Japan-U.S. Relations: Issues for Congress
Emma Chanlett-Avery, Coordinator
Specialist in Asian Affairs
William H. Cooper
Specialist in International Trade and Finance
Mark E. Manyin
Specialist in Asian Affairs
February 24, 2010
Congressional Research Service
7-5700
www.crs.gov
RL33436
CRS Report for Congress
P
repared for Members and Committees of Congress
Japan-U.S. Relations: Issues for Congress
Summary
The post-World War II U.S.-Japan alliance has long been an anchor of the U.S. security role in
East Asia. The alliance facilitates the forward deployment of about 36,000 U.S. troops and other
U.S. military assets in the Asia-Pacific, thereby undergirding U.S. national security strategy in the
region. For Japan, the alliance and the U.S. nuclear umbrella provides maneuvering room in
dealing with its neighbors, particularly China and North Korea.
U.S.-Japan relations have been adjusting to the Democratic Party of Japan’s (DPJ) landslide
victory in the August 30, 2009 elections for the Lower House of Japan’s legislature. The victory
gave the DPJ, under party president Yukio Hatoyama, control of the government. While most
members of the left-of-center DPJ are broadly supportive of the U.S.-Japan alliance and the
general thrust of Japanese foreign policy, in the past the party has questioned and/or voted against
several features of the alliance, including base realignment and Japan’s financial payments for
U.S. forces stationed in Japan. The Party has put forward a foreign policy vision that envisions
greater “equality” in Japan’s relations with the United States, in part through deeper engagement
with Asia and a more United Nations-oriented diplomacy. The DPJ’s victory appears to mark the
end of an era in Japan; it was the first time Japan’s Liberal Democratic Party (LDP) was voted out
of office. The LDP had ruled Japan virtually uninterrupted since 1955.
Since the DPJ victory, bilateral tensions have arisen over the desire of some Hatoyama
government members to alter a 2006 U.S.-Japan agreement to relocate the controversial Futenma
Marine Air Station to a less densely populated location in Okinawa. The move is to be the first
part of a planned realignment of U.S. forces in Asia, designed in part to reduce the footprint of
U.S. forces on Okinawa by redeploying 8,000 U.S. Marines and their dependents to new facilities
in Guam. The Hatoyama government withdrew Japan’s naval deployment in the Indian Ocean
that had been providing non-combat support to U.S. and allied forces in Afghanistan. Instead,
Tokyo announced a new, five-year, $5 billion aid package for Afghanistan.
Japan is one of the United States’ most important economic partners. Outside of North America, it
is the United States’ second-largest export market and second-largest source of imports. Japanese
firms are the United States’ second-largest source of foreign direct investment, and Japanese
investors are the second-largest foreign holders of U.S. treasuries, helping to finance the U.S.
deficit and reduce upward pressure on U.S. interest rates. Bilateral trade friction has decreased in
recent years, partly because U.S. concern about the trade deficit with Japan has been replaced by
concern about a much larger deficit with China. One exception was U.S. criticism over Japan’s
decision in 2003 to ban imports of U.S. beef, which have since resumed.
However, the economic problems in Japan and the United States associated with the credit crisis
and the related economic recession and how the two countries deal with those problems will
likely dominate their bilateral economic agenda for the foreseeable future. Japan has been hit
particularly hard by the financial crisis and subsequent recession. Japan’s gross domestic product
(GDP) declined 0.7% in 2008 and is estimated to have declined by 5.5% in 2009, with a modest
rebound expected in 2010. At the same time, the United States is showing some signs of recovery,
at least according to some indicators.
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Contents
Recent Developments.................................................................................................................. 1
Challenges for the New DPJ Government.............................................................................. 1
Bilateral Tensions over Futenma Airbase, Other Alliance Issues ............................................ 1
The Role of Congress in U.S.-Japan Relations............................................................................. 2
Major Diplomatic and Security Issues ......................................................................................... 4
North Korea and the Six-Party Talks ..................................................................................... 4
Afghanistan/Pakistan ............................................................................................................ 5
International Climate Negotiations ........................................................................................ 5
Regional and Historical Issues............................................................................................... 5
International Child Custody Disputes .................................................................................... 6
Military Issues ............................................................................................................................ 7
Realignment Agreement and Futenma Relocation Controversy.............................................. 7
DPJ Position on Realignment Plans................................................................................. 8
Burden-Sharing Issues and SOFA.......................................................................................... 8
F-22 Debate .......................................................................................................................... 9
Extended Deterrence ............................................................................................................. 9
Secret Nuclear Agreement ..................................................................................................... 9
Article 9 Restrictions ............................................................................................................ 9
Economic Issues ....................................................................................................................... 10
Overview of the Bilateral Economic Relationship................................................................ 11
Bilateral Trade Issues .......................................................................................................... 12
Japan’s Ban on U.S. Beef .............................................................................................. 12
Japan’s Eco-Car Program .............................................................................................. 13
U.S.-Japan FTA............................................................................................................. 13
Insurance ...................................................................................................................... 14
The Byrd Amendment ................................................................................................... 14
WTO Dispute................................................................................................................ 15
The Doha Development Agenda .................................................................................... 15
Japanese Politics ....................................................................................................................... 16
The Political Situation in February 2010.............................................................................. 16
The Primacy of Preserving the DPJ-SDP-PNP Coalition................................................ 17
Who’s in Charge?.......................................................................................................... 18
Ideology or Politics? ..................................................................................................... 19
The LDP ....................................................................................................................... 19
The DPJ’s Agenda............................................................................................................... 19
Foreign Policy............................................................................................................... 19
Domestic Policy............................................................................................................ 20
Japan’s Demographic Challenge.......................................................................................... 20
Selected Legislation .................................................................................................................. 21
111th Congress..................................................................................................................... 21
Figures
Figure 1. Map of Japan................................................................................................................ 3
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Figure 2. Map of Military Facilities in Japan ............................................................................. 10
Figure 3. Party Affiliation in Japan’s Lower House.................................................................... 17
Figure 4. Party Affiliation in Japan’s Upper House .................................................................... 17
Tables
Table 1. U.S. Trade with Japan, Selected Years.......................................................................... 11
Contacts
Author Contact Information ...................................................................................................... 22
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Recent Developments
Challenges for the New DPJ Government
In a historic landslide victory, Japan’s largest opposition party, the Democratic Party of Japan
(DPJ), ousted the main ruling party, the Liberal Democratic Party (LDP), in parliamentary
elections on August 30, 2009. After the election, the DPJ formed a ruling coalition with two
smaller parties. The right-leaning LDP and its predecessor parties had enjoyed virtually
continuous control of the Japanese government since the end of World War II. The impact of the
DPJ’s victory is being felt across nearly every aspect of Japanese policymaking, from alliance
relations with the United States, to Japan’s budget-making process, to the relations between
politicians and bureaucrats. According to many observers, the process has not been smooth,
perhaps due to the fact that the LDP’s half-century of dominance has left few in the DPJ with
experience running a government.
By February 2010, Prime Minister Yukio Hatoyama’s Cabinet’s approval ratings had shrunk to
the 40% level, from the 70% level soon after it came into power in September. In the near term,
the slide in the Hatoyama government’s popularity could have electoral costs. In July 2010, half
of Japan’s Upper House seats will be up for election. As of early 2010, the opposition LDP’s
approval ratings remain significantly below the DPJ’s.
