Order Code IB97004
CRS Issue Brief for Congress
Received through the CRS Web
Japan-U.S. Relations:
Issues for Congress
Updated August 2, 2005
Mark Manyin (Coordinator), William Cooper,
Richard P. Cronin and Larry A. Niksch
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Role of Congress in U.S.-Japan Relations
Major Foreign Policy Issues
Indian Ocean Deployment
Support for U.S. Policy toward Iraq
Converging Korean Peninsula Priorities?
U.S.-Japan-China Relations
Historical Issues
Claims of Former World War II POWs and Civilian Internees
United Nations Reform
Kyoto Protocol and Climate Change
Security Issues
Issue of U.S. Bases on Okinawa
Proposed U.S. Command Structure Changes
Burden-Sharing Issues
Revised Defense Cooperation Guidelines
Cooperation on Missile Defense
Economic Issues
Japan’s Ban on U.S. Beef
The Byrd Law
The Doha Development Agenda
Japanese Political Developments
Current Situation
The Ruling Liberal Democratic Party (LDP)
The Democratic Party of Japan (DPJ)
Constitutional Revision
LEGISLATION

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Japan-U.S. Relations: Issues for Congress
SUMMARY
The post-World War II U.S.-Japan alli-
Tokyo sent some 600 noncombat military and
ance, long the anchor of the U.S. security role
reconstruction support to Iraq, despite consid-
in East Asia and the Pacific, rests on shared
erable public opposition.
democratic values and mutual interest in
Asian and global stability and development.
Once a supporter of South Korea’s
Alliance cooperation has deepened signifi-
“sunshine policy” of unconditional engage-
cantly since the September 11, 2001, terrorist
ment, Japan’s stance towards North Korea has
attacks. The U.S. maintains about 53,000
hardened significantly, especially since Pyong-
troops in Japan, about half of whom are sta-
yang’s admission that it kidnapped Japanese
tioned on the island of Okinawa. Trade fric-
citizens in the 1970s and 1980s. North Ko-
tion has decreased in recent years, partly
rea’s provocative nuclear sabre-rattling and
because concern about the trade deficit with
unresponsive stance on the abductions issue
Japan has been replaced by a much larger
has led Japan generally to support the “hard-
deficit with China and the latter’s association
line” U.S. position in the Six Party Talks in
with concerns about the loss of manufacturing
Beijing, and to adopt legislation to permit
jobs. For 2004 the merchandise trade deficit
economic sanctions on North Korea, if the
with Japan was about $75 billion, compared
Koizumi government decides that punitive
with about $164 billion for China.
measures are necessary. Japan participates in
the Proliferation Security Initiative (PSI). The
U.S.-Japan relations are of concern to
Bush Administration supports Japan’s bid for
Members and Committees with responsibili-
a permanent seat on the U.N. Security Coun-
ties or interests in trade and international
cil. Japan is the second-largest contributor
finance and economics, U.S. foreign policy,
— paying almost 20% of the total — to the
U.S. bases in Japan, ballistic missile defense
U.N.’s regular budget.
(BMD), and regional security. Congressional
support for security cooperation with Japan
Due to its concerns about North Korea
stems in particular from concerns about North
and a rising China, Japan is participating in
Korea’s nuclear and missile proliferation,
joint research and development of a sea-based
terrorism, and China’s potential emergence as
missile defense capability and plans to acquire
the dominant regional power.
and deploy two separate U.S. systems begin-
ning in 2006. The Koizumi government also
In October 2001 the Koizumi
has taken steps that could transform Japan into
government gained parliamentary approval of
a more “normal” nation in terms of its security
unprecedented legislation permitting the
posture, calling for a revision of the anti-war
dispatch of Japanese ships and transport
clause (Article 9) of the Constitution that
aircraft to the Indian Ocean to provide rear-
prohibits participation in collective security
area, noncombat logistical support to U.S.
arrangements. The U.S. and Japan have accel-
forces engaged in the anti-terrorist campaign
erated discussion of reducing the burden of
in Afghanistan. A small Japanese flotilla
hosting U.S. bases in Okinawa, in the context
supplied about 30% of the fuel needs of U.S.
of ongoing bilateral discussions about U.S.
and allied warships from late 2001 through
plans for the realignment and transformation
March 2005. The Japanese flotilla since has
of U.S. military forces in Asia.
been reduced to one escort ship. In early 2004
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MOST RECENT DEVELOPMENTS
Japanese Prime Minister Junichiro Koizumi’s political clout, already on the wane due
to his “lame duck” status and his support for U.S. policies in Iraq, suffered another blow in
early July 2005 when his legislation to privatize Japan’s postal service — particularly its
banking and insurance operations — passed the Lower House of the Japanese Diet
(parliament) in early July 2005 by a margin of only 5 votes. Over fifty LDP members either
voted against the measure or abstained from voting. It is not clear that Koizumi will have
enough votes from within his own LDP to ensure the measure’s passage in the Diet’s Upper
House. If the measure fails during an expected Upper House vote in August, Koizumi has
said he may call for early parliamentary elections. Even if the postal measure passes,
Koizumi’s political standing is likely to be diminished significantly, casting uncertainty on
his willingness or ability to make politically unpopular decisions such as extending Japan’s
deployment in Iraq and agreeing to U.S. troop redeployments from Okinawa to the Japanese
mainland.
Following the discovery of new cases of “mad cow” disease in the United States, Japan
is now asking the United States for more safety data, which will delay the lifting of Japan’s
ban on U.S. beef imports. On August 1, 2005, Japan announced that it would impose extra
tariffs on imports of selected steel products from the United States as retaliation for the
continued implementation by the United States of the “Byrd Amendment.” This law requires
that revenues from antidumping and countervailing duty measures be redistributed to eligible
firms. The World Trade Organization (WTO) declared it illegal and authorized affected
countries to retaliate.
BACKGROUND AND ANALYSIS
Role of Congress in U.S.-Japan Relations
Congress cannot itself determine
the U.S. approach toward Japan, but its
Japan Country Data
powers and actions in the areas of trade,
technology, defense, and other policy
Population: 127.4 million (July 2005 est.)
