TRADE RELATIONS AND TRADE POLICY OF JAPAN Ali KINCAL (2006461118) ktisat (rgn) Id like to begin with historical

background of Japans trade relations, trade policy and openness to the world. Slide 1 At that time Spanish Empire invaded Philippines which is geographically close to Japan. The Japanese administration was afraid to get colonized. So they started to apply harsh precautions. Christian missonaries were killed or deported, christianized Japanese people were forced to re-embrace shintoism and buddism. They totally stopped trade. Only the Dutch had the privilege to trade with Japan but the amount of trade was only symbolic. Japan was like a closed box for more than two hundred and fifty years. Slide 2 In nineteenth century, Japan was opened to the world by force. Admiral Commodore Perry came to Edo (Tokyo) with an American fleet. He demanded trade privileges and concessions from the Japanese. They rejected first but later had to accept since Admiral Perry threatened to bombard the city. Britain and the Netherlands followed USA and got capitulations for themselves. Slide 3 The agreements caused outrage and led to end of Shogunate regime a military regime consisted of samurai elites- and Emperor Meiji came to power. He managed to industrialize the country through westernization, adapting new technologies.

Slide 4 Rapidly, Japan got back unfair trade terms and by the beginning of twentieth century became a big empire, an industrialized country. It continued to carry out Listist and neo-merchantilist trade policies until 70s when modern Japanese liberalization began. Finally, Japan opened up itself to the world, this time willingly, not by foreign intervention. Slide 5 And today, Japan is the third largest economy of the world with more than four trillion dollars GDP. The GDP per capita is about thirty four thousand US dollars. Japan is given a triple A by some credit rating instutions like Standard and Poors, and some give double A. Its got a negative inflation: Minus zero point two. Unemployment rate is quite low: Four point five percent. Japan is an advanced and stable economy. But, for more than a decade, it has been suffering from a problem of chronic stagnation. Its a member of Asian-Pacific Economic Organization, OECD, G-20, G-7, and WTO (since 1995) Slide 6 And Japanese yen is not very valuable compared to dollar and euro. The graphic might be a little tricky here. As you see, Yen per dollar exchange rate is going down, but that means value of Yen is actually going up.

Yen is commonly used, as an alternative to US dollar and Euro in international markets. Slide 7 Last year (2010) the Japanese exported commodities worth about seven hundred seventy billion dollars and imported commodities about six hundred ninety five billion dollars. Japans current account balance is positive due to positive trade balance. Its one hundred ninety five billion dollars. Trade to GDP ratio is thirty percent which means trade represents a very big slice of Japans GDP. And for an average Japanese person, trade means twelve thousand dollars of income, annually. Slide 8 After China, Germany and USA, Japans the fourth largest exporter nation in the world. After USA, China and Germany, its the fourth largest importer nation. Its share in the worlds total export is five percent, for import its four point five percent. Slide 9 Largest trade partners Japan exports to, are China, US, EU, South Korea and Chinese Taipei (This is actually Taiwan. As you may know, its not internationally recognized with that name because of Chinas opposition. China claims to be sovereign of Taiwan.) Slide 10 The map shows the destinations that Japanese export products go. Slide 11

Largest trade partners Japan imports from are China, US, EU, Australia and Saudi Arabia. As you may have noticed, the trade balance of Japan-EU and Japan-US are in favor of Japan. But Japanese-Chinese balance is in favor of China, not Japan. Japan recently accused China of keeping its currency (Yuan) too unvaluable, which gives a great advantage to the Chinese in trade wars. Slide 12 Primary commodities Japan exports are, transport equipment, motor vehicles. More exactly cars. Semiconductors, electronics and chemicals. Free trade supporters assert that econometrical studies show that some supported industries in Japan failed and the industries that never got aid succeeded. For example, Japan supported steel industry so much but the steel industry never recorded the expected success. On the other hand, electronics which never got aid from Japanese government did very good and created famous brands like Sharp, Nintendo and Toshiba. Car industry also was never subsidized yet for a while it was protected by tariffs and quotas, when it was an infant industry. Slide 13 Primary commodities that the Japanese import, are machinery and equipment, fuels, foodstuffs, chemicals, textile and raw materials. Slide 14 Japan tends to use tariffs most, as a trade policy instrument. Most imports enter Japan duty free or are subject to low tarif rates. The average tarif rate is six point one percent.

But some countries (some members of APEC) enjoy even lower tariff rates because of bilateral and unilateral trade agreements. Slide 15 As you see, tariffs on some commodities are almost zero: On machinery, transport equipment, mineral products. On works of art and paper, the tariff is literally zero. The tariffs on live animal products, footwear, vegetables and prepared food are quite high. Slide 16 There are import quotas on some certain fish products, and the items that are harmful for ozone layer. And all kinds of importation from North Korea and nuclear and weapon related items from Iran, is prohibited. And official approval from Japanese administration is needed, to export endangered animals, certain seeds, some agricultural, foresty and fishery products. Slide 17 Japans highly protective of its agriculture. The averate of the tariffs Japan applies was, as you may remember, six point one. But average tarif rate of agricultural products is seventeen point one percent. Japan gives subsidies to assist agriculture, forestry and fisheries, industry, finance and transport sectors. Slide 18

Theyve got also a new aircraft projects. Its expected itll take a lot of funds, and ease depence on USA for military systems. As you may know, before World War 2 Japans military production was impressive. Yet Japanese military industry was neutralized by antimonopoly act which US administration dictated. Now they may want to start to reverse the process due to emergence of China. Japan has neither oil, nor natural gas. It heavily relies on imported energy and thats why its been carrying out a liberalization policy on this sector. Slide 19 In nineteen ninety five; US, Canada and European Communities complained that Japans Tax system applies substantially lower taxes on the Japanese traditional beverage shochu, and the beverarages they export to Japan are being discriminated by Japanese tax system on alcoholic beverages. The panel WTO founded, ruled out that the Japanese tax application is inconsistent with General Agreement on Tariffs and Trade article III:2 In nineteen ninety eight, by presenting some modalities, Japan convinced the complainants and the dispute was solved with happy ending. Thanks for listening.