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 Prepared 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. Congressional Research Service Japan-U.S. Relations: Issues for Congress 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 Congressional Research Service Japan-U.S. Relations: Issues for Congress 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 Congressional Research Service Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 1 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 2 Japan-U.S. Relations: Issues for Congress Figure 1. Map of Japan Source: Map Resources. Adapted by CRS. Congressional Research Service 3 Japan-U.S. Relations: Issues for Congress Major Diplomatic and Security Issues1 Overall U.S.-Japan relations appear to be in a state of flux. Analysts are divided over whether current controversies are temporary blips in an otherwise strong partnership or are indicative of more fundamental shifts. New leaders in Washington and Tokyo have emphasized repeatedly the strategic importance of the relationship in multiple high-level meetings. Both President Obama and Secretary of State Hillary Clinton have re-affirmed the axiom that the U.S.-Japan alliance is “the cornerstone of U.S. Asia-Pacific strategy.” Although the DPJ was critical of some aspects of the U.S.-Japan alliance while campaigning and has called for a more U.N. and Asia-oriented diplomacy, it has also acknowledged the central role of the alliance with the United States in providing for Japan’s security. Japan Country Data Population: 127 million % of Population over 64: 22% (U.S. = 12.4%) Area: 377,835 sq km (slightly smaller than California) Life Expectancy: 82 years Per Capita GDP: $32,600 (2009 est.) purchasing power parity Primary Export Partners: US 17.8%, China 16%, South Korea 7.6%, Hong Kong 5.1% (2008) Primary Import Partners: China 18.9%, 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), 103.58 (2008), 117.99 (2007), 116.18 (2006), re-examination of ties, friction in the alliance and 110.22 (2005) stalemate on the Okinawa agreement had been present Foreign Exchange Reserves: $1.011 for several years under previous LDP governments. trillion (December 2008 est.) After a period of rejuvenated defense ties in the first 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. Congressional Research Service 4 Japan-U.S. Relations: Issues for Congress 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 Congressional Research Service 5 Japan-U.S. Relations: Issues for Congress 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...) Congressional Research Service 6 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 7 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 8 Japan-U.S. Relations: Issues for Congress 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 F22 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 Congressional Research Service 9 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 10 Japan-U.S. Relations: Issues for Congress 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 Congressional Research Service 11 Japan-U.S. Relations: Issues for Congress both Japan and the United States of the WTO as a forum for resolving trade disputes has depoliticized 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. Congressional Research Service 12 Japan-U.S. Relations: Issues for Congress 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. International Trade Reporter. February 11, 2010. 15 Inside U.S. Trade. 14 Congressional Research Service 13 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 14 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 15 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 16 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 17 Japan-U.S. Relations: Issues for Congress 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. Congressional Research Service 18 Japan-U.S. Relations: Issues for Congress 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-mid1990s, 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. Congressional Research Service 19 Japan-U.S. Relations: Issues for Congress 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 healthcare 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 midcentury. 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. Congressional Research Service 20 Japan-U.S. Relations: Issues for Congress 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 Congressional Research Service 21 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 Specialist in Asian Affairs echanlettavery@crs.loc.gov, 7-7748 Mark E. Manyin Specialist in Asian Affairs mmanyin@crs.loc.gov, 7-7653 William H. Cooper Specialist in International Trade and Finance wcooper@crs.loc.gov, 7-7749 Congressional Research Service 22