% of Population over 64: 19.5% (U.S. = 12.4%) (2005)
form a backdrop against which both the
Area: 377,835 sq km (slightly smaller than California)
Administration and the Japanese
Life Expectancy: 81.15 years (2005)
government must formulate their
Per Capita GDP: $29,400 (2004 est.) purchasing power
programs. As of 2005 several high-
parity
profile policy issues were of particular
Primary Export Partners: US 22.7%, China 13.1%,
South Korea 7.8%, Taiwan 7.4% (2004)
interest to Congress, including dealing
Primary Import Partners: China 20.7%, US 14%,
with the confrontation over North
South Korea 4.9%, Australia 4.3% (2004)
Korea’s nuclear and missile programs,
Yen:Dollar Exchange Rate: 108.3 (2004), 115.93
Japan’s support for U.S. policy
(2003), 125.39 (2002), 121.53 (2001)
concerning Afghanistan and Iraq,
Foreign Exchange Reserves: $664.6 billion (2003)
cooperation on missile defense, the
Source: CIA World Fact book, July 2005
transformation of U.S. military
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deployments in Asia, and Japan’s more assertive foreign policies and security posture.
Congress also has been active in recent years in pushing the Administration to employ anti-
dumping trade penalties against steel imports from Japan, in criticizing Japan’s ban on
imports of U.S. beef, and in supporting efforts by survivors of Japan’s World War II slave
labor camps to gain relief through the U.S. courts by opposing a long-standing U.S. policy
that gives primacy to the terms of the 1951 U.S.-Japan Peace Treaty.
Major Foreign Policy Issues

(This section was written by Richard Cronin and Mark Manyin)
The United States and Japan have long sought to promote economic cooperation, an
open global trading system, and regional stability and security. In economic terms, the two
countries have become increasingly interdependent: the United States traditionally has been
Japan’s most important foreign market, while Japan is one of the largest U.S. markets and
sources of foreign investment (including portfolio, direct, and other investment). The
U.S.-Japan alliance and the American nuclear umbrella give Japan maneuvering room in
dealing with its militarily more powerful neighbors. The alliance and access to bases in
Japan also facilitate the forward deployment of U.S. military forces in the Asia-Pacific,
thereby undergirding U.S. national security strategy. The most significant bilateral trend in
the past five years has been the steady growth of Japanese security cooperation with the
United States, including the first-ever deployments of Japanese Self-Defense Forces in
noncombat support of U.S. military operations following the September 11, 2001, terrorist
attacks.
Indian Ocean Deployment. The Koizumi government strongly condemned the
terrorist attacks of September 11, 2001, and initiated a series of unprecedented measures to
protect American facilities in Japan and provide non-lethal logistical support to U.S. military
operations against Al Qaeda and the Taliban in Afghanistan. The latter mainly took the form
of at-sea replenishment of fuel oil and water to U.S., British, French, and other allied
warships operating in the Indian Ocean, and logistical airlift. A small flotilla of transport
ships, oilers, and destroyers has provided about a third of the fuel used by 10 allied naval
forces in the Indian Ocean since the first deployment in November 2001. In addition, as of
October 2004, the Air Self-Defense Force (ASDF) had conducted more than 250 airlift
support missions for U.S. forces with C-130 and U-4 transport aircraft.1 On June 10, 2005,
the Japanese government decided to extend the anti-terrorism law for two years, but to
reduce its Indian Ocean deployment to only one escort ship. This would effectively bring an
end to the post-911 role of the Maritime Self-Defense Forces (MSDF) in providing fuel oil
and water to U.S., British, and other allied ships conducting anti-terrorism operations in the
Indian Ocean and Persian Gulf.
Japan’s ability to “show the flag” in its first such deployments since the end of World
War II was made possible by the adoption by the Japanese Diet (parliament) at the end of
October 2001 of three related anti-terrorism bills. One law, the Anti-Terrorism Special
Measures Law, gave unprecedented post-World War II authority to the Japanese Self-
1 Donna Miles, “U.S. Envoy Praises Japan’s Support for Terror War,” Armed Forces Information
Services, Oct. 28, 2004, [http://www.defenselink.mil/news/Oct2004/n10282004_2004102804.html].
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Defense Forces (SDF) to provide “rear area” support to U.S. forces operating in the Indian
Ocean. Permitted support includes intelligence sharing, medical care, and the provision of
fuel and water and nonlethal military supplies. The restriction of the authority to nonlethal
supplies was a domestic political compromise aimed at reconciling Japan’s “no-war”
constitution with the government’s desire to meet the Bush Administration’s expectations
of material support. In general, Japan’s U.S.-dictated constitution remains a major obstacle
to closer U.S.-Japan defense cooperation because of a prevailing constitutional interpretation
of Article 9 that forbids engaging in “collective defense,” that is, combat cooperation with
the United States against a third country. (See “Constitutional Revision,” below.)
Aid to Afghanistan. After the United States, Japan also has been the leading donor
country for Afghan relief and reconstruction. Japan played a major role, along with the
United States, Saudi Arabia, and the Asian Development Bank in accelerating reconstruction
of the critical highway linking Kabul with Kandahar, in the heartland of the Pushtun ethnic
group.2

Support for U.S. Policy toward Iraq. While strongly preferring a clear United
Nations role in resolving the U.S./British confrontation with Iraq, Japan nonetheless gave
almost unqualified support to the Bush Administration’s position. During an open debate in
the U.N. Security Council on February 18, 2003, Japan was one of only two out of 27
participating countries, the other being Australia, to support the U.S. contention that even if
the U.N. inspections were strengthened and expanded, they were unlikely to lead to the
elimination of Iraq’s weapons of mass destruction. Prime Minister Junichiro Koizumi and
then-Foreign Minister Yoriko Kawaguchi called the leaders of several undecided Security
Council Members to try to persuade them to support the U.S. position. Japan has committed
to providing some $5 billion in assistance to Iraq. In mid-October 2004, Japan hosted a
conference in Tokyo for a group of countries and institutions that have pledged funds to
support the reconstruction of Iraq. In addition, the Koizumi government has deployed about
600 military personnel — mainly ground troops — to carry out humanitarian aid and
reconstruction activities in Iraq. The deployment has been highly controversial in Japan.