In the fall of 2009, it became clear that maintaining the unity of the coalition was paramount to
the government. The Hatoyama government made a number of major policy moves, including the
decision to put off finalizing the Futenma relocation plan (see below) until May, that deferred to
the wishes of the two smaller parties. It is not clear to what extent Ozawa and Hatoyama view the
current coalition as a short-term necessity or a longer-term relationship. Recent defections from
the LDP may reduce the Hatoyama government’s dependence on the Social Democratic Party, the
coalition partner that is particularly opposed to the Futenma relocation plan.
For months, it has been debated whether Hatoyama or DPJ Secretary General Ichiro Ozawa is
driving the Cabinet’s policy decisions. The Japanese media have widely portrayed Ozawa as the
real power. While some DPJ Members say the Japanese media have exaggerated his influence,
others reportedly say that major policy decisions need his approval. His voice seems to have been
determinative on a number of Cabinet decisions, particularly those that affect the coalition,
including the status of the Futenma relocation plan, the formation of the DPJ’s stimulus plan, and
the reported moves to encourage Hatoyama’s first Finance Minister to resign in January. As a
result, Hatoyama appears to be developing a reputation for indecisiveness, even within the DPJ.
Bilateral Tensions over Futenma Airbase, Other Alliance Issues
The most problematic bilateral issue that has surfaced since the Hatoyama Cabinet was
inaugurated has been the fate of a 2006 U.S.-Japan agreement to relocate the controversial
Futenma Marine Air Station to a less densely populated location in Okinawa. The move is the
first part of a planned realignment of U.S. forces in Japan, designed in large measure to reduce
the footprint of U.S. forces on the island by redeploying 8,000 U.S. Marines and their dependents
to new facilities in Guam. When in the opposition, the DPJ opposed the realignment plans. Since
coming into power, splits have publicly surfaced among Hatoyama’s Cabinet, with some calling
for major revisions to the Futenma plan while others have essentially backed the existing plan.
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A series of high-level meetings with U.S. officials have failed to resolve differences. In October
2009, Defense Secretary Robert Gates bluntly and publicly called on Tokyo to follow through on
the Futenma plan. Despite the establishment of a ministerial level working group to resolve the
issue, President Obama and Prime Minister Hatoyama gave differing interpretations of the
group’s purpose following a November meeting. Hatoyama then stated that Japan would not
make a decision until May 2010. In January 2010, Secretary of State Hillary Clinton and Foreign
Minister Katsuya Okada declared the alliance strong, but indicated no progress toward a
compromise.
The DPJ campaigned on the notion that Japan and the United States should be more “equal
partners” in the alliance. In terms of specific policies, when in opposition the DPJ opposed the
Guam Accord and the Self-Defense Forces (SDF) deployment to the Indian Ocean that provided
fuel to allied ships for Operation Enduring Freedom in Afghanistan. Since coming to power, the
DPJ has terminated the SDF mission and instead offered up to $5 billion in civilian aid to efforts
in Afghanistan. Less specifically, the DPJ suggested that it will seek to reduce the amount of host
nation support that it pays to the United States to alleviate the cost of the troop presence. The DPJ
has also supported revising the Status of Forces Agreement (SOFA) in order to address local
governments’ concern with how U.S. servicemen are handled in criminal investigations. Since
taking office, the government has not indicated how or when it might seek any changes to the
burden-sharing arrangement (the current agreement expires in April 2011) or the SOFA
provisions.
The Role of Congress in U.S.-Japan Relations
Congressional powers, actions, and oversight form a backdrop against which both the
Administration and the Japanese government must formulate their policies. In the 111th Congress,
Members’ attention to Japan may be most concerned with the status of the military alignment
plans in the region. In the 109th and 110th Congress, hearings and legislation concerning Japan
focused on thorny history issues as well as the U.S. beef import ban.
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Figure 1. Map of Japan
Source: Map Resources. Adapted by CRS.
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Major Diplomatic and Security Issues1
Overall U.S.-Japan relations appear to be in a state of
Japan Country Data
flux. Analysts are divided over whether current
Population: 127 million
controversies are temporary blips in an otherwise strong
% of Population over 64: 22% (U.S. =
partnership or are indicative of more fundamental shifts.
12.4%)
New leaders in Washington and Tokyo have emphasized
Area: 377,835 sq km (slightly smaller than
repeatedly the strategic importance of the relationship
California)
in multiple high-level meetings. Both President Obama
and Secretary of State Hillary Clinton have re-affirmed
Life Expectancy: 82 years
the axiom that the U.S.-Japan alliance is “the
Per Capita GDP: $32,600 (2009 est.)
cornerstone of U.S. Asia-Pacific strategy.” Although the
purchasing power parity
DPJ was critical of some aspects of the U.S.-Japan
Primary Export Partners: US 17.8%,
alliance while campaigning and has called for a more
China 16%, South Korea 7.6%, Hong Kong
U.N. and Asia-oriented diplomacy, it has also
5.1% (2008)
acknowledged the central role of the alliance with the
Primary Import Partners: China 18.9%,
United States in providing for Japan’s security.
U.S. 10.4%, Saudi Arabia 6.7%, Australia 6.2%,
UAE 6.1%, Indonesia 4.3% (2008)
Although the DPJ’s election provided the impetus for a
Yen: Dollar Exchange Rate: 94.5 (2009),
re-examination of ties, friction in the alliance and
103.58 (2008), 117.99 (2007), 116.18 (2006),
stalemate on the Okinawa agreement had been present
110.22 (2005)
for several years under previous LDP governments.
Foreign Exchange Reserves: $1.011
After a period of rejuvenated defense ties in the first
trillion (December 2008 est.)
years of the George W. Bush Administration,
Source: CIA World Factbook, February 2010
expectations of a transformed alliance with a more
forward-leaning defense posture from Japan diminished. In the final years of the decade, political
paralysis and budgetary constraints in Tokyo, Japan’s slow-to-little progress in implementing base
realignment agreements, Japanese disappointment in Bush’s policy on North Korea, and a series
of smaller concerns over burden-sharing arrangements led to reduced cooperation and a general
sense of unease about the partnership.
North Korea and the Six-Party Talks
Washington and Tokyo appear to be strongly united in their approach to North Korea in the
stalled Six-Party negotiations process. Although the U.S. and Japanese positions diverged in the
later years of the Bush Administration, Pyongyang’s recent provocations have forged a new
consensus among the other parties, particularly Japan, South Korea, and the United States. In
response to North Korea’s nuclear test on May 25, 2009, Japan helped lead international efforts to
draft a tough new U.N. Security Council resolution (1874) that strengthens arms embargos on the
regime and calls on member states to inspect North Korean vessels for illicit weapons. Japan has
imposed a virtual embargo on all trade with North Korea. North Korea’s missile tests have
demonstrated that a strike on Japan is well within range, spurring Japan to move forward on
missile defense cooperation with the United States.
1 This section was written by Emma Chanlett-Avery.
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In addition to Japan’s concern about Pyongyang’s weapons and delivery systems, the issue of
several Japanese citizens abducted by North Korean agents in the 1970s and 1980s remains a top
priority for Tokyo in the multinational negotiations. Japan has pledged that it would not provide
economic aid to North Korea without resolution of the abductee issue. The abductee issue
remains an emotional topic in Japan. In 2008, the Bush Administration’s decision to remove
North Korea from the list of state sponsors of terrorism in exchange for North Korean
concessions on its nuclear program dismayed Japanese officials, who had maintained that North
Korea’s inclusion on the list should be linked to the abduction issue. Hatoyama has expressed his
support for reinstating North Korea on the State Department’s terrorism list.
