be worth
noting that adopting the basic framework and philosophy of the
MOSS approach is not at all inconsistent with the idea of
monitoring progress in terms of quantitative results.)
IMPLEMENTATION
Whichever approach (or combination of approaches) is adopted,
the common purpose is to bring about fundamental re-orientation
of major sectors of the Japanese economy, including deep-seated
consumer and government attitudes toward foreign products. These
would not be traditional trade talks. To be effective, the U.S.
will have to commit itself to:
1. high-level involvement on a continuing basis,
including the follow-up process; and
2. an extraordinary degree of internal cooperation,
with each agency's interests subordinated to the
general effort.
3. recognize the extraordinary nature of the exercise,
and essential need for coordination, by the formation
of a Cabinet-level group to manage U.S. strategy.
Key members should include the Secretaries of State,
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Treasury, Commerce, and Agriculture and the U.S.
Trade Representatives. Others could be added when
specific issues are taken up. O?eratine under the
overall aegis of this group, would be individual
negotiating teams, each headed by an Under Secretary.
Assuming these basic commitments, the formal process would
begin with the President informing Prime Minister Nakasone that
the present situation is not acceptable, and that Japan must
make fundamental changes in the reception it gives to foreign
products. This is in Japan's interest as well as ours; if far-
reaching changes are not made, Japan risks facing an anti-Japan
drive which would close its export markets and leave it increasingly
isolated. We want to embark on a series of talks, open-ended in
duration, which will produce dramatic change sufficient to lay
to rest the complaint that the Japanese market is less open than
the markets in which it sells.
Given the very short time left before the January Reagan/
Nakasone meeting, preparatory work needs to begin immediately.
The four top-priority tasks are:
1. Decide on the modalities of our approach, i.e., MOSS or
Import Targets (or some combination).
2. Set up a Cabinet-level group to manage the approach.
3. Begin work on priorities-setting exercise to back-stop
actual talks. We should have a pretty clear general outline of
what we want -- for example, in which sectors we think it is most
important that meaningful liberalization occur -- before the first
meeting after the President's January demarche.
4. Begin work on development of carrots and sticks to be used
as needed to sustain forward movement and break the inevitable
log-jams. Our experience with yen/dollar talks sugests we should
have something major to offer (or threaten) early in the process,
to secure agreement on the overall theme of the talks. (A discus-
sion of leverage and retaliation is included as an appendix.)
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APPENDIX
The U.S. Government has considerable leverage to use in
obtaining our trade objectives, provided that (a) we organize
ourselves to use it effectively, and (b) we are prepared to be
bloody-minded about using it. Before moving to specifics, some
general points are in order.
1. The use of leverage and/or retaliation should focus on
changing Japanese behavior in clearly defined ways. It must
not succumb to the obvious temptations to:
-- react in anger or frustration; or
-- use it as a justification for a protectionist
action.
2. Real rules must govern.
-- Exercise of muscle should always be accompanied by a
clear explanation of what behavior we want changed.
-- Consistency and determination are essential; it must
be clear to Japan that we can and will inflict pain
until it changes the policy we want changed.
-- Reversibility rule: any barriers we impose will be
removed when Japan responds appropriately.
3. Because our entire focus is on market access to Japan, we
have an advantage. Japan presently has more access to U.S.
markets than foreigners have to Japanese markets. Japan has
more to lose from U.S. retaliation or use of leverage.
Moreover, it has fewer opportunities for counter-retaliation
lose even more.
4. Generally, retaliatory or leverage measures_should 25X1
Japanese practice we want changed (e.g., close the borders to
bicycles if we want wine duties lowered). This has two
purposes:
to create conflict among Japanese domestic interest
lobbies.
to generate interagency conflict within the GOJ so
that issues are elevated to political levels.
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5. An extraordinary, higher degree of cooperation within the
U.S. Government is essential. Agencies tend only reluctantly
to put their particular areas of negotiation on the block for
use as leverage in other areas. This must stop. Every
agency's interests should be subordinated to the general
effort.
Specifics on leverage and retaliation will tend to develop
over time as we move into negotiation. However, we should not
start out in January without the most careful planning and
development of retaliatory and leverage options that we can
manage in the interim. Interagency staff work on this should
begin immediately. Some items are listed and described below.
The list is not intended to be exhaustive but rather to
demonstrate that opportunities for the U.S. Government to
exercise leverage and/or retaliation do exist and do make sense.