Converging Korean Peninsula Priorities? Having tried and largely failed in the
past to moderate North Korea’s behavior by offering the prospect of major economic
benefits, Japan has drawn closer to the U.S. position in the China-sponsored Six Party Talks
on Pyongyang’s nuclear weapons program. Japan also has hardened its stance in its efforts
to get a full accounting from North Korea over the fate of Japanese citizens kidnapped from
Japanese shores and Europe in the 1970s and 1980s. In September 2002, Japanese Prime
Minister Junichiro Koizumi traveled to Pyongyang for a historic summit with Kim Jong-il
that momentarily restarted normalization talks between the two countries, which have not
established official relations since North Korea was founded in 1948. During the visit, Kim
Jong-il admitted to Koizumi that North Korea had abducted 13 Japanese nationals in the
1970s and 1980s and that only five remained alive. News of the unexplained deaths of the
eight abductees, who were relatively young when they disappeared, and Kim’s refusal to
provide information on other suspected abductees outraged public opinion in Japan and
brought about a hardening of Tokyo’s policy toward Pyongyang. In October 2002, the five
2 Glenn Kessler, “Afghans Ask for Economic Aid to Prevent Domination by Drug Trade,”
Washington Post, Apr. 1, 2004.
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surviving abductees were allowed by the regime to travel to Japan for a visit, but their family
members were not allowed to leave North Korea. The Koizumi government subsequently
prevented the five from returning to North Korea (perhaps at the abductees’ request) and
demanded that Pyongyang release their family members. Stalemate over the abductee issue,
combined with the eruption of the North Korean nuclear crisis in October 2002, caused
Japan-North Korea normalization talks to stall for a year and a half.
In May 2004, Koizumi won the family members’ release by traveling to Pyongyang for
another one-day summit. Koizumi also pressed Kim Jong-il to abandon his nuclear
weapons program and pledged during the same visit to provide 250,000 tons of rice and $10
million in other aid to the North. Following Prime Minister Koizumi’s May 2004 visit to
North Korea, the Japanese government and the prime minister himself, in meetings with
President Bush at the June 2004 G-8 Summit at Sea Island, GA, began to press for a more
flexible U.S. stance. Shortly thereafter, the Bush Administration submitted its first and only
detailed negotiating position at the six-party talks (involving North Korea, the United States,
China, South Korea, Japan, and Russia) to discuss the North Korean nuclear issue. Japan’s
position hardened in December 2004, after Japanese DNA tests invalidated North Korea’s
claims that boxes of remains delivered to Japan were those of deceased kidnap victims.
Following this development, the Japanese government suspended its aid shipments to North
Korea, and calls within Japan for an imposition of sanctions increased. The Bush
Administration and Congress have supported Japan’s insistence on a full accounting of the
fate of Japanese citizens kidnapped by North Korea. In the North Korean Human Rights Act,
which the 108th Congress passed and President Bush signed into law in October 2004, (P.L.
108-333) U.S. nonhumanitarian assistance to North Korea is made contingent on North
Korea’s “substantial progress” toward fully disclosing information about the abductees.
While resisting the calls to impose sanctions, Prime Minister Koizumi has said that
normalization talks will not continue unless Pyongyang begins dismantling its nuclear
program and is more cooperative on the abductions issue. His government also has
toughened enforcement of Japan’s controls on the export of potential dual-use items to North
Korea, and has secured passage of legislation that would give the government the right to
block visits to Japanese ports by ships deemed to be a security risk and that lack property and
indemnity insurance (less than 5% of North Korean commercial vessels are thought to be
adequately insured). Between 2002 and 2004, port calls by North Korean ships fell by about
25%, and two-way trade flows decreased by 33%, from about $390 million to around $260
million. Also, in 2003, the Japanese Diet adopted legislation giving the government the
authority to impose economic sanctions, including the banning of cash remittances to North
Korea, without the previous requirement of specific United Nations or other multilateral
approval. Remittances to North Korea are thought to have declined significantly since the
early 1990s, though they still are estimated to total tens of millions of dollars a year. (For
more information, see CRS Report RL32161, Japan-North Korea Relations: Selected
Issues, by Mark Manyin; CRS Report RL32428, Japanese Prime Minister Koizumi’s May
2004 Trip to North Korea: Implications for U.S. Objectives, by Richard P. Cronin, and CRS
Issue Brief IB98045, Korea: U.S.-Korean Relations — Issues for Congress, by Larry
Niksch.)
U.S.-Japan-China Relations. At present, Japan seems to view China’s rising power
with deepening concern, while China, for its part, has become increasingly critical of the
strengthening of U.S.-Japan security relations. In the past, Japanese officials tended to grow
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uncomfortable when U.S.-China relations deteriorate, but also when they are too close.
Japan’s own relations with China have been increasingly strained in recent years as a result
of China’s criticism of the official approval of new textbooks that minimize Japan’ past
aggression, conflicting claims to disputed islands in the East China Sea, Chinese intrusions
into what Japan considers its 200-mile economic zone, and broader Japanese concerns about
China’s rising power and influence. Japan’s 2005-2009 defense plan for the first time
mentions China as a security problem, and in January 2005, it was reported that Japan had
developed military plans to dispatch 55,000 troops into the East China Sea area if maritime
disputes deteriorate into an armed clash. Japan has cut its assistance to China in half since
2000. For its part, China has objected to the granting of a visa for a visit to Japan by former
Taiwanese president Lee Teng Hui, has complained about the treatment of Japan’s past
aggression in Japanese textbooks, and bitterly objected to several visits by Prime Minister
Koizumi to the Yasukuni War Shrine, in Tokyo, which enshrines the names of Japan’s war
dead, including a handful of convicted war criminals. Japan values China’s role in
promoting multilateral talks aimed at eliminating North Korea’s nuclear program, but Tokyo
also worries about the concomitant expansion of China’s regional influence. The March
2005 visit of Secretary of State Condoleezza Rice to Tokyo revealed a steadily increasing
degree of U.S.-Japan alignment on regional security issues. Beijing condemned a joint
statement by Secretary Rice and Minister Machimura to the effect that the China-Taiwan
issue was a matter of common security concern, although the Japanese foreign minister made
clear that constitutional constraints would prevent Japan from becoming militarily involved
in a China-Taiwan conflict.