Afghanistan/Pakistan
Japan’s contribution to anti-terrorism and stability operations in Afghanistan has shifted form
with the arrival of a new government in Tokyo. As promised during the campaign, the Hatoyama
Administration terminated Japan’s participation in the U.S.-led Operation Enduring Freedom
mission. The Japanese Maritime Self Defense Force had been providing fuel and water to other
coalition ships in the Indian Ocean since 2001. When in opposition, the DPJ had opposed the
deployment on the grounds that the mission fell under the U.S.-led operation and was not
authorized by the United Nations. In exchange, Hatoyama has pledged up to $5 billion in civilian
aid for in Afghanistan’s reconstruction. In January, Japan offered $50 million to start a fund
designed to convince militants to give up violence and reintegrate into mainstream society.
Japan reportedly considered sending troops to participate in a Provincial Reconstruction Team
(PRT) in Afghanistan, but has shied away from such a commitment. A deployment would likely
be controversial for the pacifist-leaning Japanese public.
International Climate Negotiations
Tokyo has sought to highlight Japan’s leadership on environmental issues, where Japan has long
been recognized as a global leader in energy efficiency and development of clean energy
technology, including hybrid cars. Japan is the fourth-largest emitter of greenhouse gases after the
United States, the Russian Federation, and China. Under the Kyoto Protocol, which Tokyo
ratified in 2002, Japan is obligated to reduce its emissions to 6% below its 1990 levels by 2012,
although it is unlikely to meet this goal without purchasing international carbon emission offset
credits. Japanese industry shares many of the concerns of U.S. industry about the cost and
feasibility of robust emission reductions. Prime Minister Hatoyama has pledged to cut Japan’s
greenhouse emissions to 25% of 1990 levels by 2020 (the “Hatoyama Initiative”), a goal that
some experts in Japan have characterized as unrealistic. Japan is considered to be closely aligned
with the Obama Administration in international climate negotiations in its position that any
legally-binding post-2012 climate agreement must be legally binding in a symmetrical way, with
all major economies agreeing to the same elements. Japan is also a strong supporter of the
Copenhagen Accord, which was negotiated at that most recent climate change summit in
December 2009.
Regional and Historical Issues
Historical issues have long dominated Japan’s relationships with its neighbors, with many Asians,
and particularly those in China and South Korea, still resentful of Japan’s occupation policies and
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aggression in the World War II period. Despite underlying distrust, Tokyo’s relationships with
Beijing and Seoul generally appear to be on an upward swing. Under the DPJ, Japan has built
upon improvements that began under recent LDP governments. Ceremonial visits have been
marked by exceptional warmth. Ozawa led a 600-strong delegation to China in December, where
all 140 DPJ lawmakers in the group were greeted personally by President Hu Jintao. About a
week later, Chinese Vice President Xi Jinping was granted an audience with the Japanese
emperor, although the request was made later than the standard one-month advance protocol.
Some commentators fret that Japan is leaning toward China due to strains in its U.S. partnership,
and point to Hatoyama’s call for the creation of an “East Asian Community” that could exclude
the United States as further indication of this shift.2
Despite these concerns, deep divisions and fundamental mistrust between Japan and China likely
precludes a strategic relationship of any depth. In January 2010, Tokyo and Beijing again asserted
competing claims over the ownership of underwater gas reserves and several tiny islands in the
East China Sea, demonstrating that sovereignty issues between the erstwhile foes remain
sensitive. Hatoyama and Foreign Minister Okada often state their belief that relations with China
can be improved without damaging the U.S.-Japan alliance.
The DPJ government has indicated a willingness to address Japan’s history of aggression in the
pre-World War II era in a bid to improve regional relations. Hatoyama has pledged not to visit
Yasukuni Shrine (a Shinto shrine that honors Japanese soldiers who died in war, including several
convicted Class A war criminals), thereby removing one of the most damaging obstacles to
Tokyo’s relationship with Beijing and Seoul in the past several years. Relations with South Korea
have been on a positive trajectory under President Lee Myung-bak. Lee has invited Emperor
Akihito to visit South Korea in 2010, the 100th anniversary of Japan’s annexation of the Korean
peninsula, providing an opportunity for further reconciliation. Together with rumors that
Hatoyama may visit Nanjing to express remorse for the 1937 massacre by Japanese imperial
forces, the current government may make strides toward mending painful historical memories
among the Asian powers.
International Child Custody Disputes
In recent months, the issue of overseas Japanese women in failed marriages taking children to
Japan without the consent of the foreign husband or ex-husband has flared. Sometimes, these
women have acted in contravention of foreign custody settlements and, after arriving in Japan,
have prevented the children from meeting their fathers. With about 70 cases involving over 100
children, the United States reportedly has the largest number of such disputes with Japan. Legally,
Japan only recognizes sole parental authority, under which only one parent has parental rights,
and there is a deep-rooted notion in Japan that the mother should assume custody. Japanese
officials say that, in many cases, the issue is complicated by accusations of abuse or neglect on
the part of the foreign spouse, though a senior U.S. State Department official has said that there
are “almost no cases” of substantiated claims of violence.3 Japan has not signed the international
2 Shortly after the DPJ’s election, Hatoyama proposed a vision of creating an “East Asian Community” in the coming
decades. Initially, he and Foreign Minister Katsuya Okada and other promoters of this idea seemed to indicate that the
grouping should not include the United States. Subsequently, after expressions of concern from U.S. officials,
Hatoyama appeared to back off the idea of excluding the United States and has stressed that the Community should be
“open.”
3 U.S. State Department, “Press Availability on International Parental Child Abduction, Kurt M. Campbell, Assistant
(continued...)
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Hague Convention, which sets down rules on “child abduction” cases. The increased publicity
has raised awareness of the issue in Japan, particularly among Diet Members. In December 2009,
the Ministry of Foreign Affairs created a new “parental rights of children” office staffed by nine
officials in charge of Europe and America and international treaties. The new office will not only
deal with cases at issue with other countries, but will also be responsible for studying Japan's
accession to the treaty in the future.
Military Issues4
Japan and the United States are military allies under a security treaty concluded in 1951 and
revised in 1960. Under the treaty, Japan grants the United States military base rights on its
territory in return for a U.S. pledge to protect Japan’s security. Although defense officials had
hoped that the 50th anniversary of the treaty would compel Tokyo and Washington to work on
additional agreements to enhance bilateral defense cooperation, a rocky start under the new
Democratic Party of Japan (DPJ) government has generated concern about the future of the
bilateral alliance. The most prominent controversy concerns the planned relocation of the U.S.
Marines’ Futenma air station to a less crowded part of Okinawa (see details below), which has
thrown into doubt a comprehensive realignment of U.S. forces in the region and simultaneously
raised fundamental questions about the long-standing security relationship between Tokyo and
Washington.
Realignment Agreement and Futenma Relocation Controversy
Under the Bush Administration, a series of Security Consultative Committee meetings (SCC, also
known as the “2+2” meeting) of the Japanese and U.S. foreign and defense ministers outlined
plans to expand the alliance beyond its existing framework. Key features of the arrangement
include a reduction in the number of U.S. Marines in Japan, the relocation of a problematic air
base in Okinawa, the deployment of an X-Band radar system in Japan as part of a missile defense
system, expanded bilateral cooperation in training and intelligence sharing, and Japan’s
acceptance of a nuclear-powered aircraft carrier in the Yokosuka Naval Base.
