Japan-U.S. Relations: Issues for Congress
Emma Chanlett-Avery
Specialist in Asian Affairs
Mark E. Manyin
Specialist in Asian Affairs
William H. Cooper
Specialist in International Trade and Finance
Ian E. Rinehart
Analyst in Asian Affairs
February 15, 2013
Congressional Research Service
7-5700
www.crs.gov
RL33436
CRS Report for Congress
Pr
epared for Members and Committees of Congress

---

Japan-U.S. Relations: Issues for Congress

Summary
Japan is a significant partner for the United States in a number of foreign policy areas,
particularly in terms of security priorities, from responding to China’s rise in the region to
countering threats from North Korea. 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 49,000 U.S. troops and other U.S. military assets based in Japan in the Asia-Pacific. If
Japan decides to join the Trans-Pacific Partnership (TPP) free trade agreement, it will become an
even more critical element in the Obama Administration’s rebalancing to Asia strategy.
Japan has struggled to find political stability in the past seven years. Since 2007, six men have
been Prime Minister, including the current premier Shinzo Abe, who also held the post in 2006-
2007. His Liberal Democratic Party (LDP) returned to power in a landslide election in December
2012. The current opposition Democratic Party of Japan (DPJ) had ruled for three tumultuous
years since their own watershed election victory in 2009. Japan’s leaders face daunting tasks: an
increasingly assertive China, a weak economy, and rebuilding from the devastating March 2011
earthquake, tsunami, and nuclear disaster. In recent years, opposition control of one chamber of
parliament has paralyzed policymaking in Tokyo and made U.S.-Japan relations difficult to
manage despite overall shared national interests. Abe is unlikely to pursue controversial
initiatives before the next national elections, for the Upper House of parliament (called the Diet)
in July 2013. Perhaps most significantly, the United States could become directly involved in a
military conflict between Japan and China over the Senkaku/Diaoyu islets in the East China Sea.
Past comments and actions on controversial historical issues by Prime Minister Abe and his
cabinet have raised concern that Tokyo could upset regional relations in ways that hurt U.S.
interests. Abe is known as a strong nationalist, and he is now under pressure on the right from a
newly formed party touting its own hawkish views on national security. Abe’s approach to issues
like the so-called “comfort women” sex slaves from the World War II era, history textbooks, visits
to the Yasukuni Shrine that honors Japan’s war dead, and statements on a territorial dispute with
South Korea will be closely monitored by Japan’s neighbors as well as the United States.
The massive and immediate humanitarian relief provided by the United States following the
March 2011 “triple disaster” bolstered the bilateral alliance, but difficult issues remain,
particularly those related to the stationing of marines on Okinawa. Washington and Tokyo have
agreed to relocate several thousand marines from Okinawa to Guam and other locations in the
region, but the two governments have been unable to make tangible progress on implementing a
2006 agreement to relocate the controversial Futenma Marine Corps Air Station to a less densely
populated location on Okinawa. In addition, the U.S. Congress has restricted funding for the
realignment because of concerns and uncertainty about the cost of the realignment plans.
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. One exception was U.S. criticism over
Japan’s decision in 2003 to ban imports of U.S. beef, which have since resumed, resolving one
issue that could have been an obstacle to the United States agreeing to Japan’s joining the TPP.

Congressional Research Service

---

Japan-U.S. Relations: Issues for Congress

Contents
Recent Developments ...................................................................................................................... 1
Shinzo Abe and the LDP Return to Power ................................................................................ 1
Senkaku/Diaoyu Territorial Dispute with China ....................................................................... 1
Abe’s Economic Agenda and U.S. Beef Imports ....................................................................... 2
Japan’s Foreign Policy and U.S.-Japan Relations ............................................................................ 4
Abe and History Issues .............................................................................................................. 4
Comfort Women Issue ......................................................................................................... 5
Territorial Dispute with China ................................................................................................... 6
China-Japan Trade ............................................................................................................... 7
Japan and the Korean Peninsula ................................................................................................ 7
Japan’s Ties with South Korea ............................................................................................ 7
North Korean Issues ............................................................................................................ 8
March 2011 “Triple Disaster” .......................................................................................................... 9
Japan’s Nuclear Energy Policy .................................................................................................. 9
Exports of Liquefied National Gas (LNG) to Japan .......................................................... 10
Japanese Participation in Sanctions on Iran ............................................................................ 11
International Child Custody Disputes...................................................................................... 12
U.S. World-War II-Era Prisoners of War (POWs) ................................................................... 13
Alliance Issues ............................................................................................................................... 14
Futenma Base Relocation Controversy ................................................................................... 14
Progress on Other Elements of Military Realignment and Alliance Transformation .............. 15
Deployment of the MV-22 Osprey Aircraft to Japan ............................................................... 16
March 2011 Earthquake and Tsunami: U.S.-Japan Alliance Performance .............................. 16
Constitutional Constraints ....................................................................................................... 17
Burden-Sharing Issues ............................................................................................................. 17
Extended Deterrence ............................................................................................................... 18
Japan’s Counter-Piracy Mission in the Gulf of Aden .............................................................. 18
Economic Issues ............................................................................................................................ 19
Overview of the Bilateral Economic Relationship .................................................................. 20
Bilateral Trade Issues .............................................................................................................. 22
Japan’s Ban on U.S. Beef .................................................................................................. 22
Japan and the Trans-Pacific Partnership Agreement (TPP) ............................................... 22
Insurance ........................................................................................................................... 24
“Zeroing” ........................................................................................................................... 24
The Doha Development Agenda ....................................................................................... 25
Japanese Politics ............................................................................................................................ 26
The December 2012 Elections: A Landslide Without a Mandate for the LDP.................. 26
Abe’s Priorities .................................................................................................................. 27
The DPJ and Alternative Political Forces.......................................................................... 28
Structural Rigidities in Japan’s Political System ............................................................... 29
Japan’s Demographic Challenge ............................................................................................. 29
Selected Legislation ....................................................................................................................... 30
112th Congress ......................................................................................................................... 30
111th Congress.......................................................................................................................... 30
Congressional Research Service

---

Japan-U.S. Relations: Issues for Congress


Figures
Figure 1. Map of Japan .................................................................................................................... 3
Figure 2. Map of U.S. Military Facilities in Japan ........................................................................ 19
Figure 3. Party Affiliation in Japan’s Lower House of Parliament ................................................ 27
Figure 4. Party Affiliation in Japan’s Upper House of Parliament ................................................ 27

Tables
Table 1. U.S. Merchandise Trade with Japan, Selected Years ....................................................... 20

Contacts
Author Contact Information........................................................................................................... 32

