Japan and China in East Asian Integration

5. Japan in ASEAN: Potential Trade Frictions

118 Japan and China CHAPTER 5 Japan in ASEAN: Potential Trade Frictions Introduction After the second oil-shock in 1979–1981, trade frictions between Japan and the Western countries, that is the US and the EC, escalated. Relatively higher-quality and lower-priced Japanese manufactured goods have overwhelmed not only the markets in ASEAN but also those in Europe and North America. Japan’s trade with the US and the EC has been in Japan’s favour. In 1983, Japan’s trade surpluses with the US and the EC reached US$21 billion and US$10.1 billion respectively.1 Both the US and the EC have been urging Japan to reduce its exports and increase imports from them in order to reduce Japan’s trade surpluses. Despite numerous efforts by the parties concerned, trade relations between Japan and its foreign partners do not seem to have improved significantly. Thus, at a ministerial conference on 27 April 1984, the Japanese government adopted a six-point package of counter-measures in order to resolve contentious economic problems with the developed countries.2 It is estimated, however, that these measures will reduce Japan’s surpluses by only US$500–600 million at the most.3 Trade frictions between Japan and the Western countries are unlikely to be resolved in the near future. Trade frictions between Japan and Western countries have been sufficiently discussed and researched.4 Much attention has been paid to efforts to rectify their distorted trade relationship, and this has been reported frequently in daily newspapers. The potential and/or actual trade frictions between Japan and ASEAN, on the other hand, have been overlooked, despite protestations made by governments and among 05 Japan&China Ch 5 11/6/07, 12:22 PM 118 119 Japan in ASEAN: Potential Trade Frictions 119 business circles in this region against the closed nature of the Japanese market. For example, it was reported that Philippine President Ferdinand E. Marcos had asked the Japanese Prime Minister Suzuki Zenko to reduce tariffs on bananas when the latter visited the Philippines in January 1981.5 Marcos in his keynote speech to the thirteenth meeting of ASEAN Economic Ministers in Manila in 1982 again voiced “the collective concern of the Philippines, Malaysia, Singapore, Thailand, and Indonesia over Japan’s heavy tariff policies and nontariff barriers against products from their region (ASEAN)”.6 The Malaysian Prime Minister Datuk Seri Dr Mahathir Mohamad, when he visited Japan in January 1983, also called on Japan “to open its markets wider to products from Malaysia and other developing nations”.7 He termed “the flow of primary commodities from ASEAN in return for finished and semifinished goods from Japan” anachronistic, and said that “this symbiotic relationship, which is based on the classical developed-developing economic dichotomy, is now very much obsolete”.8 In Singapore, Dr Tony Tan, formerly Minister of Trade and Industry (also Minister for Finance), in an interview with a Japanese fortnightly periodical, Nikkei Shogyo, criticized the closed nature of the Japanese market and cited examples of exports of meat and marine products which were required to meet Japan’s sanitary standards, and exports of manufactured goods which must meet the Japanese Industry Standard (JIS), as typical non-tariff barriers imposed by Japan to restrict imports from the developing countries.9 Mr Tan Keong Choon, President of the SCCCI, also urged Japan to look into its “trade barriers” and “obstacles imposed on imports” from Singapore.10 Governments and business circles in ASEAN feel frustrated in exploring the Japanese market. As a result of the rapid industrial development in this region and the close trade and economic relations between ASEAN and Japan, imports of industrial products from Japan are likely to increase substantially year by year. ASEAN will be in a difficult situation if the value of its exports to Japan do not match that of its imports from Japan. Statistics show that over the period 1979–1982, Japan’s trade with ASEAN has been in ASEAN’s favour 05 Japan&China Ch 5 11/6/07, 12:22 PM 119 120 Japan and China because of its important supplies of industrial resources, such as crude oil, liquefied gas, timber, copper, and natural rubber to Japan. However, ASEAN’s trade surplus with Japan diminished substantially from US$4,035 million in 1980 to merely US$841 million in 1982. Moreover, the trade surplus has been mainly due to Indonesia’s exports to Japan. Taken...