The 2006 agreement between the U.S. and Japanese governments to relocate the Futenma Marine
Air Station from its current location in crowded Ginowan to Camp Schwab is the centerpiece of
the planned realignment of U.S. forces in Japan. Per the agreement, the redeployment of the III
Marine Expeditionary Force (III MEF), which includes 8,000 U.S. personnel and their
dependents, to new facilities in Guam5 would lead to the return of thousands of acres of land to
the Japanese. Japan agreed to pay around 60% of the $10.3 billion estimated costs. The transfer is
contingent upon finding replacement facilities for the Futenma base. After 13 years of
negotiations, U.S. and Japanese officials settled on Camp Schwab because of its location in Nago,
a far less congested area of Okinawa.
(...continued)
Secretary, Bureau of East Asian and Pacific Affairs,” February 2, 2010.
4 For more information on the U.S.-Japan alliance, see CRS Report RL33740, The Changing U.S.-Japan Alliance:
Implications for U.S. Interests, by Emma Chanlett-Avery.
5 For more information, see CRS Report RS22570, Guam: U.S. Defense Deployments, by Shirley A. Kan and Larry A.
Niksch.
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The reduction of Marines on Okinawa seeks to quell the political controversy that has surrounded
the presence of U.S. forces in the southernmost part of Japan for years. Public outcry against the
bases has continued since the 1995 rape of a Japanese schoolgirl by an American serviceman, and
was renewed after a U.S. military helicopter crashed into a crowded university campus in 2004.
Though constituting less than 1% of Japan's land mass, Okinawa currently hosts 65% of the total
U.S. forces in Japan. The current controversy reflects a fundamental tension in the relationship
between Okinawa and the central government in Tokyo: while the country reaps the benefit of the
U.S. security guarantee, the Okinawans must bear the burden of hosting thousands of foreign
troops. Although the host cities are economically dependent on the bases, residents’ grievances
include noise, petty and occasionally violent crime, and environmental degradation stemming
from the U.S. presence.
DPJ Position on Realignment Plans
When in the opposition, the DPJ opposed the realignment plans, calling for the Futenma station to
be relocated outside Okinawa for a number of reasons, including a desire to further reduce the
U.S. footprint in Okinawa, a reluctance to commit the financial resources associated with the
realignment plan, and a belief that the Camp Schwab plan would damage the reefs and possibly
endanger a rare sea mammal called the dugong in Henoko Bay.6 Since coming into power, splits
have publicly surfaced among Hatoyama’s Cabinet, with some calling for major revisions to the
Futenma plan while others essentially backed the existing plan. Revisions have included locating
alternative sites on the Kadena Air Force base on Okinawa, on the Japanese mainland, or even
locating the base outside Japan. In numerous public statements, Hatoyama has consistently
mentioned his desire to reduce the burdens borne by the Okinawan people. A series of high-level
meetings with U.S. officials have failed to resolve differences. In October 2009, Defense
Secretary Robert Gates bluntly and publicly called on Tokyo to follow through on the Futenma
plan.7 Despite the establishment of a ministerial level working group to resolve the issue,
President Obama and Prime Minister Hatoyama gave differing interpretations of the group’s
purpose following a November meeting. Hatoyama then stated that Japan would not make a
decision until May 2010.
Burden-Sharing Issues and SOFA
The DPJ has suggested that it will seek to reduce the amount of host nation support that it pays to
the United States to alleviate the cost of the troop presence. According to Pentagon reports, Japan
has over the years provided up to $4 billion annually in direct and indirect Host Nation Support
(HNS), which constitutes about 75% of the total cost of maintaining troops in Japan. Japan pays
for most of the salaries of about 25,000 Japanese employees at U.S. military installations. The
current agreement calls for Japan to pay about 140 billion yen annually (about $1.4 billion)
through FY2010 to defray the costs of stationing troops in Japan. The DPJ has also supported
revising the Status of Forces Agreement (SOFA) in order to address local governments’ concern
with how U.S. servicemen are handled in criminal investigations.
6 Two of the DPJ’s 311 Lower House members are from Okinawa. Of the other two Lower House representatives from
Okinawa, one is from the SDP and one from the PNP. In the Upper House, the two-member Okinawa delegation
consists of one LDP member and one independent.
7 Office of the Assistant Secretary of Defense for Public Affairs, “Joint Press Conference with Japanese Defense
Minister Toshimi Kitazawa and Secretary of Defense Robert Gates,” October 21, 2009.
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F-22 Debate
Japan has expressed interest in purchasing F-22A Raptor aircraft from the United States to replace
its aging fleet of F-4 fighters. Some Japanese defense officials regard the potential sale of the F-
22 as something of a test of the U.S. strategic commitment to the bilateral alliance. Current U.S.
legislation restricts exports of the F-22 to foreign countries in a provision known as the “Obey
Amendment.” The 2010 Department of Defense Appropriations Act (P.L. 111-118) maintains this
prohibition, but also contains a provision that allows the Pentagon to begin to design a version of
the aircraft for export if foreign sales are eventually allowed. If Congress and the Administration
do not approve F-22 sales to Japan, experts believe that Tokyo will likely consider alternative
fighter aircraft, including European-built Typhoon fighters.
Extended Deterrence
Another source of strategic anxiety in Tokyo concerns the U.S extended deterrence, or “nuclear
umbrella,” for Japan. The Bush Administration’s shift in negotiations with Pyongyang triggered
fears in Tokyo that Washington might eventually accept a nuclear armed North Korea and thus
somehow diminish the U.S. security guarantee for Japan. These anxieties have persisted despite
repeated statements by both the Bush and Obama Administrations to reassure Tokyo of the
continued U.S. commitment to defend Japan. However, Japan’s sense of vulnerability is
augmented by the fact that its own ability to deter threats is limited by its largely defense-oriented
military posture. Given Japan’s reliance on U.S. extended deterrence, Tokyo is wary of any
change in U.S. policy—however subtle—that might alter the nuclear status quo in East Asia.
Secret Nuclear Agreement
An issue that has received intense Japanese media attention of late is the recent disclosure by a
former vice foreign minister of a secret agreement signed in the 1960s between Tokyo and
Washington that tacitly allowed the United States to transit nuclear weapons through Japan
without prior approval. The practice was in clear violation of the terms of the 1960 bilateral
security treaty and Japan’s three non-nuclear principles (not to possess, produce, or transit nuclear
weapons on Japanese territory). Japanese officials who had knowledge of the practice have
consistently denied, even in Diet testimony, that it took place. The controversy has raised
questions about the integrity of Japan’s non-nuclear principles as well as the apparent lack of
transparency in the government’s decision-making process. The DPJ has vowed to investigate the
matter and to publicly report its findings.
Article 9 Restrictions
In general, Japan’s U.S.-drafted constitution remains an obstacle to closer U.S.-Japan defense
cooperation because of a prevailing constitutional interpretation of Article 9 that forbids engaging
in “collective self-defense”; that is, combat cooperation with the United States against a third
country. Article 9 outlaws war as a “sovereign right” of Japan and prohibits “the right of
belligerency.” Whereas in the past Japanese public opinion strongly supported the limitations
placed on the Self-Defense Force (SDF), this opposition has softened considerably in recent
years. The new ruling coalition in Tokyo remains deeply divided on amending Article 9 of the
constitution and is unlikely to take up deliberation of the issue in the near term. Since 1991, Japan
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has allowed the SDF to participate in non-combat roles in a number of United Nations
peacekeeping missions and in the U.S.-led coalition in Iraq.