Congressional Research Service

---

Japan-U.S. Relations: Issues for Congress

Recent Developments
Shinzo Abe and the LDP Return to Power
In elections for the Lower House of the Japanese parliament (called the Diet) on December 19,
2012, the Liberal Democratic Party (LDP) scored a commanding victory that swept the party and
its leader, Shinzo Abe, back into power. The LDP and its coalition partner won 324 of the
chamber’s 480 seats, up from 141. The LDP has now ruled Japan for all but about four years
since the end of World War II. Abe (pronounced “ah-bay”) was also Prime Minister for about a
12-month period in 2006 and 2007. The December elections toppled the Democratic Party of
Japan (DPJ), which had been Japan’s ruling party since the previous Lower House vote in 2009.
The DPJ’s seat total tumbled from 230 seats to 57. A new group, the Japan Restoration Party, led
by two controversial figures known for their iconoclastic and generally hawkish views, won 54
seats to become Japan’s third-largest party. As discussed in the Japanese Politics section below,
most observers interpreted the election more as a rejection of the DPJ than an endorsement of the
LDP.
The LDP will now turn its attention toward securing an outright majority in the Upper House in
elections for half of that chamber’s seats in July 2013. Since 2007, no party has controlled both
the Lower and Upper Houses of the Diet for more than a few months, paralyzing policymaking.
Because these elections will be pivotal—if the LDP loses seats, the Diet will remain divided—
many analysts believe Abe is unlikely to take steps before the polls that are politically
controversial, such as joining the Trans-Pacific Partnership (TPP) trade negotiations or loosening
Japan’s ban on participating in “collective self-defense,” that is, combat cooperation in defense of
another country.
Senkaku/Diaoyu Territorial Dispute with China
Japan and China have engaged in a struggle over islets in the East China Sea known as the
Senkakus in Japan, Diaoyu in China, and Diaoyutai in Taiwan, which has grown increasingly
heated in the past six months. The uninhabited territory, administered by Japan but also claimed
by China and Taiwan, has been a subject of contention for years, despite modest attempts by
Tokyo and Beijing to jointly develop the potentially rich energy deposits nearby, most recently in
2008-2010. In August 2012, the Japanese government purchased three of the five islands from a
private landowner in order to preempt their sale to Tokyo’s nationalist governor Shintaro Ishihara,
who now is a leader of the aforementioned Japan Restoration Party. Although intended to tamp
down the controversy, Japan’s “nationalization” of the territory upset the status quo, leading to
massive Chinese protests, sharp objections from Beijing, and a drop in Sino-Japanese trade.
Since then, China has conducted increasingly aggressive operations by dispatching both military
and maritime law enforcement ships and aircraft to the area, compelling the Japanese to respond
with their own forces and heightening the potential for escalation. On one occasion both countries
scrambled fighter jets, and subsequently a Japanese official publicly mulled firing warning shots.
In February 2013, the Japanese government reported that a Chinese naval ship locked its
weapons-targeting radar on Japanese assets on two occasions. Although no shots were fired, the
incident was considered a major escalation in the standoff and sparked questions about whether
the Chinese operator was acting on orders from Beijing, military commanders, or his own
discretion. Beijing has denied the accusation.
Congressional Research Service
1

---

Japan-U.S. Relations: Issues for Congress

The United States has remained neutral on the sovereignty of the islands but re-affirmed that the
territory is covered under Article Five of the U.S.-Japan Security, which stipulates that the United
States is bound to protect “the territories under the Administration of Japan” and Japan
administers the Senkakus (Diaoyu Islands). The Treaty obligates the United States to defend
Japan. Due to the risk of U.S. involvement in military operations, U.S. officials have urged
caution and encouraged both sides to avoid a conflict.
The Senkaku/Diaoyu conflict embodies Japan’s security challenges. The maritime confrontation
with Beijing is a concrete manifestation of the threat Japan has faced for years from China’s
rising regional power. It also brings into relief Japan’s dependence on the U.S. security guarantee
and its anxiety that Washington will not defend Japanese territory if it risks going to war with
China. Operationally, Japan has an acute need for its military, known as the Japan Self Defense
Forces, to build up their capacity in the southwest part of the archipelago. Similarly, many
observers cite the lack of coordination and clear delineation of responsibilities between the
Japanese Maritime Self Defense Forces and Coast Guard.
Abe’s Economic Agenda and U.S. Beef Imports
Abe has made it a priority of his administration to grow the economy and to eliminate deflation,
which has plagued Japan for many years. After assuming power, Abe’s government announced a
$122 billion stimulus package aimed at spending on infrastructure, particularly in areas affected
by the March 2011 disaster. While the package is expected to boost growth somewhat, it will also
add to Japan’s already large public debt. Under pressure from Abe, the independent central bank
announced that it would undertake quantitative easing measures and raise its inflation target to
2% within two years. The Japanese yen then rapidly dropped in value against the U.S. dollar and
other major currencies.
On February 1, 2013, the Japanese government loosened its restrictions on U.S. beef imports to
allow beef from cattle 30 months or younger for the first time since December 2003. These steps
would appear to provide the opportunity for growth in U.S. beef imports to Japan and to resolve
an issue that had been a major irritant in the bilateral trade relationship, as well as a potential
obstacle for Japan to join the TPP.

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

Japan’s Foreign Policy and U.S.-Japan Relations1
The U.S.-Japan relationship is broad, deep-seated, and
Japan Country Data
stable but has been handicapped by the political
Population: 127.4 million
paralysis in Tokyo. The annual replacement of prime
% of Population over 64: 24% (U.S. =
ministers since 2006 has made long-term planning with
12.4%)
Japan complicated, particularly as the United States
seeks reliable partners in the Obama Administration’s
Area: 377,835 sq km (slightly smal er than
California)
rebalancing to Asia strategy, also known as the “Pacific
Pivot.” Both Tokyo and Washington seek to manage
Life Expectancy: 84 years
relations with a rising China, as well as address the
Per Capita GDP: $36,200 (2012 est.)
North Korean threat. Alliance cooperation at the
purchasing power parity
working level has been strong, driven closer by
Primary Export Partners: China 19.7%,
assertive Chinese behavior and North Korean
US 15.5%, South Korea 8%, Hong Kong 5.2%,
provocations. Although major basing issues in Okinawa
Thailand 4.6% (2011)
remain stubbornly unresolved, other security matters
Primary Import Partners: China 21.5%,
such as ballistic missile defense cooperation have
US 8.9%, Australia 6.6%, Saudi Arabia 5.9%,
progressed under both the DPJ and LDP governments.
UAE 5%, South Korea 4.7% (2011)
The joint response to the March 2011 disasters remains
Yen: Dollar Exchange Rate: 79.42 (2012
a vivid reminder to both sides of the underlying strength
est.), 79.81 (2011 est.), 87.78 (2010 est.),
of the alliance.
93.57 (2009), 103.58 (2008)
Foreign Exchange Reserves: $1.351
It remains uncertain how Prime Minister Abe will fare
trillion (December 2012 est.)
as a steward of the relationship. On the one hand, he is
Source: CIA World Factbook, February 2013.
known as a strong supporter of the U.S. alliance and
promotes a number of security positions that align with the United States. He is an advocate of
building relations with fellow democracies, particularly advancing security ties with Australia and
India. On the other hand, Abe faces questions about his ability to steer foreign policy away from
divisive regional issues that could hurt U.S. interests. (See section below for discussion.) In
addition, domestic political divisions mean that major U.S. priorities such as Japan joining
negotiations for the Trans-Pacific Partnership (see “Economic Issues” section for more) and
allowing for more advanced defense cooperation (see “Alliance Issues” section for more) will
likely remain on hold until after the July 2013 Upper House elections.
Abe and History Issues
During his year-long stint as Prime Minister in 2006-2007, Abe was known for his nationalist
rhetoric and advocacy for more muscular positions on defense and security matters. Some of
Abe’s positions—such as changing the interpretation of Japan’s pacifist constitution to allow for
Japanese participation in collective self-defense—were largely welcomed by U.S. officials eager
to advance military cooperation. Other statements, however, suggest that Abe embraces a
revisionist view of Japanese history that rejects the narrative of imperial Japanese aggression and
victimization of other Asians. He has been involved with groups arguing that Japan has been
unjustly criticized for its behavior as a colonial and wartime power. Among the positions
advocated by these groups, such as Nippon Kaigi Kyokai, are that Japan should be applauded for

