Tom Whitson
ACCJ President
twhitson@accj.or.jp
The outlook for the financial year ending 31 March 2010 has some bright spots.
If the economy is not booming, at least the economy is no longer shrinking. Resurgent economic Asian tigers are stimulating exports from Japan.
However, domestic demand remains weak despite the government stimulus. Massive auto recalls are damaging Japanese pride in its manufacturing prowess and raising concerns about its vaunted quality.
Nevertheless, Japanese automakers are pulling over, checking under the hood, and making needed repairs. I believe that they will soon be back on the highway and into higher gear.
The Japanese government is trying to find a path to renewed growth, but the disadvantages of a shrinking population, declining demand, and inefficient domestic businesses make it difficult to achieve the productivity improvements needed to achieve sustained economic growth.
Many governments choose to support industries where their nation does not really have enough of an edge to produce companies that can compete in global markets against all comers.
In many cases, the historical political power of certain companies distorts the investment that nations make in businesses that cannot compete on the world stage.
The ACCJ completed its Internet Economy White Paper in 2009 and has begun a Growth Strategy Initiative to provide ideas that can help offset Japanese structural disadvantages – such as shrinking population, etc. – with engines of high productivity.
The ACCJ believes that Japan’s sophisticated and educated population can and should use the internet as a powerful productivity multiplier.
The ACCJ’s 2010 Growth Strategy Initiative is intended to document how foreign direct investment, which is lower in Japan than any other OECD nation, can be another powerful engine of growth for Japan’s future.
The ACCJ believes that vigorous high-level Japanese and U.S. efforts to advance free trade are vital. Passage of the Republic of Korea-U.S. Free Trade Agreement and engagement through the Trans Pacific Partnership are critical.
An Economic Partnership Agreement or a Free Trade Agreement between our countries would unleash billions of dollars of economic growth and the benefits to the U.S. in trade in services would be tremendous.
The Keidanren has joined us to advocate such an agreement. We understand that sensitive issues like beef, rice and autos must be resolved, but we believe these challenges should not prevent us all from benefiting from the opportunities that a rigorous, high quality FTA offers.
The Koreans have signed an agreement with the EU and we are concerned that Japanese and U.S. companies will miss out on the economic benefits if we don’t move on this.
The current Japanese government was elected on a platform of change. They seem willing to consider different approaches to economic problems and want to change some of the old ways of doing business.
There are issues that we disagree on and proposals that worry us. But we believe that the government is open to discussion and interested in what we think might be the effects of some of their policy proposals.
We have had many lively exchanges of views and have picked up some themes that we will develop before we go on our Washington Door Knock later this year. I am optimistic that the ACCJ’s message of free and fair competition and a transparent process of financial system regulation and reform still resonate with leaders on both sides of the Pacific.
I think that our message of formalized bilateral economic dialogue at various levels of government working towards greater U.S.-Japan economic integration will lead to more opportunities for our member companies and an eventual free trade agreement between Japan and the U.S.