Figure 2. Map of Military Facilities in Japan
Source: Map Resources. Adapted by CRS.
Economic Issues8
Trade and other economic ties with Japan remain highly important to U.S. national interests and,
therefore, to the U.S. Congress.9 By the most conventional method of measurement, the United
States and Japan are the world’s two largest economies,10 accounting for around 40% of world
8 This section was written by William Cooper.
9 For a more complete treatment of U.S.-Japan economic ties, see CRS Report RL32649, U.S.-Japan Economic
Relations: Significance, Prospects, and Policy Options, by William H. Cooper.
10 China’s economy is now larger than Japan’s by another method of measurement: purchasing power parity.
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gross domestic product (GDP), and their mutual relationship not only has an impact on each other
but on the world as a whole. Furthermore, their economies are intertwined by merchandise trade,
trade in services, and foreign investments.
Overview of the Bilateral Economic Relationship
Although Japan remains important economically to the United States, its importance has slid as it
has been edged out by other trade partners. Japan was the United States’ fourth-largest
merchandise export market (behind Canada, Mexico, and China) and the fourth-largest source for
U.S. merchandise imports (behind Canada, Mexico, and China) by the end of 2008. These
numbers probably underestimate the importance of the United States to Japan’s trade since a
significant portion of Japanese exports to China are used as inputs to China’s exports to the
United States and, therefore, are dependent on U.S. demand for China’s exports.
At one time Japan was the largest source of foreign direct investment in the United States, but by
2006 had fallen to second place, behind the United Kingdom where it remained at the end of
2008. Japan was the 11th largest target for U.S. foreign direct investment abroad as of the end of
2008. For many years, the United States was Japan’s largest export market but became the second
largest in 2009 (next to China). The United States was second-largest source of imports as of the
end of 2009. The global economic downturn has had a significant impact on U.S.-Japan trade. In
2009, U.S. exports declined by 23.1% from 2008 and imports from Japan declined by 31.1 %
causing the U.S. bilateral deficit with Japan to $44.8 billion. (See Table 1.)
Table 1. U.S. Trade with Japan, Selected Years
($ billions)
Year Exports
Imports
Balances
1995 64.3 123.5 -59.1
2000 65.3 146.6 -81.3
2003 52.1 118.0 -66.0
2004 54.4 129.6 -75.2
2005 55.4 138.1 -82.7
2006 59.6 148.1 -88.4
2007 62.7 145.5 -82.8
2008 66.6 139.2 -72.3
2009 51.2 95.9 -44.8
Source: U.S. Commerce Department, Census Bureau. FT900. Exports are total exports valued on a free
alongside ship (f.a.s.) basis. Imports are general imports valued on a customs basis.
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 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 U.S.
policymakers to shift attention from Japan to China as a source of concern; the increased use by
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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; and the emphasis in the bilateral relationship
has shifted from economic to security matters.
However, the economic problems in Japan and United States associated with the financial crisis
and recession and how the two countries deal with those problems will likely dominate the their
bilateral economic agenda for the foreseeable future. Japan has been hit particularly hard by the
financial crisis and subsequent economic downturn. Japan’s gross domestic product (GDP)
declined 0.7% in 2008, and an estimated 5.5% in 2009. The Economist Intelligence Unit forecasts
a modest recovery of 1.4% in 2010. The value of the yen has hit 13-year highs in terms of the
U.S. dollar, which will adversely affect Japanese exports to the United States and other countries,
contributing to the downturn in Japanese economic growth. Less than three years ago, the yen
was valued at $1=¥124. As of February 18, 2010, it was $1=¥91.
Bilateral Trade Issues
Japan’s Ban on U.S. Beef11
In December 2003, Japan imposed a ban on imported U.S. beef in response to the discovery of
the first U.S. case of bovine spongiform encephalopathy (BSE or “mad cow disease”) in
Washington state. In the months before the diagnosis in the United States, nearly a dozen
Japanese cows infected with BSE had been discovered, creating a scandal over the Agricultural
Ministry’s handling of the issue (several more Japanese BSE cases have since emerged). Japan
had retained the ban despite ongoing negotiations and public pressure from Bush Administration
officials, a reported framework agreement (issued jointly by both governments) in October 2004
to end it, and periodic assurances afterward by Japanese officials to their U.S. counterparts that it
would be lifted soon.
In December 2005 Japan lifted the ban after many months of bilateral negotiations but re-imposed
it in January 2006 after Japanese government inspectors found bone material among the first beef
shipments to have arrived from the United States after the ban was lifted. The presence of the
bone material violated the procedures U.S. and Japanese officials had agreed upon that allowed
the resumption of the U.S. beef shipments in the first place. The then-U.S. Secretary of
Agriculture Johanns expressed regret that the prohibited material had entered the shipments.
In July 2006, Japan announced it would resume imports of U.S. beef from cattle 20 months old or
younger. While praising the decision, some officials have called on Japan to broaden the
procedures to include beef from older cattle. The first shipments arrived in August 2006.
Members of Congress have pressed Japan to lift restrictions on imports of U.S. beef further. On
May 27, 2009, the Japan Ministry of Health, Labor, and Welfare and the Ministry of Agriculture,
Forestry, and Fisheries reportedly were ready to ask the Food Safety Commission to determine
whether it would relax restrictions and allow U.S. beef from cattle younger than 30 months to
enter Japan, a decision that could take about six months to be rendered.12 In a meeting with
11 For more information, see CRS Report RS21709, Mad Cow Disease and U.S. Beef Trade, by Charles E. Hanrahan
and Geoffrey S. Becker.
12 International Trade Daily. May 28, 2009.
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Japan’s Minister of Agriculture, Hirotaka Akamatsu, U.S. Agriculture Secretary Vilsack and
USTR Kirk urged Japan to move ahead with reducing the restrictions on beef imports.13
Japan’s Eco-Car Program
The U.S. auto industry and a bipartisan group of Member of Congress have raised concerns that
the Japanese government is implementing a program to encourage the purchase of low-emissions
and fuel-efficient cars in a way that unfairly discriminates against U.S.-made vehicles. Under the
program, which went into effect on June 19, 2009, Japanese car buyers can obtain tax incentives
if they turn in a car at least 13 years old and purchase one that meets Japan’s fuel efficiency
standards, and are eligible for an additional tax break if they purchase a car that exceeds those
standards by at least 15%. While not explicitly disqualifying U.S.-made cars or other imported
vehicles, the program did disqualify cars that were imported under the preferential handling
program (PHP). The Japanese government implemented the PHP in 1986 to allow foreign models
that are imported in small volumes to circumvent Japanese fuel emissions and fuel efficiency
certification procedures. Since U.S.-made cars enter through that program, they would have been
disqualified from the incentive program.14
Responding to U.S. concerns, Japan announced on January 19, 2010, that cars imported under the
PHP program would be eligible for the program if they met Japan’s fuel efficiency standards
based on their country’s testing procedures. Japan subsequently listed eight cars that would be
eligible based on U.S. Environmental Protection Agency (EPA) “city mileage” measurements.
While welcoming Japan’s decision as a welcome first step, the U.S. auto industry and some
Members of Congress have argued that using city mileage measurements, rather than combined
city/highway measurements, unnecessarily restricts the number of models that would be eligible.
