Foreign policy and economic relations of japan Essay

This paper would travel into the penetrations of Nipponese foreign policy, its economic relation and corporation systems with other states. Nipponese economic system is felt in many states in relation to concern ventures, civilizations and investings, even in the US. In the last few old ages, though, it lost clasp in being a power house of trade, impacting their gross domestric merchandise. This paper will every bit good offer an account to why it lost its position and how it regained the celebrity and how the foreign policy has changed over the old ages giving advantage to other states in Asia for case the Thailand.

Japan ‘s foreign Economic dealingss

Nipponese economic system is central in universe ‘s economic and fiscal system ; influenced by international trade, investing and economic diplomatic negotiations. It depends to a great extent on trade ; it imports oil, Fe nucleus for industrial production and the nutrient grains for human ingestion, though its economic system entirely relies in exports, with China importing more.

The Nipponese corporations have invested widely in foreign direct investings chiefly tied to imports and exports ; this is diversified both internationally and in other sectors. With the fabrication sector being more profitable. By the terminal of the 2009, FDI earned Japan 758 US dollars. In Asia, Japan accounts for 24 per centum of FDI, in China its FDI is 7.4 per centum. Though America still remains its chief bilateral trade, accounting for close to 34 per centum of its FID. The Japanese are limited with domestric growing and extremely expensive labor force ; this is predicted to coerce them to put in other foreign dynamic economic systems in Asia, this will be stimulated by its strong currency.

Japan ‘s current scheme

Japan initiated a new scheme this twelvemonth furthering its international dealingss ; this is expected to concentrate on the dynamic Asiatic market ; aiming trade integrating and touristry. It expects an enlargement of its concerns internationally in conformity to its bilateral Economic Partnership Agreements. Though this is expected to hold small alteration due to its hapless agricultural sector, and barriers on imports put against other states, impacting farther dialogues. On the other manus, Japan has proposed the formation of East Asia community, this could heighten making concern with others closer states who seem to welcome such bundle became it would take some traditional trade barriers heightening, positive balance of trade between them. ( Patrick,2010 )

America – Japan Economic Relationss

Both the US and Nipponese history for over 40 % of the universe ‘s domestric merchandise, therefore the largest economic powers, this is in footings of trade in international goods and services, and investings. This affects the economic systems of other states ; these two economic systems heavy rely on the integrating of trade in goods and services – basking good balance of trade between each others.Infact, the, both have larger markets for export and imports. ( Cooper, 2007 )

Both of these states ‘ trade depend on capital flows, with Japan financing the UA national debt needs ; this is projected to predominate in the hereafter as the America ‘s domestric nest eggs and stock is unequal to provide for its immense demand. Japan is besides the beginning of foreign private portfolio and direct investing in America ; likewise the United States is exclusive foreign investing in Japan. ( Cooper, 2007 )

The last few old ages, have seen the rise of China in the trading universe thereby, impacting comparative trade significance of Japan and America. Japan has lost this competitory advantage to Canada and Mexico due to the North American Free Trade Agreement ( NAFTA ) , from economic analysis this is non lost, but ; still remains of import if the policies are reviewed. With both of states holding common involvement in each others national security. The two states enjoy a affable relationship that may be hindered by: Nipponese insisting and failure to stop market barriers to US exports of vehicles and there parts, and on level glass. In add-on they have non agreed to cut down bilateral trade instabilities. ( Cooper, 2007 )

Japan – Thailand Relation

Economic Relationss

Japan is the 1 of Thailand ‘s trading spouse, coming 3rd in exports and foremost in imports, the biggest foreign investor taking 40 % of entire Thailand ‘s foreign investings. Nipponese chamber of commercialism is the largest in the universe. Though ; they enjoy merchandising now, in the late 70 ‘s, Thailand had economical constabularies that worked against Nipponese, by presenting foreign capital, changed regulative reforms, and promoted the relaxation of limitations on foreign investing the trade between them nourished, likewise the Japanese provided economic aid to Thai ‘s economic growing – countries like substructure, and human resource development. The Seaboard development undertaking was supported by Nipponese to excite investing in Thailand. After the Plaza agreement, the degrees of trade between Japan and Thailand increased, most of the Nipponese companies invested in Thailand making occupation chances at that place and heightening good relationship. During the 1997 Thailand ‘s fiscal crisis, Japan assisted in to a great extent in conveying back its economic system to recovery way by shooting more money into their economic system. Though with the Nipponese investment in car and parts in Thailand, they may make unemployment rate to flip projectile back in their state, most of the companies are making this to be secure in the universe ‘s competitory market.