1. We have allies and should use them. Korea, Taiwan, and
the ASEANs all have the same kinds of problems with Japan as
we do. Moreover, the Japanese are extremely touchy about
their relations with the rest of Asia and thus have real
vulnerabilities here. The U.S. Government should:
-- consult with the ASEANs about proper approaches to
take with regard to Japan's closed markets and
excessive export drives -- and make sure Japan hears
about it;
-- at a second stage, if necessary, try actually to
coordinate with the ASEANs on joint approaches to the
Japanese, perhaps even negotiate on the ASEANs'
behalf -- and make sure, again, that Japan knows our
game.
2. Self-initiate Section 301 cases (President's retaliatory
authority against unreasonable, unjustifiable, or discrimina-
tory trade practices). Japanese standards policies might be
a good place to start. Ultimate retaliatory action we are
contemplating should be made known to the Japanese at the
outset. It should take the form of trade barriers against
goods which Japan considers important. The pain we threaten
(and inflict if necessary) should be real.
3. Hit the Japanese on leather imports by imposing a tariff
on, say, personal computers and just let them go to GATT to
complain. World opinion is uniformly against the Japanese
regarding their egregious leather quotas.
4. Play Japan's request for gateway landing rights for a new
Japanese all-cargo airline (it's owned by Japanese freight
forwarders and has a cozy, GOJ-sanctioned agreement not to
"disrupt" JAL's cargo business) for all it's worth. This
issue is perfect leverage not only in the civil air field,
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but also in related areas such as the hi-cube container
dispute and the tobacco shipping question. If the Japanese
want it badly enough, we can use it over and over again, to
get action on other trade issues as well.
5. Make Japan's participation in U.S. space station project
contingent on Japan being responsive on trade issues.
Participation in the station would provide major benefits to
Japan as partners who make significant investments in space
station hardware will most likely retain ownership of those
elements and will have a role in management of the station
commensurate with their investment share. Exclusion would be
costly to Japan for commercial and prestige reasons.
6. Use textile and similar sectoral market access negotia-
tions not primarily to limit Japanese exports to the U.S.
market, but to gain Japan's commitment, with numbers, to open
its markets to third-country suppliers. That will help to
take import pressure off U.S. markets and at the same time
gain support for U.S. objectives from third countries.
7. Mount a major USIS effort to tap the enormous latent
consumer pressure in Japan for more cheap, high-quality
imports of foods and consumer goods. The Japanese press is
an ally here.
8. The issue of renewing the U.S.-Japan auto VRA is usually
seen as a problem. It may be an opportunity, if subtly
played. The Japanese seem ambivalent on whether they want it
renewed (with higher limits). Different firms within the
Japanese auto industry have different interests. In this
context, we can create maximum leverage on other issues by
creating maximum uncertainty on this one. The Japanese will
abhor uncertainty, especially if we transmit signals that
create dissension within the Japanese industry, erode the
GOJ's control over the issue, and create the impression that
anything we do will hurt them. In any event, we should put
off resolving this question as long as possible. Then, a
decision on whether to seek an extension can be taken in
light of the overall results of the 1985 effort on all
fronts.
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No one measure can show that an economy is open or closed.
Nonetheless, under a variety of measures, Japan seems to import
fewer products that displace domestic production than do other
industrialized economies.
1. Compared to its counterparts in Western Europe and North
America, Japan's imports are a low percentage of GNP.
RATIO OF MERCHANDISE IMPORTS TO GNPI
(percent)
1970
1983
Japan
9.2
10.9
8
2
U
Canada2 nited States
144.3
.3
.
20.1
France3
France
FRG
13.5
16.1
20.3
23.4
Italy3
16.1
22.9
Netherlands
n.a.
47.3
United Kingdom
17.7
21.9
1Source: ITA, U.S. Department of Commerce. C.i.f.
values.
2F.o.b. values.
3Ratio of imports to GDP.
2. while Japan's lack of raw materials logically results in
a low proportion of its imports being manufactured .products,
Japan's ratio of imports of manufactured goods to total merchandise
imports is much lower than that of other resource-poor, industri-
alized countries.
RATIO OF IMPORTS OF MANUFACTURED GOODS
TO TOTAL MERCHANDISE IMPORTS (1983)1
Japan
.25
Canada2
France
56 .76
United States
.63
FRG
.57
Italy
.44
Netherlands
.55
United Kingdom
.68
1Source:
ITA, U.S. Department of Commerce.
C.i.f.
values.
2F.o.b.
values.
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3. Japan's imports of manufactureu rivet f.- -- - - -
per capita basis and as a percentage of GNP as well.
IMPORTS OF MANUFACTURED GOODSI
Per Capita
I of GNP
1970
1983
1970
1983
Japan
$ 144
$ 267
0.8
2.8
2
5
United States
353
728
1.3
.
