Foreign Policy Blogs

Japan postponed decision on free trade accord

The U.S. voiced discontent with the Japanese government through official channels last month over Japan’s postponement on a decision to join a U.S.-led Pacific free trade accord. Tokyo was to arrive at a decision by June, but postponed it in the wake of the March 11 earthquake.

Washington is understandably frustrated with Tokyo’s delaying a decision. The development of trade accords in East Asia in upcoming years will have profound effects on the rest of the world.

While the media still rave about China’s ballooning economy, especially since China overtook Japan earlier this year as the world’s second largest economy, the reality is China’s economy is on the brink of collapse. China’s economy requires perpetual near double-digit growth just to keep unemployment down and maintain its (miserable) standard-of-living. That rate of growth is unsustainable. After all, there is a finite number of markets in the world for cheap Chinese crap. Sooner or later (my money’s on sooner), the Chinese economy will come to a devastating crash.

Meanwhile, Japan is dealing with its own crisis, which is one of demographics. With an ever-plummeting birthrate and the swelling ranks of retirees, Japan will soon face a labor shortage.

China and Japan can help each other out, with Japan providing capital and China providing labor. Even though Japan has dug itself into a hole economically with its relentless borrowing of public funds for massive construction projects, Japan remains one of the world’s largest economies on the strength of the money the Japanese squirreled away during its boom years. The Japanese public (especially the elderly, who were in their prime during the bubble economy), still has hoards of yen stuffed away in mattresses, mattresses which provide competitive interest rates compared to Japanese banks.

In the past when Japan has faced labor shortages, it has turned to mainland Asia. And by “turned to,” I mean “brutally colonized.” Therefore, Washington is understandably anxious about how trade accords play out in East Asia in the upcoming years.



Dustin Dye

Dustin Dye is the author of the YAKUZA DYNASTY series, available through the Amazon Kindle.

He lived in Okayama, Japan, where he taught English at a junior high school through the Japan Exchange and Teaching Program for three years. He is a graduate from the University of Kansas, where he received a bachelor's degree in anthropology.

His interest in Japan began in elementary school after seeing Godzilla fight Ghidorah, the three-headed monster. But it wasn't until he discovered Akira Kurosawa's films through their spaghetti Western remakes that he truly became fascinated in the people and culture of Japan.

He lives in Kansas with his wife, daughter and guinea pig.

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E-mail him: [email protected]