EU ‘s -Japan Trade Relation

Japan is the 2nd largest universe ‘s economic system accounting for 2 per centum of planetary population and 1/8 of planetary GDP, with 840billion dollars foreign currency militias being the biggest in universe by 2005.Japan went into economic convulsion in 2004 but is now retrieving with the Bankss doing net incomes and the debts cut downing. The recovery was chiefly achieved through more exports. Though there are a figure of defects for case deflation, diminutions in bank loaning and increased land monetary values. In 2004 Nipponese imports and exports reached 352.3 and 421.1 hankerings severally doing 6.2 % and 7.9 % of the universe ‘s flows. . ( Patrick, 2010 )

Bilateral Trade Relations – Goods and Services

The trade between EU and Japan is on upward tendency, presently the it has growing rate of 0.7 % in footings of exports by 2005 statistics. Japan has a portion of 4.1 % of the EU exports, in the last five old ages, being the fifth biggest EU ‘s export market after America, Switzerland, Russia and China. . ( Patrick, 2010 )

Japan histories for 7.36 % of EU ‘s agricultural exports, 5.46 % for fabric, 5.39 % of chemicals, and 4.21 % of conveyance goods. Japan commands 6.2 % of portion of EU ‘s import market, coming after USA, China and Russia. Imports from Japan compose of chiefly machines, and conveyance stuffs, chemicals merchandises doing 45.1 % and 15.4 % severally.

On the other manus, EU ‘s is a bigger participant in Japan ‘s economic system, by 2004 EU was the 3rd in Japan ‘s imports and 2nd in exports, doing imports and exports services from and to Japan 10.2 and 18.9 billion euros severally. . ( Patrick, 2010 )


The flow of foreign domestric investing between Japan and EU has been in been in addition with the two manner investing flows and little lessening in the subsequent old ages. Japan has invested to a great extent in EU, doing 4.1 % of Eu ‘s influxs in 2003, in the same twelvemonth 5.03 % of the EU stock income FDI coming from Japan, on other manus in the same twelvemonth, 1.82 % of the stock of EU outward was reported to be in Japan. Though entering negative influxs of -0.58 % . The Japan ‘s is been making good from mid 1990’s.With the debut of the fiscal, communications and distribution sectors, the FDI has increased between these two trading partners.Ironically, the Japan ‘s FDI is low at 2 % of its GDP compared to other developed states. . ( Patrick, 2010 )

Development of the Trade between Japan and EU.

Until late, Japan has been basking strong trade excess in its favor against the EU, now the trading figures have been recorded to be in positive balance of trade exciting the concern even more. Japan, nevertheless has a construction that makes trading with them hard, therefore they have started taking up structural reforms in their assorted sector to vie favorably in trade internationally. Most the Europium companies have invested widely in Nipponese market particularly in information engineering, auto- vehicle fabrication, retailing and insurance, therefore going the largest FDI into Japan.EU is still looking frontward for more investing in Nipponese market aiming the little and average endeavors. . ( Patrick, 2010 )

Japan and EU continue to work good through making negotiations in many countries like the ministerial meetings and the annual acmes. During the 10th Japan – EU acme ten twelvemonth action programs was signed between them ; beef uping their partnership. The program had the undermentioned aim, to beef up economic and trade partnerships, exchange o degree Fahrenheit thoughts, trade dialogues, advancing WTO.They agreed to develop Cooperation model to assist advance the two manner investing via concrete actions in coming up with new ordinances, transparence, criterions, conformance and criterions, and bettering foreign investing policy.Besides, the belongings intellectuals rights to promote patent protection, and cooperate in countries of authorities procurance and private finance enterprises and public private partnerships. . ( Patrick,2010 )

The two manner regulative Reform Dialogue aiming to cut down the figure of barriers or ordinances that hinder the trade and foreign investing – this hour angle made the trading between them prosper ; these they have achieved through duologue and sharing of reform proposals.EU have submitted reforms proposals to Japan in near the last decennary to assist chiefly in the creative activity of trading clime, therefore exciting economic growing in Japan.Infact, the EU provinces have been encouraged by Nipponese authorities to perforate its market, by offering support through the EXPROM programme. The bilateral co-operation between Japan and EU is developed on many-sided trade issues in line of the World Trade Union. Through duologue they have identified countries of involvement to both of them. During the EU- Japan Summit in Tokyo, it was reported that the current many-sided, rule-based, trading system in the WTO is indispensable and the merely right manner of managing and spread outing trade dealingss between states. . ( Patrick, 2010 )