They have requested that Japan adopt the city/highway mileage standard in determining
eligibility. The program is due to expire on March 31, 2010, but may be extended to end of
September.15
U.S.-Japan FTA
With the conclusion of negotiations on a U.S.-South Korean free trade agreement (KORUS FTA)
on April 1, 2007, and the formation of FTAs among other East Asian countries, interest seems to
have increased in the possibility of a U.S.-Japan FTA. Japanese business leaders are concerned
about being adversely affected by the trade preferences that South Korean exporters would gain
under the proposed KORUS FTA. In May 2007, a Japanese government advisory panel
recommended that Japan undertake the formation of an economic partnership agreement (EPA),
Japan’s version of an FTA, with the United States. During their late April 2007 summit meeting,
President Bush and Prime Minister Abe touched on the issue. According to a White House fact
sheet, they agreed to exchange information about one another’s FTAs and EPAs with third
countries. However, in a October 2, 2008 speech, Assistant USTR stated that she did not believe a
U.S.-Japan FTA would occur in the near term primarily because of the stumbling block that
13 Inside U.S. Trade. October 16, 2009.
14 International Trade Reporter. February 11, 2010.
15 Inside U.S. Trade.
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would result over the issue of agricultural policy.16 The DPJ’s 2009 election manifesto calls for
the negotiation of a U.S.-Japan FTA.
Insurance
Market access in Japan for U.S. and other foreign insurance providers has been the subject of
bilateral trade agreements and discussion for some time. Current U.S. concerns center around
making sure that Japan adheres to its agreements with the United States, especially as Japan’s
domestic insurance industry and government regulations of the industry are restructured.
Specifically, American firms have complained that little public information is available on
insurance regulations, how those regulations are developed, and how to get approval for doing
business in Japan. They also assert that government regulations favor insurance companies that
are tied to business conglomerates—the keiretsu—making it difficult for foreign companies to
enter the market.
The United States and Japan concluded agreements in 1994 and 1996 on access to the Japanese
market for U.S. providers of life and non-life insurance and also on maintaining competitive
conditions for foreign providers in the specialty insurance market—cancer insurance,
hospitalization, nursing care, and personal accident insurance. U.S. and Japanese officials
continue to meet under those two agreements, and U.S. providers have been able to expand their
presence in Japan under them, according to the Office of the U.S. Trade Representative (USTR).
However, the United States has raised concerns about Kampo, the government-owned insurance
company under the Japan Postal Service, which offers insurance services that directly compete
with U.S. and other privately owned providers. The United States has also raised questions about
the activities of regulated and unregulated insurance cooperatives, kyosai, claiming that these
entities do not have to adhere to the same regulations that bind traditional private insurance
companies, creating an unfair competitive advantage. A Japanese government privatization
framework released in July 2006 generated statements from the American Chamber of Commerce
in Japan and from the American Council of Insurers arguing that the privatization plan would
allow Kampo to compete with foreign insurance providers by offering new products before it has
been completely privatized. On October 1, 2007, the Japanese government began the
privatization, a process that is expected to last ten years. However, as of late October 2009, the
recently elected government led by the Democratic Party of Japan (DPJ) has taken steps,
including proposing legislation that could halt, if not reverse, at least some aspects of the
privatization.17 It is unclear at this point how these initiatives might affect U.S. insurance
providers.
The Byrd Amendment
Japan, together with other major trading partners, challenged U.S. trade laws and actions in the
World Trade Organization (WTO). For example, Japan and others challenged the so-called Byrd
Amendment (which allows revenues from countervailing duty and antidumping orders to be
distributed to those who had been injured). The WTO ruled in Japan’s favor. In November 2004,
the WTO authorized Japan and the other complainant-countries to impose sanctions against the
December 25, 2009.16 International Trade Reporter. October 16, 2008.
17 Inside U.S. Trade. October 30, 2009.
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United States. In September 2005, Japan imposed 15% tariffs on selected imports of U.S. steel
products as retaliation, joining the EU and Canada. It is the first time that Japan had imposed
punitive tariffs on U.S. products. In the meantime, a repeal of the Byrd Amendment was included
in the conference report for S. 1932, the Deficit Reduction Act of 2005, that was signed by the
President into law (P.L. 109-171) on February 8, 2006. The measure phases out the program over
a period ending October 1, 2007.18 Although Japan has praised the repeal of the Byrd
Amendment, it criticized the delayed termination of the program and has maintained the sanctions
on imports from the United States. Consequently, Japan announced in August 2006 that it would
maintain the tariff sanctions until October 1, 2007. In August 2007, Japan notified the WTO that
it would extend the sanctions for another year as it did in August 2008 and most recently in
August 2009.
WTO Dispute
On January 10, 2008, Japan requested permission from the WTO to impose sanctions on U.S.
imports valued at around $250 million in retaliation for the failure of the United States to comply
with a January 2007 WTO decision against the U.S. practice of “zeroing” in antidumping duty
determinations. On April 24, 2009, a WTO compliance panel agreed with Japan that the United
States was not in compliance with the original WTO ruling. On August 18, 2009, the WTO
Appellate Body, having heard the U.S. appeal of the compliance panel decision, announced its
decision that the United States was not in compliance with the earlier determination, thus
upholding the compliance panel decision, opening the way for Japanese sanctions against the
United States.19 On February 3, 2010, the EU announced that it would seek WTO permission to
impose retaliatory tariffs on U.S. products based on the “zeroing” determination. Japan reportedly
indicated it would follow suit.20 The practice of zeroing is one under which the U.S. Department
of Commerce treats prices of targeted imports that are above fair market value as zero dumping
margin rather than a negative margin. It results in higher overall dumping margins and U.S.
trading partners have claimed and the WTO has ruled that the practice violates WTO rules.21
The Doha Development Agenda
Japan and the United States are major supporters of the Doha Development Agenda (DDA), 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 resisted by Japan
and the European Union. 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.
In July 2006, WTO Director-General Pascal Lamy suspended the negotiations because, among
other reasons, the major participants could not agree on the modalities that negotiators would use
18 For more information on the Byrd Amendment, see CRS Report RL33045, The Continued Dumping and Subsidy
Offset Act ("Byrd Amendment"), by Jeanne J. Grimmett and Vivian C. Jones.
19 International Trade Reporter. July 23, 2009.
20 International Trade Daily. February 5, 2010.
21 International Trade Reporter. January 17, 2008.
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to determine how much they would liberalize their agricultural markets and reduce agricultural
subsides. Negotiators had been meeting from time to time to try to resuscitate the talks. However,
Lamy’s attempt to hold a ministerial meeting to in December 2008 failed when the major parties
to the negotiators could not resolve their differences over establishing modalities in agricultural
and non-agricultural negotiations. Various groups of WTO members have been meeting to try to
establish a foundation for completing the negotiations without success to date.
Japanese Politics22
The Political Situation in February 2010
The impact of the DPJ’s historic victory over the LDP in the August 2009 Lower House election
is being felt across nearly every aspect of Japanese policymaking, from alliance relations with the
United States, to Japan’s budget-making process, to the relationship between politicians and
bureaucrats. According to many observers, the process has not been smooth, perhaps due to the
fact that the LDP’s half-century of dominance has left few in the DPJ with experience running a
government.
As of mid-February 2010, for a variety of reasons discussed below, the Hatoyama’s Cabinet’s
disapproval ratings exceeded its approval ratings, which had shrunk to the 40% level from the
70% level it enjoyed soon after coming into power in September. During the LDP era, Japanese
prime ministers were often able to remain in power with approval ratings much lower than
Hatoyama’s, in part because the LDP’s virtual monopoly on power to a large extent insulated it
from public opinion. However, public opinion appears to have become a more important factor in
recent years. The last three LDP leaders each lasted less than one year, in part due to approval
ratings that fell to the 20%-40% range.