1 This section was written by Emma Chanlett-Avery.
Congressional Research Service
4

---

Japan-U.S. Relations: Issues for Congress

liberating much of East Asia from Western colonial powers, that the 1946-1948 Tokyo War
Crimes tribunals were illegitimate, and that the killings by Imperial Japanese troops during the
1937 “Nanjing massacre” were exaggerated or fabricated. Historical issues have long colored
Japan’s relationships with its neighbors, particularly China and South Korea, who remain
resentful of Japan’s occupation and belligerence during the World War II period. Abe’s selections
for his Cabinet appear to reflect these views, as he chose a number of politicians well-known for
advocating nationalist, and in some cases ultra-nationalist views.
The previous DPJ government adopted a more conciliatory view of Japan’s past and worked to
mend historical wounds with South Korea and China. In August 2010, the 100th anniversary of
Japan’s annexation of the Korean Peninsula, then-Prime Minister Naoto Kan renewed Japan’s
apology for its treatment of Koreans during colonial rule, and offered to return historical
documents and other artifacts taken from Korea. Until the end of their time in power, DPJ leaders
also avoided visiting the controversial Yasukuni Shrine, a shrine that honors Japan’s wartime dead
and includes several Class A war criminals. Visits to the shrine by LDP Prime Minister Junichiro
Koizumi had severely strained Tokyo’s relationships with Beijing and Seoul in the early and mid-
2000s.
Abe last visited the Yasukuni Shrine in October 2012, after he was elected president of the LDP
but before the parliamentary elections that made him Prime Minister. Many analysts say that
Abe’s re-ascension to the premiership risks inflaming regional relations, which could disrupt
regional trade, threaten security cooperation among U.S. allies, and further exacerbate already
tense relations with China. Abe is under pressure from the Japan Restoration Party, a new fiercely
nationalist party that won the third largest number of seats in the Diet. On the other hand, during
his last stint as Prime Minister, Abe successfully repaired ties with South Korea and China and is
regarded by some observers as a pragmatic operator. Since becoming prime minister, he has not
repeated his calls while in opposition to station Japanese civilians on the Senkaku Islands and to
designate a national “Takeshima Day” to promote Japan’s assertion of sovereignty over the
Dokdo/Takeshima island that is controlled by South Korea. Although relations with China are far
more problematic now, he recently sent an envoy to reach out to the new government in South
Korea, raising hopes that relations will not deteriorate significantly.
Comfort Women Issue2
Abe’s statements on the so-called “comfort women”—sex slaves used by the Japanese imperial
military during its conquest and colonization of several Asian countries in the 1930s and 1940s—
have been criticized by other regional powers and the U.S. House of Representatives in a 2007
resolution. Abe has suggested that his government might consider revising a 1993 official
Japanese apology for its treatment of these women, a move that would be sure to degrade Tokyo’s
relations with South Korea and other countries.
In the past, Abe has supported the claims made by many on the right in Japan that the women
were not directly coerced into service by the Japanese military. When he was Prime Minister in
2006-2007, Abe voiced doubts about the validity of the 1993 “Kono Statement,” an official
statement issued by then-Chief Cabinet Secretary Yohei Kono that apologized to the victims and
admitted responsibility by the Japanese military. As the U.S. House of Representatives considered

2 For a lengthier discussion of the comfort women issue, please request a copy of a 2007 CRS congressional
distribution memo on the topic authored by Larry Niksch.
Congressional Research Service
5

---

Japan-U.S. Relations: Issues for Congress

H.Res. 121, calling on the Japanese government to “formally acknowledge, apologize, and accept
historical responsibility” for forcing young women into military prostitution, Abe appeared to
soften his commentary and asserted that he would stand by the statement. The House later
overwhelmingly endorsed the resolution. Then-Deputy Chief Cabinet Secretary Hakubun
Shimomura had been leading the movement to revise the statement; Abe recently appointed him
Minister of Education, Culture, Sports, Science, and Technology.
The issue of the so-called comfort women has gained visibility in the United States, due primarily
to Korean-American activist groups. These groups have pressed successfully for the erection of
monuments commemorating the victims, passage of a resolution on the issue by the New York
State Senate, and the naming of a city street in the New York City borough of Queens in honor of
the victims. In addition, former Secretary of State Hillary Clinton reportedly instructed the State
Department to refer to the women as “sex slaves,” rather than the euphemistic term “comfort
women.”3
Territorial Dispute with China4
Japan, China, and Taiwan all claim sovereignty over a small group of uninhabited islets located
about 120 miles northeast of Taipei, known as the Senkakus in Japan, the Diaoyu in China, and
the Diaoyutai in Taiwan. China considers the islets to be part of Taiwan, over which it claims
sovereignty. Geologists believe that the waters surrounding them may be rich in oil and natural
gas deposits. The disputed claims are long-standing, but the episodes in early 2013 escalated
beyond previous incidents. In April 2012, Tokyo governor Shintaro Ishihara announced in
Washington, DC, that he intended to purchase three of the five islets from their private Japanese
owner. Ishihara, who is known for expressing nationalist views, called for demonstrating Japan’s
control over the islets by building installations on the island and raised nearly $20 million in
private donations for the purchase. In September, the central government purchased the three
islets for ¥2.05 billion (about $26 million at an exchange rate of ¥78:$1) to block Ishihara’s move
and reduce tension with China. Protests, sometimes violent, erupted across China in response.
Starting in the fall of 2012, China began regularly deploying China Maritime Surveillance (CMS)
and Fisheries Law Enforcement Command (FLEC) ships near the islands and stepped up what it
called “routine” patrols to assert jurisdiction in “China’s territorial waters.” Chinese military
surveillance planes reportedly have entered airspace that Japan considers its own, in what Japan’s
Defense Ministry has called the first such incursion in 50 years. In early 2013, near-daily
encounters have escalated: both countries have scrambled fighter jets, Japan has threatened to fire
warning shots, and, according to the Japanese government, a Chinese navy ship locked its fire-
control radar on a Japanese destroyer and helicopter on two separate occasions.
U.S. administrations going back at least to the Nixon Administration have stated that the United
States takes no position on the territorial disputes. However, it also has been U.S. policy since
1972 that the 1960 U.S.-Japan Security Treaty covers the islets, because Article 5 of the treaty
stipulates that the United States is bound to protect “the territories under the Administration of
Japan” and Japan administers the islets. China’s increase in patrols appears to be an attempt to