Historical Issues. Japan’s record of interpreting its period of colonial rule of East
Asia in the first half of the 20th Century also has contributed to the worsening of tensions
with South Korea in 2005 and periodically have led to strains in U.S.-Japan relations. South
Koreans have been particularly angered by Japan’s claim to two small rocky islets in the Sea
of Japan — named Tokdo in Korean and Takeshima in Japanese — currently administered
by South Korea. In March 2005, South Korean President Roh Moo-hyun warned that a
“diplomatic war” could erupt if Japan does not correct the “wrongs” it has committed. South
Korea also has complained about Japanese history textbooks, the Yasukuni visits, and a
perceived failure by Japan to compensate Korean “comfort women” who were recruited to
provide sexual services for Japanese troops during World War II. Although the Japan-
South Korean disputes generally are regarded as more manageable than Sino-Japan tensions,
the disagreements over history are a major obstacle to improved Japan-South Korean ties,
which is often called the “weak link” in the U.S. triangle of alliances in Northeast Asia.
Criticism of Japan’s interpretation of its history also has affected Korean and Chinese
views of the United States. Both countries have criticized the Bush Administration for its
silence regarding the controversy over the Yasakuni shrine and Japan’s record in accounting
for its past history of aggression before and during World War II. In July 2005, the U.S.
House of Representatives passed H.Con.Res. 191, which commemorated the 60th anniversary
of the end of the Pacific War; the resolution stated that Congress reaffirmed the judgments
rendered by the international war crimes tribunal in Tokyo after World War II, including the
conviction of Japanese leaders for “crimes against humanity.”
Claims of Former World War II POWs and Civilian Internees. Congress has
also indicated interest in another issue in which the U.S. and Japanese governments have
been in essential agreement. A number of surviving World War II POWs and civilian
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internees who were forced to work for Japanese companies during the war have filed suits
in Japan and California seeking compensation of $20,000 for each POW or internee. Former
POWs and civilian internees had been paid about $1.00-2.50 for each day of internment from
a fund of seized Japanese assets administered by a War Claims Commission (WCC)
established by Congress in 1948. Numerous suits have been filed in California against
Japanese firms with wartime or pre-war roots, including Mitsui & Co., Nippon Steel, and
Mitsubishi Company on grounds that these companies subjected POWs and internees to
forced labor, torture, and other mistreatment. Thus far, the Japanese courts and the U.S.
Court of Claims have dismissed the suits on grounds that Japan’s obligations to pay
compensation were eliminated by Article 14 of the 1951 Multilateral Peace Treaty with
Japan. The State Department and Department of Justice support the position of the Japanese
government, but a number of Members of Congress have sided with the plaintiffs. The core
issue is whether the Peace Treaty with Japan relieved only the Japanese government from
future claims or whether it covered private companies as well. A number of bills and
amendments introduced in recent Congresses sought to block the executive branch from
upholding the supremacy of the Peace Treaty in civil suits. None have been enacted, in part
due to opposition from the Bush Administration.
United Nations Reform. In 2004, Japan accelerated its longstanding efforts to
become a permanent member of the United Nations Security Council by forming a coalition
with Germany, India, and Brazil (the so-called “G-4”) to achieve non-veto membership for
all four countries. Though the Bush Administration has backed Japan’s bid, it has not
supported the G-4 proposal, which is expected to be voted on in the summer of 2005, and has
opposed taking a vote on expanding the Security Council until a “broader consensus” within
the organization can be reached. To become a new member, Japan needs to obtain support
from two-thirds (128 countries) of all the U.N. member countries. Japan is the second-
largest contributor to the U.N. regular budget, paying more than 20% of the total, more
than twice the percentage paid by the third-largest contributor. China and South Korea
have criticized the Bush Administration for its support for Japan’s bid for permanent U.N.
Security Council membership.
Kyoto Protocol and Climate Change. Japan is the fourth-leading producer of so-
called greenhouse gases after the United States, the Russian Federation, and China. Under
the Kyoto Protocol, which Tokyo ratified on June 4, 2002, Japan is obligated to reduce its
emissions 6% below its 1990 levels by 2010. Japanese industry shares many of the concerns
of U.S. industry about the cost and feasibility of achieving these reductions by the target date
of 2012, but the Japanese government, which places a high value on its support of the
protocol, expressed extreme dismay over the Bush Administration’s decision to back away
from the protocol. In July 2005, Japan joined with the United States, China, India, South
Korea, and Australia to announce a new, non-binding, agreement, the Asia-Pacific
Partnership on Clean Development and Climate, that calls on the six-nation agreement to
cooperate on the development and diffusion of technologies to combat climate change,
reduce pollution, and promote energy security. A vision statement announcing the initiative,
which is expected to take more concrete form during a ministerial meeting in Australia in
November 2005, says the agreement will “complement, but not replace, the Kyoto Protocol.”
Environmentalists have criticized the arrangement for its absence of mandates — particularly
on emissions of greenhouse gases — and for being a part of a suspected U.S. strategy to
prevent the Kyoto Protocol from being renewed after it expires in 2012.
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Security Issues

(This section was written by Larry Niksch)
Japan and the United States are military allies under a security treaty concluded in 1960.
Under the treaty, the United States pledges to assist Japan if it is attacked. Japan grants the
U.S. military base rights on its territory in return for U.S. support to its security. In recent
years Japan has edged closer to a more independent self-defense posture. A five-year defense
plan for 2005-2009 calls on Japan to become more engaged militarily in the Indian Ocean
region from the Middle East to Southeast Asia, permits military exports to the United States
for development of joint missile defense, mentions China as a security problem (the first such
mention in a five-year plan), and increases the size of rapid reaction forces, whose main
mission is to prevent infiltration from North Korea.