In the near term, the slide in the Hatoyama government’s popularity could have electoral costs. In
July 2010, half of Japan’s Upper House seats will be up for election. The DPJ controls that
chamber of the Diet by virtue of its alliance with two smaller parties, the Social Democratic Party
and the People’s New Party, which have entered into a ruling coalition with the DPJ. As of early
2010, the opposition LDP’s approval ratings remain significantly below the DPJ’s. However,
because the Upper House’s powers are more limited than the Lower House’s—it is the Lower
House, for instance, that chooses the prime minister—Japanese voters often have used it to send a
“protest vote” to the government. The DPJ’s fortunes in the Upper House election may have a
formative impact on a number of issues in U.S.-Japan relations.
In recent months, two factors have been particularly important in driving Japanese political
developments: the DPJ’s decision to prioritize the maintenance of its coalition with the leftist
Social Democratic Party (SDP) and the conservative/populist People’s New Party (PNP); and the
extent to which Prime Minister Yukio Hatoyama or DPJ Secretary General Ichiro Ozawa are
driving government policy.
22 This section was written by Mark Manyin, Weston Konishi, and Emma Chanlett-Avery. For more, see CRS Report
R40758, Japan’s Historic 2009 Elections: Implications for U.S. Interests, by Weston S. Konishi.
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The Primacy of Preserving the DPJ-SDP-PNP Coalition
The August election gave the DPJ a majority of the Lower House. (See Figure 3 below.) Since
2007, the DPJ has cooperated with the SDP and PNP to control Japan’s less powerful Upper
House of the Diet. As Figure 4 below shows, although the DPJ is the largest party in the Upper
House, it does not have a majority of seats. Instead, it belongs to a floor group along with the
PNP and two other minor parties. Together with coalition partner SDP, the DPJ government
controls just over half of the Upper House’s seats.
Figure 3. Party Affiliation in Japan’s Lower House
Source: CRS, derived from Japan’s Lower House data, as of mid-February 2010.
Figure 4. Party Affiliation in Japan’s Upper House
Source:
CRS, Derived from February 2010 Upper House data, as of mid-February 2010.
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In the fall of 2009, it became clear that maintaining the unity of the coalition was paramount to
Ozawa, who does not want to jeopardize the DPJ’s prospects in the July 2010 elections. The
Hatoyama government made a number of major policy moves, including the decision to put off
finalizing the Futenma relocation plan until May, that deferred to the wishes of the SDP and PNP.
(The existing Futenma relocation plan is opposed by both coalition partners, particularly the SDP,
which appears to have taken a no-compromise position that a new relocation site must be chosen,
preferably outside of Japan.) It is not clear to what extent Ozawa and Hatoyama view the current
coalition as a short-term necessity or a longer-term relationship.
If the present ruling coalition were to disintegrate and the DPJ were subsequently unable to
cobble together a new majority in the Upper House, the party would likely find it much more
difficult to enact its ambitious domestic agenda. In particular, Hatoyama would likely have more
trouble passing the budget and the budget’s implementing legislation by the beginning of Japan’s
fiscal year on April 1. Thus, it is possible that Ozawa and/or Hatoyama would allow the coalition
to split after this date. Another possibility—one hoped for in private by many DPJ members—is
that the DPJ secures an outright majority in the July Upper House election, giving it more
freedom to maneuver on a number of issues, including those dealing with the U.S.-Japan alliance.
Yet another scenario is that the DPJ could reach out to like-minded LDP members of parliament
and/or to Japan’s third-largest party, Komeito, which is the LDP’s former coalition partner. In
mid-February 2010, the DPJ-PNP grouping secured a one-vote majority in the Upper House when
two former LDP representatives joined the PNP. This development could reduce the DPJ
government’s need to defer to the SDP, the votes of which may no longer be needed to pass
legislation and take other actions in the Upper House.
Who’s in Charge?
For months, it has been debated whether Hatoyama or Ozawa is driving the Hatoyama Cabinet’s
policy decisions. The Japanese media have widely portrayed Ozawa as the real power. As party
president from 2006 until a fundraising scandal led him to resign in May 2009, Ozawa was in
many ways the architect of the DPJ’s ascent. He is said to have personally recruited around 100 of
the nearly 150 DPJ’s first-time candidates who won in the 2009 Lower House vote.23 While some
DPJ Members say the Japanese media have exaggerated his influence, others reportedly say that
major policy decisions need his approval. His voice seems to have been determinative on a
number of Cabinet decisions, particularly those that affect the coalition, including the status of the
Futenma relocation plan, the formation of the DPJ’s stimulus plan, and the reported moves to
encourage Hatoyama’s first Finance Minister to resign in January.
As a result, Hatoyama appears to be developing a reputation for indecisiveness, even within the
DPJ. A major reason for the fall, according to the polls, appears to be concerns among the public
that Hatoyama is not displaying capable leadership. Additionally, separate fundraising scandals
involving Hatoyama and Ozawa have tarnished the DPJ’s attempts to present itself as the party of
clean politics and transparency. Indeed, some political analysts wonder how long Hatoyama’s
premiership will last.
23 CRS interviews with DPJ politicians and Japanese officials, December 2009.
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Ideology or Politics?
Hatoyama and Ozawa’s actions have raised questions about whether their true aim is to
fundamentally alter the alliance. In the past, both Hatoyama and Ozawa have made statements
suggesting that U.S. troops in Japan either be significantly reduced or withdrawn altogether,
though both have backed away from these sentiments more recently. Since the early-to-mid-
1990s, Ozawa has articulated a vision of Japan that is more “normal,” in that it is more assertive
and independent on the international stage.24 Among other items, Ozawa has called for Japan to
increase its contributions to international security, but to do so only in missions that are
authorized by the U.N. Security Council.
Ascertaining where the DPJ as a whole stands on the alliance is complicated by the DPJ’s
makeup. The party was formed in 1998 as a merger of four smaller parties and was later joined by
a fifth grouping. There are considerable internal divisions between the DPJ’s
hawkish/conservative and passivist/liberal wings.
The LDP
Now Japan’s largest opposition party, the LDP appears to have been demoralized by its fall from
power. Following the election, then-Prime Minister Taro Aso resigned from the premiership and
his position as LDP president. In September, the LDP selected Sadakazu Tanigaki as its new
leader. One analyst observes that the party is divided into three ideological groupings: “pure
conservative” hawks, populist “liberals” like Tanigaki who focus on promoting a welfare state,
and “neo-liberals” who emphasize small government, administrative reform, economic growth,
and free markets. The 2009 election appears to have reshaped the LDP in at least two ways. First,
the DPJ’s dominance in urban areas has made the LDP a more rural-based party than ever before
in its history. Second, the party is not only smaller but also is stacked with leaders of its “old
guard” because many of the LDP’s newer—and generally younger—members were effectively
purged before the election in order to ensure that senior leaders could keep their seats.
The DPJ’s Agenda
Foreign Policy
On foreign policy, the DPJ’s policy statements throughout the years consistently raise a number
of themes, including adopting a more “assertive” foreign policy; achieving a more “mature” and
“equal” alliance partnership with the United States; reducing the burden of the approximately
50,000 U.S. forward deployed troops in Japan, particularly those based in Okinawa Prefecture;
maintaining constitutional restrictions on collective self-defense while expanding contributions to
international security through U.N.-sanctioned peacekeeping operations; and improving Japan’s
relations with Asian countries.25 As discussed below, DPJ members are divided over many
matters of foreign and security policy.