3 “‘Comfort Women’ Were Sex Slaves,” Chosun Ilbo, July 13, 2012.
4 For more information, see CRS Report R42761, Senkaku (Diaoyu/Diaoyutai) Islands Dispute: U.S. Treaty
Obligations, by Mark E. Manyin.
Congressional Research Service
6

---

Japan-U.S. Relations: Issues for Congress

demonstrate that Beijing has a degree of administrative control over the islets, thereby casting
into doubt the U.S. treaty commitment. In its own attempt to address this perceived gap, Congress
inserted in the FY2013 National Defense Authorization Act (H.R. 4310, P.L. 112-239) a
resolution stating, among other items, that “the unilateral action of a third party will not affect the
United States’ acknowledgment of the administration of Japan over the Senkaku Islands.” Perhaps
responding to the criticism of the Administration’s rhetoric, in January 2013 Secretary Clinton
stated that “we oppose any unilateral actions that would seek to undermine Japanese
administration,” of the islets.
China-Japan Trade
One of the side-effects of the China-Japan islands dispute has been the adverse impact on their
bilateral trade, especially on Japanese exports to China. China is Japan’s most important trading
partner—its largest export market and its largest source of imports—having overtaken the United
States in that role long ago. The relationship developed as Japanese multinational companies
established production facilities in China that assemble finished goods that are exported
elsewhere, including to the United States. In addition, as Chinese citizens have become wealthier,
China has become a growing market for consumer goods such as cars. Japanese exports to China
declined 11% in 2012 with much of the decline occurring in the fourth quarter.5 These trends are
similar to those with other major partners: Japan’s exports to the United Kingdom declined 18.8%
and to Germany—14.6%, reflecting moderate economic growth or slowdown and the strong yen.
However, observers have noted that the political tensions caused by the confrontations over the
Senkaku/Daioyu islands may have spilled over in the commercial arena. During the height of the
fracas in September 2012, nationalists in China called for a boycott on Japanese goods and
defaced Japanese retail stores. Japanese auto manufacturers experienced sharp declines in sales in
China beginning in September 2012.6 To what degree these trends are a function of politics or
macroeconomic factors would require further analysis and more data.
Japan and the Korean Peninsula
Japan’s Ties with South Korea
After a period of relatively warm ties and the promise of more effective security cooperation,
Tokyo-Seoul ties appear to have cooled anew. Under the DPJ governments and the Lee Myung-
bak administration in Seoul, South Korea and Japan managed historical issues, cooperated in
responding to North Korean provocations, and exchanged observers at military exercises. The
two countries were on the verge of concluding two modest but significant bilateral security
agreements on information sharing and military acquisitions until an anti-Japanese outcry in
South Korea scuttled the signing. The new governments in both capitals appear less likely to
reach out to each other, dimming U.S. hopes for more sustained trilateral cooperation among the
three democracies. Policy toward North Korea has been the one issue where regular trilateral
consultation persists, and the February 2013 nuclear test by North Korea will provide an
opportunity for the three capitals to coordinate their response.

5 GTIS, Inc., Global Trade Atlas.
6 IHS Global Insight, October 12, 2012.
Congressional Research Service
7

---

Japan-U.S. Relations: Issues for Congress

In addition to the comfort women issue discussed above, the perennial issues of a territorial
dispute between Japan and South Korea and Japanese history textbooks continue to periodically
ruffle relations. A group of small islands in the Sea of Japan known as Dokdo in Korean and
Takeshima in Japanese (referred to as the Liancourt Rocks by the United States) are administered
by South Korea but claimed by Japan. Mentions of the claims in Japanese defense documents or
by local prefectures routinely spark official criticism and public outcry in South Korea. Similarly,
Seoul expresses disapproval of some of the history textbooks approved by Japan’s Ministry of
Education that South Koreans claim diminish or whitewash Japan’s colonial-era atrocities.
Some of Abe’s cabinet appointments have raised concern among South Koreans. Minister of
Education Hakubun Shimomura has criticized history textbook companies for being insufficiently
patriotic by, among other items, giving undue deference to the concerns of China and South
Korea in their presentation of Japan’s colonial past. Abe’s appointment of Shimomura appears to
signal his intent to follow through on the LDP’s pre-election advocacy of reducing “self-torturing
views of history” in education and of giving the central government greater authority over the
content of history textbooks. Abe’s Cabinet also includes Internal Affairs Minister Yoshitaka
Shindo and Minister for Administrative Reform Tomomi Inada, who have aggressively asserted
Japanese territorial claims, including a well-publicized attempt to visit South Korea in 2011 to
advocate for Japanese sovereignty over the Dokdo/Takeshima islets.
North Korean Issues
Since 2009, Washington and Tokyo have been strongly united in their approach to North Korea.
Although the U.S. and Japanese positions diverged in the later years of the Bush Administration,
Pyongyang’s string of provocations in 2009-2010 forged a new consensus among Japan, South
Korea, and the United States. North Korea’s provocations have helped to drive enhanced trilateral
security cooperation between Washington, Tokyo, and Seoul. Japan also appeared to be at least
somewhat in synch with the United States in late 2011 and early 2012 when the Obama
Administration—with the blessing of the South Korean government—was negotiating
agreements with North Korea over its nuclear and missile programs and food aid. North Korea’s
2012 missile launches and the February 2013 nuclear test are likely to drive closer cooperation
among the three governments.
Tokyo has adopted a relatively hardline policy against North Korea and plays a leadership role at
the United Nations in pushing for stronger punishment for the Pyongyang regime for its military
provocations and human rights abuses. 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. 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. Japan has pledged that it will 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 status on the list should be linked to the
abduction issue. Although the abductions issue has lost potency in recent years, Abe came onto
the political scene in the early 2000s as a fierce advocate for the abductees and their families and
could dedicate attention to the issue.

