NO. 13 -- April 4, 1997


Feature Article


At a time of dramatic cuts in Washington's international affairs budget, Japan's commercial diplomacy, particularly in Asia, would appear to present much for an American business executive to envy. Government programs aimed at promoting trade and investment are extraordinarily well-funded.

Japan's commercial diplomacy is also strikingly comprehensive. Initiatives that fall under the self-styled rubric of keizai kyoryoku -- literally translated as economic cooperation -- range from traditional tools, such as financing and insurance, to less direct means of advocacy and influence-building, including personnel exchanges and government-funded educational and training programs.

Further, the bureaucracies responsible for drafting and implementing these programs arguably benefit from an embedded, societywide view that national security interests are consonant with aggressive support for Japanese business overseas. While criticism of the country's foreign aid policy emerges from time to time in the national media, public debate on the merits of commercial diplomacy is virtually nonexistent.

Big bucks backing a plethora of programs are no guarantee of effectiveness, however. While these programs unquestionably provide important support for private-sector activity overseas, evidence of waste, inefficiency and duplication abounds. Moreover, bureaucratic turf wars impair many programs, despite the widely held view in the United States that Japan's commercial diplomacy efforts are centrally controlled and well-coordinated.

In short, serious deficiencies plague the implementation of keizai kyoryoku. The problems do not imply, however, that the programs forming the foundation of Japan's commercial diplomacy are a waste of taxpayer money. These initiatives clearly provide important support for corporate Japan in ways both tangible and subtle.

Foreign policymakers attempting to draw lessons from Japan's practice of commercial diplomacy would do well to view the impact of Tokyo's programs with a healthy dose of skepticism. Large budget outlays and MITI's grand schemes for molding East Asia into something akin to a playground for Japanese companies certainly are impressive. Funding levels and the activities they underwrite also offer insights into the philosophical underpinnings of Tokyo's support programs for Japanese business operations abroad. The reality, however, is much less threatening to the foreign competition than a description of keizai kyoryoku might suggest.

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Weekly Review

A Tale Of Three Visits: Beijing Hosts Senior Officials From Tokyo, Washington by Christopher B. Johnstone

In the space of a week, the world witnessed in microcosm the contrasting pressures confronting Tokyo and Washington in their efforts to manage relations with the People's Republic of China. Foreign Minister Yukihiko Ikeda, Vice President Al Gore and Speaker of the House Newt Gingrich (R, Ga.) all visited the Chinese capital during late March -- a striking symbol of Beijing's rise to prominence on the world stage. The visits by Messrs. Ikeda and Gore in particular illustrated the challenges of developing cooperative ties with the emerging superpower


Ota Rebuffs Hashimoto On Base Leases; Stage Set For Special Legislation by Barbara Wanner

As widely anticipated, Okinawa Governor Masahide Ota March 25 rejected Prime Minister Ryutaro Hashimoto's request to support revision of a 1952 law to allow the U.S. military's continued legal occupation of land in the southernmost prefecture after the relevant leases run out. Chief Cabinet Secretary Seiroku Kajiyama indicated March 28 that the cabinet likely would approve the necessary legislation during the first week in April, with Diet action planned for later in the month.


Annual Wage Negotiations Show Labor Market Changes by Jon Choy

The vigorous but brief blooming of the cherry trees and equally frenetic and abbreviated nationwide wage negotiations herald springtime in Japan. After World War II labor unions there organized the spring wage offensive or shunto to maximize their leverage with management, but it had the double benefit of limiting labor strife to a short, defined period. Shunto became a spring ritual. Unions and employers staked out early wage hike positions; unions staged one- or two-day nationwide strikes to demonstrate their power; and then key industries settled on a uniform basic pay hike that became the benchmark for settling all remaining wage talks.



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