24 See, for instance, Ichiro Ozawa, Blueprint for a New Japan, ( Ichiro Ozawa, Blueprint for a New Japan (Tokyo,
Kodansha International, 1994).
25 See, for instance, Democratic Party of Japan, Our Basic Philosophy, at http://www.dpj.or.jp/english/about_us/
philosophy.html.
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Domestic Policy
However, the DPJ historically has been relatively more unified over, and placed far more
emphasis on, domestic social issues. During the 2009 election campaign, the party promoted a
sweeping agenda for reshaping the Japanese economy and Japanese policymaking. Perhaps most
significantly for the United States, the party has pledged to centralize authority in the Prime
Minister’s Office and increase the authority of Japan’s politicians over its bureaucrats. During the
LDP era, with some important exceptions, Japan’s policymaking process tended to be
compartmentalized and bureaucratized, making it difficult to make trade-offs among competing
constituencies on divisive issues. The result was often paralysis or incremental changes at the
margins of policy, particularly during periods of weak premierships. The DPJ hopes to transform
the process of Japanese policymaking by, among other steps, appointing more politicians to
senior positions in the bureaucracy and by creating a National Strategy Bureau under the prime
minister’s office that is to provide top-down direction over the national budget and other domestic
policies. The DPJ hopes that these and other changes lead to a more dynamic and decentralized
nation that is better prepared to handle future challenges.
The DPJ has also pledged to reform Japan’s domestic economy and social welfare system. The
party wants to transform Japan’s highly regulated, export-oriented economy into a deregulated
economic system propelled by consumer-led growth. As part of the DPJ’s two-year ¥21 trillion
($218 billion) stimulus proposal, household disposable income would be increased through tax
cuts and payment transfers.26 Income support for struggling workers, as well as sweeping health-
care and pension reforms, are also proposed. The DPJ claims that it will offset the cost of these
programs by trimming the national budget and eliminating wasteful spending, but it has been
criticized for lacking details about how its programs will be paid for over the long-run. With
Japan’s public sector debt approaching 200% of GDP this year, there are outstanding concerns
about the nation’s long-term budgetary health.
Japan’s Demographic Challenge
Japan’s combination of a low birth rate, strict immigration practices, and a rapidly aging
population present policymakers with a significant challenge. Polls suggest that Japanese women
are avoiding marriage and child-bearing because of the difficulty of combining career and family
in Japan; the birthrate has fallen to 1.25, far below the 2.1 rate necessary to sustain a population
size. Japan’s current population of 128 million is projected to fall to about 100 million by mid-
century. Concerns about a huge shortfall in the labor force have grown, particularly as the elderly
demand more care. Japan’s National Institute of Population and Social Security Research projects
that the working-age population will fall from 85 million in 2005 to 70 million by 2030. Japan’s
immigration policies have traditionally been strictly limited, but policy adjustments have allowed
for a larger foreign labor force. With government encouragement, some private firms offer
incentives to employees with children.
26 Democratic Party of Japan, “‘Economic and Financial Crisis Measures’: Opening up a Path Towards the Future by
‘Putting People’s Lives First,’” November 5, 2008, http://www.dpj.or.jp/english/financial/f_crisis.html.
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Selected Legislation
111th Congress
H.R. 44 (Bordallo). Seeks recognition of the loyalty and suffering of the residents of Guam who
suffered unspeakable harm as a result of the occupation of Guam by Imperial Japanese military
forces during World War II, by being subjected to death, rape, severe personal injury, personal
injury, forced labor, forced march, or internment, as well as payments for death, personal injury,
forced labor, forced march, and internment. Referred to Senate Committee on the Judiciary on
March 5, 2009.
H.R. 423 (Mica). Seeks 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. Referred to House
Subcommittee on Military Personnel on February 6, 2009.
H.R. 2055 (Thompson) and S. 817 (Cantwell). The Pacific Salmon Stronghold Conservation
Act of 2009. Among other items, authorizes the sharing of status and trends data, innovative
conservation strategies, conservation planning methodologies, and other information with North
Pacific countries, including Japan, to promote salmon conservation and habitat. In April 2009, the
House bill was referred to House Natural Resources Committee’s Subcommittee on Insular
Affairs, Oceans and Wildlife, which held a hearing on the bill on June 16, 2009. The Senate bill
was referred to the Senate Committee on Commerce, Science, and Transportation in April 2009.
H.R. 2647 (Skelton) and S. 1390 (Levin); P.L. 111-84. The National Defense Authorization Act
for FY2010. Signed into law October 28, 2009. On July 21, 2009, the Senate passed (58-40,
Record Vote Number: 235) an amendment (S.Amdt. 1469) to S. 1390, the FY2010 National
Defense Authorization Act, that eliminated funding for additional F-22 aircraft production. In
conference, this provision was deleted, but both chambers agreed not to authorize funding for
additional procurement of the F-22 in FY2010. Section 1250 requires the Secretary of Defense to
report to Congress on the potential for foreign military sales of the F-22A fighter aircraft. Section
2835 establishes an Interagency Coordination Group of Inspectors General for Guam
Realignment, which among other items is required to submit by February 1 an annual report on
Japan’s budgetary contribution to the relocation of military personnel on Guam. The conference
committee deleted the portion (in Section 2833) of the House version of H.R. 2647 that would
have required construction firms that get contracts for projects associated with the expansion of
U.S. military facilities on Guam to pay their workers wages consistent with the labor rates in
Hawaii.
H.Res. 933 (Dingell). Commending the Government of Japan for its current policy against
currency manipulation and encouraging the Government of Japan to continue in this policy.
Introduced November 19, 2009; referred to House Ways and Means Committee.
H.Res. 125 (C. Smith). Calling on Brazil in accordance with its obligations under the 1980
Hague Convention on the Civil Aspects of International Child Abduction to obtain, as a matter of
extreme urgency, the return of Sean Goldman to his father David Goldman in the United States;
urging the governments of all countries that are partners with the United States to the Hague
Convention to fulfill their obligations to return abducted children to the United States; and
recommending that all other nations, including Japan, that have unresolved international child
abduction cases join the Hague Convention and establish procedures to promptly and equitably
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Japan-U.S. Relations: Issues for Congress
address the tragedy of international child abductions. Passed/agreed to in House on March 11,
2009.
H.Res. 997 (Sutton). Expressing the sense of the House of Representatives regarding unfair and
discriminatory practices of the government of Japan in its failure to apply its current and planned
extension of the Government's Eco-friendly Vehicle Purchase and scrappage program to imported
vehicles made by U.S. automakers. Introduced January 5, 2010; referred to the Committee on
Ways and Means, and in addition to the Committee on Foreign Affairs, for a period to be
subsequently determined by the Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned.
S.Res. 388 (Stabenow). A resolution expressing the sense of the Senate regarding unfair and
discriminatory measures of the Government of Japan in failing to apply the Eco-Friendly Vehicle
Purchase Program to vehicles made by United States automakers. Introduced January 20, 2010;
referred to the Committee on Finance.
Author Contact Information
Emma Chanlett-Avery, Coordinator
Mark E. Manyin
Specialist in Asian Affairs
Specialist in Asian Affairs
echanlettavery@crs.loc.gov, 7-7748
mmanyin@crs.loc.gov, 7-7653
William H. Cooper
Specialist in International Trade and Finance
wcooper@crs.loc.gov, 7-7749
Congressional Research Service
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