Congressional Research Service
8

---

Japan-U.S. Relations: Issues for Congress

March 2011 “Triple Disaster”
On March 11, 2011, a magnitude 9.0 earthquake jolted a wide swath of Honshu, Japan’s largest
island. The quake, with an epicenter located about 230 miles northeast of Tokyo, generated a
tsunami that pounded Honshu’s northeastern coast, causing widespread destruction in Miyagi,
Iwate, Ibaraki, and Fukushima prefectures. Some 20,000 lives were lost and entire towns were
washed away; over 500,000 homes and other buildings and around 3,600 roads were damaged or
destroyed. Up to half a million Japanese were displaced. Damage to several reactors at the
Fukushima Dai-ichi nuclear power plant complex led the government to declare a state of
emergency and evacuate nearly 80,000 residents within a 20 kilometer radius due to dangerous
radiation levels.
In many respects, Japan’s response to the multifaceted disaster was remarkable. Over 100,000
troops from the Self Defense Forces (SDF), Japan’s military, were deployed quickly to the region.
After rescuing nearly 20,000 individuals in the first week, the troops turned to a humanitarian
relief mission in the displaced communities. Construction of temporary housing began a week
after the quake. Foreign commentators marveled at Japanese citizens’ calm resilience, the lack of
looting, and the orderly response to the strongest earthquake in the nation’s modern history.
Japan’s preparedness—strict building codes, a tsunami warning system that alerted many to seek
higher ground, and years of public drills—likely saved tens of thousands of lives.
Despite this response to the initial event, the uncertainty surrounding the nuclear reactor accident
and the failure to present longer-term reconstruction plans led many to question the government’s
handling of the disasters. As reports mounted about heightened levels of radiation in the air, tap
water, and produce, criticism emerged regarding the lack of clear guidance from political
leadership. Concerns about the government’s excessive dependence on Tokyo Electric Power
Company (TEPCO), the firm that owns and operates the power plant, amplified public skepticism
and elevated criticism about conflicts of interest between regulators and utilities.
Japan’s Nuclear Energy Policy
Japan is undergoing a national debate on the future of nuclear power, with major implications for
businesses operating in Japan, U.S.-Japan nuclear energy cooperation, and nuclear safety and
non-proliferation measures worldwide. Looking back to 2006, the “New National Energy
Strategy” had set out a goal of significantly increasing Japan’s nuclear power generating capacity,
partly as a way to decrease dependence on foreign energy supplies and partly to decrease
emissions of greenhouse gases. By 2011, nuclear power was providing roughly 30% of Japan’s
power generation capacity.
The policy of expanding nuclear power encountered an abrupt reversal in the aftermath of the
March 11, 2011, natural disasters and meltdowns at the Fukushima Daiichi nuclear power plant.
Public trust in the safety of nuclear power collapsed, and a vocal anti-nuclear political movement
emerged. This movement tapped into an undercurrent of anti-nuclear sentiment in modern
Japanese society based on its legacy as the victim of atomic bombing in 1945. As the nation’s 54
nuclear reactors were shut down one by one for their annual safety inspections in the months after
March 2011, the Japanese government did not restart them—except for two reactors at one site in
central Japan.
Congressional Research Service
9

---

Japan-U.S. Relations: Issues for Congress

The drawdown of nuclear power generation resulted in many short- and long-term consequences
for Japan: rising electricity costs for residences and businesses; heightened risk of blackouts in
the summer, especially in the Kansai region; widespread energy conservation efforts by
businesses, government agencies, and ordinary citizens; the possible bankruptcy of major utility
companies; and increased fossil fuel imports (see next section). The Institute of Energy
Economics, Japan, calculated that the nuclear shutdowns led to the loss of 420,000 jobs and $25
billion in corporate revenue in 2012.7
With prominent intellectuals and politicians calling for the end of nuclear power in Japan, the
DPJ attempted to author a long-term energy policy. On September 14, 2012, the sub-Cabinet-
level Energy and Environment Council announced an ambitious plan to eliminate all nuclear
power generation in Japan by 2030. Leading voices in the Japanese business community harshly
criticized the plan and warned of the hollowing out of Japanese industry. One week later, the
Noda Cabinet announced a more flexible “Innovative Strategy for Energy and the Environment,”
which pushed back the deadline for nuclear drawdown to 2040, continued the present nuclear fuel
cycle policy, and allowed the completion of under-construction plants and possible reactor life-
span extensions past 2040. American observers have raised concerns about losing Japan as a
global partner in promoting nuclear safety and non-proliferation measures.
The LDP has promoted a relatively pro-nuclear policy, despite persistent anti-nuclear sentiment
among the public. The LDP party platform for the December 2012 election called for the restart
of nuclear reactors as soon as new safety regulations are implemented and promised to study
Japan’s energy situation thoroughly before developing a national policy. In comments to the Diet
on January 30, 2013, Abe called the DPJ’s zero-nuclear energy policy “groundless.”8 Yet, 48% of
the population does not agree with the Abe Cabinet’s approach to reactor restarts, compared to
46% in favor. The Abe Cabinet faces a complex challenge: how can Japan balance concerns about
energy security, promotion of renewable energy sources, the viability of electric utility
companies, the health of the overall economy, and public concerns about safety?
Exports of Liquefied National Gas (LNG) to Japan
Japan imports more LNG than any other country and would be a large market for potential LNG
exports from the United States. Due to the near-elimination of nuclear power at present, Japan has
become increasingly dependent on fossil fuels for electric power generation (see previous
section). Japan’s LNG imports for the year from April 2012 to March 2013 are expected to reach
90 million metric tons—an 18% increase on the previous 12 months.9 Japanese utility companies
are attracted to the large difference between global market prices for natural gas and the much
lower price prevailing in North America. The lower price is largely a result of the recent
expansion of natural gas production from shale.
The U.S. government must satisfy legal requirements before additional LNG exports from the
continental United States to Japan are permitted (a relatively small amount of natural gas is
currently exported to Japan from Alaska). The 2005 Energy Policy Act requires that the
Department of Energy (DOE) issue a permit to export natural gas to countries with which the

7 Masakazu Toyoda. “Energy Policy in Japan: Challenges after Fukushima,” Institute of Energy Economics, Japan,
presentation prepared for delivery on January 24, 2013.
8 “Abe Aims for Japan to Join Child Custody Pact Soon,” Kyodo News Agency, January 31, 2013.
9 Eric Johnston, “LNG Gains Political Value as Japan’s Needs Soar,” Japan Times, January 3, 2013.
Congressional Research Service
10