Issue of U.S. Bases on Okinawa. Since September 1995, the U.S. military
presence on Okinawa has been plagued by controversy over crimes committed by U.S.
military personnel, especially U.S. Marines, and by plans to reshape the structure of military
bases on the island. There have been widespread calls on Okinawa for a renegotiation of the
Japan-U.S. Status of Forces Agreement (SOFA) and a reduction in U.S. troop strength. The
U.S. and Japanese governments have opposed revising the SOFA, but, in 2001, the United
States agreed to turn over American military personnel suspected of specific grievous crimes
to Japanese authorities prior to formal indictments being issued by Japanese courts.
Recent U.S. announcements of troop withdrawals from South Korea and plans to
withdraw 70,000 military personnel from Europe and Asia have raised speculation that U.S.
troop strength on Okinawa might be reduced. In 2004, about 3,000 U.S. Marines from
Okinawa were dispatched to Iraq. Marine General Wallace Gregson has stated that Marines
could be relocated from Okinawa to bases on the Japanese mainland. A U.S.-Japanese
Special Action Committee on Okinawa (SACO) reached an agreement in 1996 under which
the U.S. military will relinquish some bases and land on Okinawa (21% of the total bases’
land) over seven years, but U.S. troop numbers would remain the same — about 29,000.
Implementation of the agreement has been stalled by the issue of relocation of the U.S.
Marine air station at Futenma, which is in the heart of a densely populated area, to another
site on the island. The crash of a Marine helicopter from Futenma at a nearby university
campus in August 2004 reportedly prompted the Pentagon to consider a withdrawal from
Futenma. Japan’s opposition Democratic Party, which made major gains in December 2003
parliamentary elections, came out in favor of a total U.S. military withdrawal from Okinawa.
The Pentagon reportedly has proposed relocating the Futenma air station to the U.S. Air
Force Kadena base on Okinawa. Japan and the United States reportedly have discussed
relocating the 3rd Marine Expeditionary Force headquarters to Guam and other Okinawa-
based Marines to the northernmost Japanese island of Hokkaido. Reportedly, the Japanese
government favors a reduction in the Marine presence on Okinawa, but the Pentagon opposes
major changes.
Proposed U.S. Command Structure Changes. In line with U.S. plans for global
and regional force structure changes, the Pentagon reportedly has proposed to Japan two
major command changes. One would shift the 1st Army Corps headquarters from
Washington State to Camp Zama in Japan. The second would integrate the 13th Air Force
on Guam into the 5th Air Force command and base the new command at the U.S. Yokota Air
Base (about 23 miles northwest of Tokyo), where the 5th Air Force command currently is
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located. These changes would make Japan a greater focal point of the U.S. command
structure in the Pacific. Proposals to transfer some of the U.S. forces on Okinawa to areas
of mainland Japan, particularly to Camp Zama, have run into considerable opposition from
local politicians. In January 2005, the United States and Japan reportedly agreed to establish
a set of working groups to discuss specifics about the realignment of U.S. forces in Japan.
Burden-Sharing Issues. The United States has pressed Japan to increase its share
of the costs of American troops and bases. Under a host nation support (HNS) agreement,
Japan has provided about $2.5 billion annually in direct financial support of U.S. forces in
Japan, about 77% of the total estimated cost of stationing U.S. troops. It was reported that
at a U.S.-Japan meeting in August 2004, Japanese officials suggested that Japan reduce its
HNS on grounds that Japan is now making a greater direct contribution to the alliance.
Revised Defense Cooperation Guidelines. U.S. and Japanese defense officials
agreed on a new set of defense cooperation guidelines on September 24, 1997, replacing
guidelines in force since 1978. The guidelines grant the U.S. military greater use of Japanese
installations in time of crisis. They also refer to a possible, limited Japanese military role in
“situations in areas surrounding Japan” including minesweeping, search and rescue, and
surveillance. The Japanese Diet passed initial implementing legislation in late May 1998.
The crises often mentioned are Korea and the Taiwan Strait, but another emerging point of
tensions is the East China Sea, where China and Japan have overlapping territorial claims over
the Sankaku islands and the underseas mineral resources. In January 2005, it was reported that
Japan had developed military plans to dispatch 55,000 troops into the East China Sea area if the
disputes deteriorate into an armed clash.
Until its unprecedented dispatch of a small naval flotilla and transport aircraft to provide
noncombat logistical support of U.S. forces operating in the Indian Ocean following the
September 11, 2001 terrorist attacks, Japan had barred its Self-Defense Forces (SDF) from
operating outside of Japanese territory in accordance with Article 9 of the 1947 constitution.
Article 9 outlaws war as a “sovereign right” of Japan and prohibits “the right of belligerency.”
It provides that “land, sea, and air forces, as well as other war potential will never be
maintained.” Japanese public opinion has strongly supported the limitations placed on the SDF.
However, Japan has allowed the SDF since 1991 to participate in a number of United Nations
peacekeeping missions and in the U.S.-led coalition in Iraq, but in noncombat roles.
Japan’s prime minister, Junichiro Koizumi, has advocated that Japan be able to
participate in collective self-defense and broader peacekeeping roles, but he said he would
not seek a revision of Article 9. In mid-2004, the Bush Administration stepped into the issue
directly, in contrast to the traditional U.S. stance that revising Article 9 should be decided
by Japanese. Top U.S. officials called for changes to Article 9. Then-Secretary of State
Colin Powell said that Japan must revise Article 9 in order to realize its goal of permanent
membership on the United Nations Security Council. One reported motive for the Bush
Administration’s intervention is that Article 9 is closely linked to the three “non-nuclear
principles,” barring nuclear weapons and nuclear-powered naval ships from Japanese
territory, that Japan adopted after World War II. U.S. plans to mothball the remaining non-
nuclear aircraft carrier, currently homeported in Japan, raise questions about the future of the
homeporting arrangement if the non-nuclear principles would bar nuclear-powered aircraft
carriers.