Bilateral understandings

The chief bilateral understandings were reached between the EU and Japan to further the trade between them: The Mutual Recognition Agreement of 2001, allowing credence of conformance appraisal carried out in one party in line with the ordinances of the other in four merchandise countries – telecommunications, terminal equipment, electrical merchandises. Good research lab Practices for chemicals and Good fabrication Practises for pharmaceutical – assisting in the doing the markets accessible. The 2nd understanding. An understanding on Co-operation on Anti- competitory Activities was formed and signed in 2003, easing both trade and investing by offering an equal chance to all trading spouses in all the provinces. The relation between the Japan – EU economic relation have besides, given the concern community a new rental of life, with the duologues they identified reciprocally – good enterprises, maintaining close path of such achieve in their disposals, this is reinforce trade dealingss between them and the concern community. . ( Patrick, 2010 )

EU- Japan Future

With the current developments in macroeconomics in both Japan and the EU provinces, still a batch is staying to be desired on the portion of Japan in footings of the trade barriers in their state – the foreign companies still can non follow with the market handiness ordinances. Hence to let such houses to merchandise freely, these structural barriers to investing on the Nipponese market must be removed ; to give every – trading spouse smooth playing field. This is expected to liberate the market and let more houses invest in take-over or partnership of concerns. Both of these trading spouses, program to escalate their investing to let investor benefit from the new regulative models and publicity strategies, and EU has improved the Regulatory Reform Dialogue to open the Nipponese un-dynamic market, this is targeted to bring forth a balanced trade flows, more concern chance, tie-ups and inter-penetration. The bilateral co-operation is expected to come up with joint enterprises in specific countries of involvement for illustration investing facilitation, rational belongings rights, authorities procurances and others. . ( Patrick, 2010 )

In the mid 60 ‘s due economic prosperity of Japan, European states removed bit by bit the quantitative limitations on Nipponese goods and services while Britain wholly taking them in 1967.Japan on its side put more limitations – the voluntary export restrain steps. The involvement of Britain in Japan due to growing forced them to make away with what they considered barriers to making concern with them – Nipponese duty or non tariff barriers, the instability in trade and impenetratable markets. America ne’er liked the discriminatory trade policies and its protective trade steps, peculiarly in agribusiness. The Nipponese took a gesture to return the state of affairs, enlargement of import quota for skimmed milk pulverization and directing some of its exiles to measure the markets abroad. ( Patrick,2010 )

The Asia states apply the construct of “ reactive province ” in their foreign economic policy, doing them look as planetary political economic systems. Some of the few characteristics of reactive constructs are: the states fail to take independent foreign policy enterprises while they have the capacity to make so.Secondly, it responds to outside influence to alter, ertatically, disorderly and rarely unsatisfactorily. Nipponese have adopted this system in their international construction system and besides locally.

The local concern characteristics like bureaucratic atomization, political relations, power mass media, and compromised cardinal authorization is order of the twenty-four hours in the last three decennaries. ( Calder,198 )


With the trade barriers being imposed on African provinces in footings of trading chances particularly the by the West and America, most of such states have opted to construct partnership humor Japan that tend to hold fewer barriers while merchandising with Africans. In information engineering and communicating systems, the motor vehicle, amd chemical industries have to a great extent invested in Africa states. The Nipponese houses have build multi- corporations in Africa, using many people.Infact, for illustration most of electronics used in most African provinces originate from Asia, with Japan lending more, though, the West and America have complained of buccaneering over-time but this seems non to hold changed the involvement in such goods, perchance because they are cheaper.

Motor vehicle industry has grown enormously, with most Nipponese autos being traded to a great extent across the universe. For illustration in East Africa, the Nipponeses have an assembly works in Kenya, this make their vehicles affordable, extinguishing the revenue enhancement due to importation.Besides, most people are employed in these industries making occupation chance for the un-employed young persons. The human resource development have besides benefited as they offer preparations to their employees on modern engineering.

Nipponese on the other manus, have helped develop roads web in most African States, due to the application of inexpensive and low-cost engineering.

The growing of Japan ‘s economic for the last few old ages has made it be dependent on most of the developing economic systems for its beginning of energy and other natural resources, besides, as the major market for its goods. With one-year trade of 300 billion dollars conducted in Africa. This has forced them to alter their foreign policy to accommodate the development states, which they mostly depend on to run portion of their economic system. Due to its foreign policies on has made autumn out with the West and America, go forthing Africa as the hereafter development spouse. ( Brooks and Roberts,1985 )