---

Japan-U.S. Relations: Issues for Congress

United States does not have a free trade agreement (FTA), including Japan. DOE must also
determine that export to non-FTA countries is in the public interest. A DOE-commissioned study
concluded in December 2012 that LNG exports would produce net economic benefits for the
United States, but the study has been controversial. After the study completes a 45-day public
comment period, DOE will make a decision on 20 pending permits to export LNG to non-FTA
countries. At present only one export terminal in the continental United States, Sabine Pass in
Louisiana, has been approved. That terminal will likely begin export operations in late 2015 or
early 2016.10
Members of Congress have joined the debate on LNG exports to Japan. On January 31, 2013,
Senator John Barrasso introduced a bill (S. 192) “to enhance the energy security of U.S. allies” by
having DOE automatically approve natural gas exports to U.S. treaty allies, regardless of their
FTA status. Senator Lisa Murkowski wrote in a letter to the Secretary of Energy Steven Chu,
“Exporting LNG, particularly to allies that face emergency or chronic shortages, but with whom
we do not have free-trade agreements, is in the public interest.”11 On the other side of the debate,
Senator Ron Wyden, chairman of the Senate Energy and Natural Resources Committee, wrote in
a letter to Secretary Chu, “The shortcomings of the [DOE] study are numerous and render this
study insufficient for the Department to use in any export determination.”12 In February 2012,
Congressman Ed Markey introduced legislation (H.R. 4024) to suspend approval of LNG export
terminals until 2025.
Japanese Participation in Sanctions on Iran
Over the past decade, growing concerns over Iran’s nuclear program have led to increased U.S.
scrutiny of Japan’s longstanding trade with and investments in Iran. Japan is the third-biggest
customer for Iranian oil, and for most of the past decade Iran has been Japan’s third largest source
of crude oil imports, accounting for a little over 10% of the annual total.13 As part of their efforts
to tighten economic penalties on Iran, the Bush and Obama Administrations have pushed Japan to
curtail its economic ties with Tehran. In general, although Japan has been a follower rather than a
leader in the international campaign to pressure Tehran, Japanese leaders have in recent years
increased their cooperation with the U.S.-led effort, reducing significantly what had been a source
of tension between Washington and Tokyo during the 1990s and early 2000s.
Most recently, in September 2012, the Obama Administration granted Japan a second exemption
under P.L. 112-81, the National Defense Authorization Act for Fiscal Year 2012, which could
have placed strict limitations on the U.S. operations of Japanese banks that process transactions
with Iran’s Central Bank.14 Japan has reduced its imports of Iranian oil over the past several

10 Alex Benedetto and Barbara Shook, “Study Pushes US LNG Exports One Step Closer to Reality,” World Gas
Intelligence, December 12, 2012.
11 Geof Koss, “With Eye on Japan, Murkowski Makes Case for Gas Exports,” CQ Roll Call, January 25, 2013.
12 Office of Senator Ron Wyden, “Wyden Highlights Flaws in DOE Export Study,” press release, January 10, 2013,
http://www.wyden.senate.gov/news/press-releases/wyden-highlights-flaws-in-doe-export-study-.
13 Iran data is from Economist Intelligence Unit, Iran Country Report, March 2012. Japan data is a CRS adaptation of
data provided in Japan Statistical Yearbook 2012, Table 10-13, “Imports of Crude Oil by Region and Country.” During
the same time period, Saudi Arabia and the United Arab Emirates, Japan’s two largest oil suppliers, generally
accounted for approximately 29% and 25%, respectively.
14 State Department Press Release, “Statement on Significant Reductions of Iranian Crude Oil Purchases,” March 20,
2012. For more on Iran sanctions, see CRS Report RS20871, Iran Sanctions, by Kenneth Katzman.
Congressional Research Service
11

---

Japan-U.S. Relations: Issues for Congress

years, despite its increased need for oil imports with the shutdown of virtually all of its nuclear
power industry. Japan’s crude oil imports from Iran fell by roughly 40% in 2012, and a further
decline of 15% is projected for 2013.15 Iran’s share of Japan’s oil market has fallen by several
percentage points, to less than 8%, a level not seen since 1988.16 Additionally, Japan has restricted
the activities of 21 Iranian banks.17
New U.S. sanctions that went into effect on February 6, 2013, pressure banks that deal with the
Iranian Central Bank to either prevent repatriation of Iran’s foreign currency (non-rial) assets or
else be frozen out of the U.S. financial system. Iran can still use the funds to finance trading
activities not covered by sanctions, but, since it runs a large trade surplus with Japan (and other
Asian oil importers), a significant portion of its oil export earnings will likely be held in Japan
and other importing countries.18
Japan has taken steps on Iran in the past to cooperate with the United States. Japan announced in
September 2010 that it would impose new restrictions, including a broad ban on investments in
and restrictions on sales to Iran’s energy sector, as well as a freeze on certain assets of Iranian
banks. These steps exceeded the requirements of United Nations Security Council Resolution
1929 that sanctioned Iran. Earlier in the decade, after pressure from the Bush Administration,
Japan’s quasi-governmental INPEX firm dramatically scaled back its involvement in developing
Iran’s Azadegan oilfield. In October 2010, INPEX announced its complete withdrawal from the
project and, as a result, it was granted an exemption from U.S. sanctions under a provision of the
Iran Sanctions Act that was added by a July 2010 law (P.L. 111-195). In addition, several major
Japanese corporations, including Toyota Motors, viewing Iran as a “controversial market,” have
ceased doing business in Iran even though no U.N., U.S., or Japanese government sanctions
would apply to those transactions.
International Child Custody Disputes
The issue of overseas Japanese women in failed marriages taking children to Japan without the
consent of the foreign husband or ex-husband has become an issue in bilateral relations.
Sometimes, these women have acted in contravention of custody settlements and, after arriving in
Japan, have prevented the children from meeting their fathers. In recent years, both Congress and
the executive branch have urged Japan to address the problem, provide access to the children to
the aggrieved parents, and join the 1980 Hague Convention on the Civil Aspects of International
Child Abduction.19
The increased publicity has raised awareness of the issue in Japan, particularly among Diet
members. In March 2012, the Japanese government submitted a bill that would adjust domestic

15 “Corrected: Japan Nov Crude Imports from Iran Fall 20.3 Pct yr/yr—METI,” Reuters News, January 7, 2013.
16 Ministry of Internal Affairs and Communication, Historical Statistics of Japan, “Table 10-12 Imports of Crude Oil
by Region and Country (F.Y.1970-2003),” http://www.stat.go.jp/english/data/chouki/index.htm; “Table 10-13,
“Imports of Crude Oil by Region and Country,” in Statistical Yearbook of Japan, 2008, 2010, and 2012. Ministry of
Economy, Trade, and Industry, “Preliminary Report on Petroleum Statistics February 2012,” http://www.meti.go.jp/
english/statistics/tyo/sekiyuso/index.html.
17 Ministry of Economy, Industry, and Trade Press Release, “Addition of an Entity Subject to Accompanying Measures
Implemented Pursuant to the UN Resolution Against Iran,” March 13, 2012.
18 “Asian Buyers to Deepen Iranian Crude Import Cuts in 2013,” Metis Energy Insider, December 24, 2012.
19 “Abe to tell Obama Japan Will Speed Up Steps to Join Hague Convention,” Kyodo News, January 16, 2013.
Congressional Research Service
12