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Escalation of the nuclear crisis with North Korea influenced the passage by the Japanese
Diet in May 2003 of three wartime preparedness bills, which specify the powers of the
government to mobilize military forces and adopt other emergency measures. The North
Korean situation also sparked a debate in Japan over acquiring offensive weaponry that could
be used to attack North Korea.
Cooperation on Missile Defense. A six-year Japan-U.S. program of cooperative
research and development of anti-ballistic missiles began in 1999. Proponents of missile
defense justify it on the basis of North Korea’s missile program, but China opposes the
program. U.S. military officials reportedly have recommended that Japan adopt a missile
defense system that combines the ground-based U.S. Patriot Advanced Capability-3 (PAC-3)
system and the ship-based U.S. Standard Missile-3 system. Prime Minister Koizumi
announced in December 2003 that Japan would acquire these two U.S. systems. The
Defense Agency reportedly hopes to begin deploying the missile defense system around
major Japanese cities by 2007. The total cost to Japan is estimated at close to $10 billion.
(See CRS Report RL31337, Japan-U.S. Cooperation on Ballistic Missile Defense: Issues
and Prospects, by Richard P. Cronin.)
Economic Issues
(This section was written by William Cooper)
Despite Japan’s long economic slump, trade and other economic ties with Japan remain
highly important to U.S. national interests and, therefore, to the U.S. Congress. By the most
conventional method of measurement, the United States and Japan are the world’s two
largest economies, accounting for around 40% of world gross domestic product (GDP), and
their mutual relationship not only has an impact on each other but on the world as a whole.
(China’s economy is now larger than Japan’s by another method of measurement: purchasing
power parity.) Furthermore, their economies are intertwined by merchandise trade, trade in
services, and foreign investments.
Although Japan remains important economically to the United States, its importance
has slid as measured by various indicators. Japan is the United States’s third-largest
merchandise export market (behind Canada and Mexico) and the fourth-largest source for
U.S. merchandise imports (behind Canada, Mexico, and China) as of the end of 2004. At
one time Japan was the largest source of foreign direct investment in the United States but,
as of the end of 2003, it was the second largest source (behind the United Kingdom). It was
the fourth-largest target for U.S. foreign direct investment abroad as of the end of 2003. In
2004, United States was Japan’s largest export market and second-largest source of imports.
Because of the significance of the U.S. and Japanese economies, domestic economic
conditions strongly affect their bilateral relationship. Except for some brief periods, Japan
had incurred stagnant or negative economic growth in the 1990s and the first few years of
this decade. In Japan Fiscal Year (JFY) 2000, real GDP increased 2.5%, declined 1.1 in
JFY2001, and increased only 0.8% in 2002. However, in JFY2003, Japan’s GDP increased
2.0% and increased 1.9% in JFY2004. (Japan’s fiscal year runs from April 1 through the
following March 31. Thus, JFY2004 is equivalent to calendar year April 1, 2004 - March
31, 2005.)
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Some long-standing trade disputes continue to irritate the relationship. The U.S.
bilateral trade deficit with Japan reached $81.3 billion in 2000, breaking the previous record
of $73.9 billion set in 1999. (See Table 1.) However, in 2001, the U.S. trade deficit
declined 15%, primarily because of the slowdown in the U.S. economy, but increased
moderately to $70.1 billion in 2002. The trade deficit decreased slightly to $66.0 billion in
2003 but increased to $75.2 billion in 2004. In recent years, there have been complaints from
U.S. industry and certain Members of Congress about the Japanese government’s massive
intervention in currency markets in 2003 and early 2004 to slow the Japanese yen’s
appreciation against the U.S. dollar.
Table 1. U.S. Trade with Japan, 1996-2004
($ billions)
Year
Exports
Imports
Balances
1996
67.5
115.2
- 47.7
1997
65.7
121.4
- 55.7
1998
57.9
122.0
- 64.1
1999
57.5
131.4
- 73.9
2000
65.3
146.6
- 81.3
2001
57.6
126.6
-69.0
2002
51.4
121.5
-70.1
2003
52.1
118.0
-66.0
2004
54.4
129.6
-75.2
Source: U.S. Department of Commerce, Bureau of the Census. FT900. Exports are total
exports valued on a f.a.s .basis. Imports are general imports valued on a customs basis.
Japan’s Ban on U.S. Beef.3 Another lingering bilateral trade dispute pertains to the
Japanese ban on imports of U.S. beef. Japan imposed the ban in December 2003, in response
to the discovery of a case of “mad cow” disease in Washington State. On February 8, 2005,
U.S. Agriculture Secretary Mike Johanns had announced that Japan had accepted the U.S.
method for determining the age of cattle that were the source of processed beef and had
agreed in principle to allow the importation of beef less than 20 months old. Japanese
government officials now contend that it is up to the Food Safety Commission, an
independent Japanese government body, to make the final decision on lifting a ban. The
issue has become more complicated with the discovery of a second U.S. cow with the “mad
cow disease” with the subsequent request by the Japanese government for more data from
the United States. Unless the data are provided, the lifting of the beef ban could be delayed
even further, according to a Japanese Agriculture Ministry official.4
3 For more, see CRS Report RS21709, Mad Cow Disease and U.S. Beef Trade, by Charles Hanrahan
and Geoffrey Becker.
4 International Trade Reporter. July 28, 2005. p.1248.
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The issue has reached the highest political levels. In a March 9, 2005 telephone call to
Prime Minister Koizumi, President Bush urged the Japanese leader to end the ban.5
Members of Congress have weighed in on the issue as well. H.Res. 137 and S.Res. 87,
introduced in March 2005, express the sense of the respective Houses of Congress that the
U.S. government should impose economic sanctions against Japan if Japan does not lift the
ban. Until it imposed the ban, Japan was by far the largest market for U.S. beef and veal
exports, far ahead of second place South Korea.6
The Byrd Law. Japan, together with other major trading partners, has challenged U.S.
trade laws and actions in the WTO. For example, Japan and others challenged the U.S. 1916
Antidumping law and the so-called Byrd Law (Title X of P.L. 106-387, which allows
revenues from countervailing duty and antidumping orders to be distributed to those who had
been injured). In both cases, the WTO ruled in Japan’s favor. Legislation to repeal the 1916
law was passed by the 108th Congress. However, there is strong resistence in the Congress
to repealing the “Byrd Law.” In November 26, 2004, the WTO authorized Japan and seven
other countries to impose sanctions against the United States.7 On August 1, Japan
announced that it would impose 15% tariffs on selected imports of U.S. steel products
effective September 1 as retaliation. Japan joins the EU and Canada which had begun to
impose retaliatory tariffs earlier.8 It is the first time that Japan has imposed punitive tariffs
on U.S. products.

