Japan and China in East Asian Integration

3. Japan–Singapore Trade Frictions: A Study of Japanese Non-Tariff Barriers

46 Japan and China CHAPTER 3 Japan–Singapore Trade Frictions: A Study of Japanese Non-Tariff Barriers Introduction Japan has been accused of imposing non-tariff barriers (NTBs) on imports of foreign products. NTBs form an important part in defining the closed and protectionist market in Japan. This chapter identifies — through a comprehensive survey of Singapore exporters and manufacturers and, to a lesser extent, Japanese importers and distributors — several suspected NTBs and examines them in detail. Singapore’s lopsided trade relationship with Japan can be rectified if Japan is willing to look into measures to eliminate NTBs. On the other hand, it is an undeniable fact that Singapore’s exporters and manufacturers have also created their own NTBs by ineffectively and less aggressively exploring the Japanese market. It is widely known that the Singapore economy is very much outward-looking and trade-oriented due to its lack of natural resources and small domestic market. These two basic factors have made it necessary for Singapore to develop human resources aimed at promoting capital-intensive, high value-added, and high-technology industries. As a result of this industrial policy, Singapore-made manufactured products will be looking increasingly for potential foreign markets. It is anticipated that developed countries, such as the US, Japan, and the EC will gradually become important markets for Singapore’s manufactured products. Obviously, Singapore has to explore wider markets among developed countries in order to maintain a balanced trade relationship with them, as rapid industrial development in Singapore requires 03 Japan&China Ch 3 11/6/07, 12:21 PM 46 47 Japan–Singapore Trade Frictions 47 substantial imports of machinery and equipment, and other hightechnology supplies from technologically advanced countries. On the other hand, because of the world-wide economic recession which has led to an economic slowdown among developed countries, protectionist policies have been implemented to restrain import trade. Thus, manufactured products from developing countries find formidable constraints in penetrating the markets of developed countries. In this context, Singapore has faced similar difficulties in exploring the Japanese market. The Japan–Singapore trade relationship is getting more and more serious in terms of the trade deficit suffered by Singapore in recent years. Singapore, as the only newly-industrializing country among the ASEAN member states, will suffer a further set-back in its industrial developmental process if appropriate quantities of manufactured products, such as petroleum products, electronic and electrical products, and pharmaceutical products, do not find outlets in the Japanese market. This chapter analyses the trade relationship between Singapore and Japan. Emphasis is given to Japanese NTBs affecting Singapore’s manufactured exports to the Japanese market. It is not designed to examine the features and substance of NTBs practised in Japan in general, but is basically an effort to provide a data-base on identified NTBs encountered by Singapore’s exporters and manufacturers in their export trade with Japan.1 Trade between Japan and Singapore Before examining Japanese NTBs encountered by Singapore manufacturers and exporters, it is perhaps essential to discuss the main features of the Japan–Singapore trade relationship and problems. There are trade deficits and difficulties in Singapore’s export trade with Japan which undermine Singapore’s intention to penetrate the Japanese market. Basic Facts During the 1988–1993 period, Malaysia, the US, Japan, and the EC have been the most important trading partners of Singapore (see 03 Japan&China Ch 3 11/6/07, 12:21 PM 47 48 Japan and China Table 3.1). Trade with these countries constitutes 55 to 57 per cent of Singapore’s total international trade throughout the period under consideration. The Singapore economy cannot but be influenced by the economic situation in these countries. Singapore’s rate of export and import dependence on these countries has ranged from 50 to 54 and 59 to 61 per cent, respectively, over the period 1988–1993 (see Tables 3.2 and 3.3). Singapore’s import dependence on these countries has been higher than its export dependence, that is, in terms of total values, Singapore imports more from this group of countries than it exports. The US and Japan have been important importers of Singapore’s products. Singapore’s exports to the US, in absolute terms, increased substantially from S$18,826 million in 1988 to S$24,291 million in 1993 (but stagnated in the years 1989–1991); while its imports from the US increased from S$13,718 million to S$22,360...