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NO. 3 -- January 24, 1997

 

Feature Article

FINANCIAL MARKET REFORM IN JAPAN: BIG BANG OR JUST FIZZ? by Jon Choy

The Ministry of Finance has been deregulating and reforming domestic financial markets for nearly two decades in order to make both the multiple businesses covered by this rubric and local players world-class competitors. At the moment, however, it appears that MOF's initiatives have hurt rather than helped. Lenders are burdened with nonperforming loans, stock prices are a source of uncertainty, real estate markets are stagnant, insurers are inefficient, and Japanese financial firms still compare poorly with their foreign peers. In this almost-crisis atmosphere Prime Minister Ryutaro Hashimoto announced a plan in November to implement by the year 2001 sweeping deregulation and restructuring of Japan's financial markets. While the reform package was hailed at home and abroad as bold and well-intended -- as well as needed, its details and prospects for implementation and success are unclear. A "Big Bang" or a fizzle appear equally likely outcomes at this time.

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Weekly Review

Short-Term Indicators Show Signs Of Economic Life In Japan by Douglas Ostrom

Just as the economy has begun to float free of the shoals, the hands are jumping ship. That, in brief, seems to be what is happening Japan. The message that economic conditions are improving -- repeated endlessly by Japanese officialdom hoping to slow a free-fall in the Tokyo stock market in early 1997 -- receives some support from recent economic data. In fact, figures pertaining to 1996 suggest that Japan may have had its best year economically since early in the 1990s.

 

Tokyo Updates Protections For Intellectual Property by Jon Choy

Japan has underscored its commitment to protect intellectual property rights with a series of recent moves both at home and in the international arena. These actions span not only responses to disputes with trading partners but self-initiated efforts designed to ensure the continued innovative vitality of Japanese music, arts, industry and commerce. Tokyo, moreover, hopes that developing Asian countries will follow its lead in the IP area. The government consequently is setting aside resources to encourage the nation's rapidly industrializing neighbors to fall in line.

 

Oil Spill Strains Russian-Japanese Ties, Local-Central Government Relations by Barbara Wanner

An oil spill in the Sea of Japan resulting from the January 2 wreck of an aged Russian tanker has created additional strains in Tokyo's already uneasy relations with Moscow as well as revived questions about the Japanese government's crisis management capabilities. Although the Russian government dispatched the first of two special oil-cleaning vessels to the polluted Japanese waters January 12 and Russian Ambassador to Japan Alexander Panov three days later offered a formal apology to residents of the affected areas, prefectural officials complained that Moscow was tardy in providing mop-up assistance and stingy in withholding offers of financial compensation.

 

Outlook Murky For Renewal Of Fast-Track Authority by Christopher B. Johnstone

With President Clinton's second term now officially underway, attention in Washington has returned to the details of governing. Among the host of items on the international economic policy agenda, few are more central than the question of renewing the president's so-called fast-track trade negotiating authority. Mr. Clinton has been without that authority -- which allows the president to submit trade agreements to Congress for a simple up-or-down vote without amendment -- for more than three years.

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