The Doha Development Agenda. Japan and the United States are major supporters
of the Doha Development Agenda, the latest round of negotiations in the WTO. Yet, the two
have taken divergent positions in some critical areas of the agenda. For example, the United
States, Australia, and other major agricultural exporting countries have pressed for the
reduction or removal of barriers to agricultural imports and subsidies of agricultural
production, a position strongly opposed by Japan and the EU. At the same time, Japan and
others have argued that national antidumping laws and actions that member countries have
taken should be examined during the DDA, with the possibility of changing them, a position
that the United States has opposed.
Despite some outstanding issues, tensions in the U.S.-Japan bilateral economic
relationship have been much lower than was the case in the 1970s, 1980s, and early 1990s.
A number of factors may be contributing to this trend:
! Japan’s economic problems in the 1990s and in the first few years of this
decade have changed the general U.S. perception of Japan as an economic
“threat” to one of a country with problems.
! The rise of China as an economic power has caused attention of U.S.
policymakers to shift from Japan to China as source of concern.
5 Washington Trade Daily. March 10, 2005.
6 U.S. Department of Agriculture. Economic Research Service. FATUS Export Aggregations.
7 International Trade Reporter. January 20, 2005. p. 90.
8 Congress Daily. August 1, 2005 (PM edition).
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! The increased use by both Japan and the United States of the WTO as a
forum for resolving trade disputes has de-politicized disputes and helped to
reduce friction.
Japanese Political Developments

(This section was written by Mark Manyin)
Current Situation. Many analysts are predicting that Prime Minister Koizumi’s
political capital in Japan will erode considerably in the coming weeks. Prime Minister
Junichiro Koizumi’s term will end at the latest in September 2006, when his position as
president of the ruling Liberal Democratic Party (LDP) expires. Traditionally, the LDP
President serves as prime minister. Koizumi is Japan’s fourth-longest serving prime minister
since the end of World War II. Koizumi’s public approval ratings, which generally hover in
the 40%-50% range, are the highest of any prime minister in decades, and he has used his
popularity to centralize power in the prime minister’s office (at the expense of the previously
powerful LDP factions). However, his popularity has eroded somewhat in response to his
“lame duck” status, his support for U.S. policies in Iraq, and his attempts to privatize the
postal service.9
On the latter issue, Koizumi suffered a setback when his reform legislation passed the
Lower House of the Japanese Diet (parliament) in early July 2005 by a margin of only 5
votes. Over fifty LDP members — including four vice-ministers — either voted against the
measure or abstained from voting, and it is not clear that Koizumi will have enough votes
from within his own LDP to ensure the measure’s passage in the Diet’s Upper House, where
the LDP’s lack of an absolute majority has led it to rely upon a coalition with another party,
to maintain control over the chamber. If the measure does not pass the Upper House during
the expected early August vote, Koizumi has said he likely will call for early parliamentary
elections, which ordinarily would not have to be held until 2007, thus confronting the LDP
rebels with the prospect of facing off against a relatively strong opposition party, the
Democratic Party of Japan (DPJ). Even if the postal measure passes, Koizumi’s political
clout is likely to have been diminished significantly, casting uncertainty on his willingness
or ability to make politically unpopular decisions such as extending Japan’s deployment in
Iraq and agreeing to U.S. troop redeployments from Okinawa to the Japanese mainland.
Despite his reformist image, Koizumi’s record on economic reforms generally is judged
to be mixed at best. Many analysts attribute this to a combination of a lack of focus and
detailed planning by the prime minister’s office, and to opposition from vested interests. In
April 2004, Koizumi attempted to redouble the impetus behind his reforms by appointing a
deregulation task force with himself at the head. Koizumi has been far more assertive on
security issues, spearheading legislation designed to pressure North Korea to cooperate with
9 The publicly run postal system, which includes Japan’s largest bank, has been one of the pillars of
the LDP’s political dominance since it was formed in 1955. Until 2001, Japan Post was required to
give the government its savings and insurance deposits — worth over $3 trillion — to the Ministry
of Finance, providing the government with a massive, off-budget, source of revenue, as well as tens
of thousands of jobs in rural areas, the LDP’s traditional base. Japan Post is the largest purchaser
of Japanese government bonds.
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the international community, calling for a revision of Japan’s constitution (including its war-
renouncing Article 9), and carrying out controversial military deployments into the Indian
Ocean to support Operation Enduring Freedom in Afghanistan and into Iraq to support the
U.S.-led occupation. Koizumi’s relatively hard-line stance toward China has been divisive;
although many conservative Japanese are supportive, domestic criticism has risen that
Koizumi is unnecessarily antagonizing China on certain issues, particularly his insistence on
visiting the Yasukuni Shrine.
The Ruling Liberal Democratic Party (LDP). The LDP has dominated Japanese
politics since it was formed 1955; ruling the country except for a 10-month hiatus in the
1990s. However, since that hiatus, the LDP has not secured enough parliamentary seats to
rule on its own, forcing it to rely upon coalitions with other parties. For the past several
years, the LDP’s partnership with the Komeito (“clean government”) party has enabled it to
remain in power. Also over the past decade, a bloc of independent voters has arisen
opposing the LDP’s “business as usual” political system. Urban, younger, and increasingly
female, this pool of independents has shown itself willing to support politicians, such as
Koizumi, who appear sincerely committed to reform (although when pressed, many of these
same voters oppose specific structural — and potentially painful — economic reforms).