1 4
7
Canada
1,347
1,936
5.8
0
.
1
12
France2
634
1,135
3.
.
3
13
FIG
768
1.428
3.3
.
9
9
Italy2
384
616
3.5
1
.
4
25
Netherlands
1,815
2,347
2.
7
.
15
2
United Kingdom
541
1,218
2.
.
ISource: CIA; ITA, U.S. Department of Commerce; USTR.
2Based on GDP figures.
4. It is generally agreed--even by the Japanese--that Japan
was protectionist through 1970. Despite the many specific liber-
alizing measures implemented by Japan since then, imports of
manufactured items as a percent of the domestic market have
grown very little--and have grown much less than they have in EC
(excluding intra-EC trade) or the United States.
IMPORT PENETRATION IN MANUFACTURES1
(by value in percent)
a 1 1 1 1 1~ Ip 1 1 1
a: .M
1f~0 ~
1indicat rimpgrt Gasrpercent of domestic market measuredlbys
theisume fmdomes ac ve _
imports from within theyCommunity~.d impo ts. EC data exe adds
 Declassified in Part -Sanitized Copy Approved for Release 2012/04/16: CIA-RDP85-011568000200260007-1
~ . ., . r,... .
natural for a resource-poor country, is >ruc +?rger ?
most other countries.
SURPLUS IN MANUFACTURED GOODS (1983)1
(iUS billion)
Sur lust
! of GtiP
Japan
1110.3
9.5
United States
-38.2
1.2
Canada
- S.7
1.7
France
6.4
1.2
FRG
58.7
8.9
Italy
26.7
7.5
Netherlands
- 0.7
0.5
United kingdom
- 7.7
1.7
1Sources CIAJ ITA, U.S. Depaztment of Commerce.
25urplus based on exports f.o.b., except U.S. f.a.s.s
and imports c.i.f., except Canada f.o.b.
6. Japan'a import elasticity (percent growth in total
isplowscompared to othereindustrialtcountroitensstic?real income)
II+iPORT ELASTICITY (198d)1
Japan
X744
Canada
1.194
2
316
United States
2.258
France
.
034
2
FRG
,
Italy
1.943
Netherlands
United kingdom
n.a.
2.268
15ources Ministry of International Trade and Industry
(l9ITI) .
Declassified in Part -Sanitized Copy Approved for Release 2012/04/16: CIA-RDP85-011568000200260007-1
 -a
Declassified in Part -Sanitized Copy Approved for Release 2012/04/16: CIA-RDP85-011568000200260007-1
7. In the area of manufacturing activity. foreign-owned
firms produce a low percentage of Japan's total output and employ
an even lower percentage of its workforce.
SSJ-RE OF FOREIGN-Ok'NED FIRISS IN MANUFACTURING ACTIVITYI
Cut-off
oint
Year
i of
persons
am to ed
t of
vroduction
p
Japan
2251
1978
1.8
4.2
3
0
United
States
210?
1974
3.0
.
56
2
Canada
250
1975
44.3
.
27
8
France2
>20~
1975
19.0
.
7
21
F~
25i
1976
16.8
.
23
8
Italy
>50?
1977
18.3
.
21
2
United
Kingdom
2501
1977
13.9
.
1Source: OECD, U.S. DeparUnent of Canmerce.
2Excluding natural gas and food industries.
8. In contrast, since the mid-1970x, Japan has been expanding
its overseas direct investment.
COlSPARISON OF OVERSEAS DIRECT INVESTM,ENTl
(a) Comparison of Overseas Direct Investment Balance (Stock)
1971-76
1976-82
Overseas Direct
Investment Balance
(SUS billion)
average
annual
growth
average
annual
growth
sate
76 1982
sate
1971 19
Japnn
5 1.9 10.3 29.0
137
2 2
40.2?
18.8?
United States
'
82.8
Z?;g
9
3 11
7
10.3
13.0
France
.
.
9 39.5
22.2
12.1
RG
7.3 19.
16
3
F
United Kingdom
23.7 32.1 79.6
6.3
.
(b) Share in Global Overseas Direct Investment (FLOE)
1971-73
1974-76
1977-79
190-82
Japan
5.7t
7.5~
6.2~
47
9
10.6f
21.2
United States
53.1
8
3
47.0
5.4
'
4.4
9.3
Trance
FRG
.
8.5
8.6
9.3
10.4
0
20
United Kingdom
14.5
13.6
13.0
.
lSourcet Ministry of International Trade and Industry
(MITI).
OA,SIA ITT
11/28 84