---

Japan-U.S. Relations: Issues for Congress

law to allow Tokyo to accede to the Convention. However, the Diet did not vote on the bill in
2012 due to reservations in both the opposition and ruling parties and preoccupation with other
legislative issues. The government of Prime Minister Abe in 2013 declared its intent to follow
through on accession to the Hague Convention with the “aim to conclude the treaty early.”
With cases involving approximately 100 American 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 custodial 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.20 Some observers fear that, even if Japan signs the Hague Convention, it is
unlikely to enforce the treaty’s provisions, given the existing family law system.21
U.S. World-War II-Era Prisoners of War (POWs)
For decades, U.S. soldiers who were held captive by Imperial Japan during World War II have
sought official apologies from the Japanese government for their treatment. A number of
Members of Congress have supported these campaigns. The brutal conditions of Japanese POW
camps have been widely documented.22 In May 2009, Japanese Ambassador to the United States
Ichiro Fujisaki attended the last convention of the American Defenders of Bataan and Corregidor
to deliver a cabinet-approved apology for their suffering and abuse. In 2010, with the support and
encouragement of the Obama Administration, the Japanese government financed a
Japanese/American POW Friendship Program for former American POWs and their immediate
family members to visit Japan, receive an apology from the sitting Foreign Minister and other
Japanese Cabinet members, and travel to the sites of their POW camps. Annual trips were held in
2010, 2011, and 2012.23 It is unclear whether the Abe government will continue the program. It is
also unclear if Abe and other LDP politicians’ suggestions that past Japanese apologies should be
reworded or retracted include the apologies to the U.S. POWs.
In the 112th Congress, three resolutions—S.Res. 333, H.Res. 324, and H.Res. 333—were
introduced thanking the government of Japan for its apology and for arranging the visitation
program.24 The resolutions also encouraged the Japanese to do more for the U.S. POWs,

20 U.S. State Department, “Press Availability on International Parental Child Abduction, Kurt M. Campbell, Assistant
Secretary, Bureau of East Asian and Pacific Affairs,” February 2, 2010.
21 Leah Hyslop, “Hope for Parents Denied Access to Children in Japan,” The Telegraph, March 19, 2012.
22 By various estimates, approximately 40% percent held in the Japanese camps died in captivity, compared to 1%-3%
of the U.S. prisoners in Nazi Germany’s POW camps. Thousands more died in transit to the camps, most notoriously in
the 1942 “Bataan Death March,” in which the Imperial Japanese military force-marched almost 80,000 starving, sick,
and injured Filipino and U.S. troops over 60 miles to prison camps in the Philippines. For more, see CRS Report
RL30606, U.S. Prisoners of War and Civilian American Citizens Captured and Interned by Japan in World War II:
The Issue of Compensation by Japan, by Gary Reynolds, currently out of print but available from the co-authors of this
report. Estimates of the death rates in German prison camps for POWs are in the low single digits, compared to rates
near 40% for Imperial Japanese camps.
23 For more on the program, see http://www.us-japandialogueonpows.org/. Since the mid-1990s, Japan has run similar
programs for the POWs of other Allied countries.
24 S.Res. 333 (Feinstein) was introduced and passed by unanimous consent on November 17, 2011. H.Res. 324
(Honda) and H.Res. 333 (Honda) were introduced on June 22, 2011, and June 24, 2011, respectively, and referred to
the House Foreign Affairs Subcommittee on Asia and the Pacific.
Congressional Research Service
13

---

Japan-U.S. Relations: Issues for Congress

including by continuing and expanding the visitation programs as well as its World War II
education efforts. They also called for Japanese companies to apologize for their or their
predecessor firms’ use of un- or inadequately compensated forced prison laborers during the war.
Alliance Issues25
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 enhance
bilateral defense cooperation, a rocky start by the Democratic Party of Japan (DPJ) government
generated concern about the future of the alliance. The coordinated response to the March 2011
disaster by the U.S. and Japanese militaries made a strong statement about the strength and the
value of the bilateral alliance, and commitment from top U.S. leadership to assist the nation in its
recovery may have assuaged fears that the alliance was adrift after a series of public
disagreements. On the other hand, the crisis response did little to change the fundamental
challenges of the thorny base relocation issue in Okinawa. Although the governments have now
amended the plan to allow several thousand marines to depart Okinawa in order to ease local
frustrations, fundamental questions about the existence of problematic military facilities and the
political sustainability of the Marine Corps presence on the island remain.
Futenma Base Relocation Controversy26
A prominent controversy over the relocation of a Marine Corps base in Okinawa has consumed
the alliance for years. While a comprehensive resolution remains elusive, the two governments
have adjusted the plan in a way that removes the issue from the center of the security relationship.
The 2006 agreement between the U.S. and Japanese governments to relocate the Futenma Marine
Corps Air Station from its current location in crowded Ginowan City to Camp Schwab, in a less
congested part of the island, was envisioned as the centerpiece of a planned realignment of U.S.
forces in Japan.27 Under the original agreement, the United States would redeploy 8,000 marines
and their dependents from Okinawa to Guam in exchange for progress on constructing the new
Marine Corps facility at Camp Schwab, located offshore of the Henoko area of Nago City.
Problematic from the start, the base relocation developed into a major point of contention
between Tokyo and Washington after Yukio Hatoyama became Prime Minister in 2009;
Hatoyama had promised Okinawans during his election campaign that he would oppose the
relocation. Although Hatoyama and his DPJ successors all eventually endorsed the plan, local
opposition and management missteps by Tokyo appeared to render the plan unworkable.

25 For more information on the U.S.-Japan alliance, see CRS Report RL33740, The U.S.-Japan Alliance, by Emma
Chanlett-Avery.
26 For more information, see CRS Report R42645, The U.S. Military Presence in Okinawa and the Futenma Base
Controversy, by Emma Chanlett-Avery and Ian E. Rinehart.
27 Per the agreement, the redeployment of roughly half of the III Marine Expeditionary Force (III MEF) to new
facilities in Guam would lead to the return of thousands of acres of land to Japan. Japan agreed to pay around 60% of
the $10.3 billion estimated costs. After years of negotiations, U.S. and Japanese officials settled on Camp Schwab
because of its location in Henoko, a far less congested area of Okinawa.
Congressional Research Service
14

---

Japan-U.S. Relations: Issues for Congress

To remove impediments to the realignment of U.S. forces, the United States and Japan changed
their agreement in April 2012 by “de-linking” the transfer of marines off Okinawa with progress
on the new base in Henoko. In order to ease the burden on Okinawan residents, about 9,000
marines and their dependents would be transferred to locations outside of Japan: to Guam,
Hawaii, on a rotational basis to Australia, and perhaps elsewhere. Alliance officials described the
move as in line with their goal of making U.S. force posture in Asia “more geographically
distributed, operationally resilient, and politically sustainable.”28
After the announcement, Senators Carl Levin, John McCain, and Jim Webb, who had together
criticized the realignment plan as “unrealistic, unworkable, and unaffordable,”29 and wrote in a
letter to Defense Secretary Leon Panetta, “No new basing proposal can be considered final until it
has the support of Congress.”30 Concern about the ballooning costs of the Guam construction and
uncertainty about the future U.S. force posture in the Asia-Pacific region drove Congress to zero
out the Administration’s request for related military construction funding in the FY2012 and
FY2013 National Defense Authorization Acts, P.L. 112-81 and P.L. 112-239. The Acts prohibit
authorized funds, as well as funds provided by the Japanese government for military construction,
from being obligated to implement the planned realignment of Marine Corps forces from
Okinawa to Guam until certain justifications and assessments are provided.
Significant obstacles remain in Japan as well. Public opposition has hardened considerably in
Okinawa, with all the major political figures involved in the new base construction process
declaring opposition to the plan. The deployment of the MV-22 Osprey tilt-rotor aircraft to the
Futenma base in summer 2012 heightened safety concerns of nearby residents, and a string of
crimes committed by U.S. servicemembers in late 2012 further inflamed local resentments. The
fundamental problem of hosting foreign troops on a crowded urban landscape and the sense of
grievance that the Okinawans in particular have harbored for decades seems unlikely to fade. The
current controversy reflects a fundamental tension in the relationship between Okinawa and the
central government in Tokyo: while the entire country reaps the benefits of the U.S. security
guarantee, Okinawans bear a disproportionate burden. The April 2012 announcement that the
U.S. and Japanese governments will undertake long-deferred repairs on Futenma raised
suspicions that the base will remain indefinitely.
Progress on Other Elements of Military Realignment and Alliance
Transformation
The relocation of Futenma air station is the largest and most controversial part of a broad
overhaul of U.S. force posture in Japan and bilateral military activities, but it is not the only
element. In 2002, the U.S. and Japanese governments launched the Defense Policy Review
Initiative (DPRI) to review force posture and develop a common security view between the two
sides. With the exception of the Henoko relocation, the plan has been largely successful. A