Thus, the LDP is under severe, perhaps unmanageable, stress: to succeed in future elections,
it must become more appealing to the new generation of reform-minded voters. Yet, if it
adopts political and economic reforms, it risks antagonizing its traditional power base. This
tension appears to have been at work in the November 2003 Lower House and July 2004
Upper House elections, in which the LDP’s traditional supporters failed to back the party in
their usual numbers, and many pro-reform voters turned not to Koizumi but to the newly
energized alternative, the DPJ. National parliamentary elections in November 2003 and July
2004 demonstrated that the LDP has lost much of its strength in Japan’s urban areas, which
have tended to favor the DPJ.10 That said, despite the DPJ’s gains, the LDP-led coalition still
comfortably controls majorities in both parliamentary chambers.
The Democratic Party of Japan (DPJ). Koizumi’s use of the threat of elections
to enforce party discipline is a powerful deterrent because, over the past three years, a viable
opposition party — the Democratic Party of Japan (DPJ) — has emerged, the first time in
a generation that Japan has had a party capable of threatening the LDP’s electoral dominance.
The DPJ has scored particularly well among urban voters, independent voters, and the
younger generations. While few Japan watchers predict that the DPJ, led by Katsura Okada,
would defeat the LDP in a snap election, such a scenario is no longer unthinkable; the DPJ
has scored major gains in the last two parliamentary elections. The DPJ’s recent approval
ratings have been in the 20% range in many nationwide polls, compared with the 35%- 40%
range for the LDP. The DPJ’s members tend to be younger and more reform-minded than
the LDP elites. The DPJ has taken many positions likely to cause friction with the United
States if it assumed power, including voting against Japan’s Iraq deployment, calling for a
total U.S. military withdrawal from Okinawa, and criticizing Koizumi for aligning Japan too
closely to the United States. The DPJ was formed in April 1998 as a merger among four
smaller parties and was later joined by a fifth grouping. The amalgamated nature of the DPJ
has led to considerable internal contradictions, primarily between the party’s
10 The LDP has benefitted from Japan’s electoral system, in which each rural vote is worth an
estimated two urban votes.
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hawkish/conservative and passivist/liberal wings. In particular, the issue of revising the war-
renouncing Article 9 of the Japanese constitution is generating considerable internal debate
in the DPJ. As a result, on many issues the DPJ has not formulated coherent alternative
policies to the LDP.
Constitutional Revision. Japan’s constitution was drafted in 1946 by the U.S.
Occupation authorities, who then imposed it on a reluctant Japanese legislature. Since the
early 1990s, however, previous strong public opposition to revising the constitution has
gradually weakened and public opinion polls now show strong support for some sort of
revision. Over the past year, various proposals have been debated and submitted, with an eye
toward Prime Minister Koizumi’s goal of having the LDP submit a constitutional draft by
December 2005. The most controversial issue, and the one with the most important
implications for the future of the U.S.-Japan alliance, has been the war renouncing clause,
Article 9.
Both the LDP and the DPJ are split between relatively hawkish and pacifist wings that
appear to be sparring over the question of whether or not conditions (such as United Nations
backing) should be attached to the right to join collective security arrangements. In other
words, here, too, the issue is not whether, but how, Article 9 should be revised, a
development that is due in part to increased concerns about North Korea and China. In late
March 2005, Japan’s House of Representatives Research Commission on the Constitution,
composed of representatives from various parties, released a report indicating that over two-
thirds of members generally favor constitutional provisions allowing Japan to join U.N.
collective security arrangements, stipulating the Self-Defense Forces existence, and
maintaining some portion of the war-renouncing clause of Article 9. A wide majority of the
commission also favored allowing women to serve as emperor, establishing stronger privacy
and environmental rights, creating a constitutional court, and revising Japan’s federalist
system. Constitutional amendments must be approved by two-thirds of each chamber, after
which they will be “submitted to the people” for majority approval.
LEGISLATION
H.Con.Res. 191 (Hyde). Commemorates the 60th anniversary of the conclusion of the
War in the Pacific and reaffirms the judgments rendered by the International Military
Tribunal for the Far East of 1946-1948, including the conviction of certain individuals as war
criminals. Passed by the House (399-0) on July 14, 2005; referred to the Senate Committee
on Foreign Relations.
H.Res. 137 (Moran) and S.Res. 87 (Thune). Express the sense of the respective
Houses of Congress that the U.S. government should impose economic sanctions against
Japan, if Japan does not lift its ban on U.S. beef. Neither resolution have seen committee
action.
H.Con.Res. 68 (Evans). Expresses the sense of Congress that the Government of Japan
should formally issue a clear and unambiguous apology for the sexual enslavement of
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“comfort women” during the colonial occupation of Asia. Introduced March 17, 2005;
referred to House Asia Pacific Subcommittee.
H.Con.Res. 168 (Hyde). Condemns the Democratic People’s Republic of Korea for
the abductions and continued captivity of citizens of the Republic of Korea and Japan.
Passed by the House (362-1) on July 11, 2005; referred to Senate Foreign Relations
Committee.
H.Res. 321(Leach). Expresses support for a “regionally balanced expansion” of the
membership of the United Nations Security Council, which would include adding Japan,
India, Germany, Brazil, and an African country. Introduced June 15, 2005; referred to the
House Committee on International Relations.
S. 384 (DeWine). Extends the existence of the Nazi War Crimes and Japanese Imperial
Government Records Interagency Working Group for two years. Passed by both Houses and
signed into law by President Bush in March 2005.
H.R. 30 (Mica). To provide compensation for certain World War II veterans who
survived the Bataan Death March and were held as prisoners of war by the Japanese.
Introduced January 4, 2005; referred to House Committee on Armed Services. Similar
legislation in the 108th Congress (H.R. 595) did not see action outside of committee.
S. 377 (Lieberman). Requires negotiation and appropriate action with Japan, China,
and other countries that have engaged in currency manipulation. Introduced February 15,
2005; referred to Senate Finance Committee.
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