28 “Joint Statement of the Security Consultative Committee,” State Department Media Note, April 26, 2012,
http://www.state.gov/r/pa/prs/ps/2012/04/188586.htm.
29 “Senators Levin, McCain, Webb Call for Examination of Military Basing Plans in East Asia,” Press Release from
Senator McCain’s office, May 11, 2011, http://www.mccain.senate.gov/public/index.cfm?FuseAction=
PressOffice.PressReleases&ContentRecord_id=e00453cd-c883-65d2-f9c3-489463b38af1.
30 “Senators Levin, McCain and Webb Express Concern to Secretary Panetta Regarding Asia-Pacific Basing Tuesday,”
Press Release from Senator Levin’s office, April 24, 2012, http://www.levin.senate.gov/newsroom/press/release/
senators-levin-mccain-and-webb-express-concern-to-secretary-panetta-regarding-asia-pacific-basing/?section=alltypes.
Congressional Research Service
15

---

Japan-U.S. Relations: Issues for Congress

training relocation program allows U.S. aircraft to conduct training away from crowded base
areas to reduce noise pollution for local residents. U.S. Carrier Air Wing Five is being relocated
from Atsugi Naval Air base to the Iwakuni base, where a new dual-use airfield is operational. In
2010, U.S. Army Japan established at Camp Zama (about 25 miles southwest of Tokyo) a forward
operational headquarters, which can act as a bilateral joint headquarters to take command of
theater operations in the event of a contingency. The SDF Air Defense Command facility at
Yokota U.S. Air Base was recently completed. Since 2006, a bilateral joint operations center at
Yokota allows for data-sharing and coordination between the Japanese and U.S. air and missile
defense command elements. In June 2011, Japan announced a long-sought agreement to allow the
transfer of jointly developed missile components to third parties, representing an exception to
Japan’s ban on arms exports.
Deployment of the MV-22 Osprey Aircraft to Japan
The U.S. Marine Corps is replacing the 24 CH-46E “Sea Knight” helicopters stationed at the
Futenma base with 24 MV-22 “Osprey” tilt-rotor aircraft. The deployment of the first 12 Osprey
aircraft to Japan in mid-2012 created a public outcry in Okinawa and mainland base-hosting
communities. Japanese politicians and civil society groups strongly opposed introduction of MV-
22 to Japan due to the aircraft’s safety record.31 The crashes of V-22 tilt-rotor aircraft in training
exercises in Morocco and Florida in early 2012 reminded Okinawans of the U.S. military
helicopter crash on the grounds of a school near Futenma Air Station in August 2004. In response
to these concerns, the Japanese Ministry of Defense conducted its own investigation of the
aircraft’s safety. The investigation cleared the MV-22 for deployment, but Japan requested that
Osprey pilots adhere to a set of operational guidelines to reduce the risk of accidents in populated
areas. Intense public scrutiny of the aircraft’s safety record may be connected to widespread
distrust of the government stemming from the nuclear disaster at the Fukushima Daichi reactors.
The introduction of these advanced aircraft to Okinawa reportedly will enhance the operational
capability of the Marines based there, particularly in a rapid response scenario.
March 2011 Earthquake and Tsunami: U.S.-Japan Alliance
Performance
Appreciation for the alliance surged after the two militaries worked effectively together to
respond to the 2011 earthquake and tsunami. Years of joint training and many interoperable assets
facilitated the integrated alliance effort. “Operation Tomodachi,” using the Japanese word for
“friend,” was the first time that SDF helicopters used U.S. aircraft carriers to respond to a crisis.
The USS Ronald Reagan aircraft carrier provided a platform for air operations as well as a
refueling base for Japanese SDF and Coast Guard helicopters. Other U.S. vessels transported SDF
troops and equipment to the disaster-stricken areas. Communication between the allied forces
functioned effectively, according to military observers. For the first time, U.S. military units
operated under Japanese command in actual operations. Specifically dedicated liaison officers
helped to smooth communication. Although the U.S. military played a critical role, the Americans
were careful to emphasize that the Japanese authorities were in the lead.

31 During its development phase, the Osprey suffered several highly publicized crashes. Since the aircraft achieved
initial operational capability in 2007, the Class-A mishap rate is slightly better than the Marine Corps average. See the
CRS Report RL31384, V-22 Osprey Tilt-Rotor Aircraft Program, by Jeremiah Gertler for more information.
Congressional Research Service
16

---

Japan-U.S. Relations: Issues for Congress

The successful bilateral effort held several important consequences. First, it reinforced alliance
solidarity after a somewhat difficult period of public disagreement over the Futenma base issue. It
was also very well-received by the Japanese public, leading to exceptionally high approval ratings
of both the SDF performance and the U.S. relief efforts. The operation demonstrated to others the
capability of the alliance. It also illuminated challenges that the two militaries might face if
responding to a contingency in the defense of Japan in which an adversary were involved,
including having more secure means of communication as multiple agencies and services
mobilized resources.32
Constitutional Constraints
Several legal factors restrict Japan’s ability to cooperate more robustly with the United States.
The most prominent and fundamental restriction is Article 9 of the Japanese constitution, drafted
by American officials during the post-war occupation, that outlaws war as a “sovereign right” of
Japan and prohibits “the right of belligerency.” It stipulates that “land, sea, and air forces, as well
as other war potential will never be maintained.” However, Japan has interpreted this clause to
mean that it can maintain a military for national defense purposes and, since 1991, has allowed
the SDF to participate in non-combat roles overseas in a number of U.N. peacekeeping missions
and in the U.S.-led coalition in Iraq.
The principle of “collective self-defense” is also considered an obstacle to close defense
cooperation. The term comes from Article 51 of the United Nations Charter, which provides that
member nations may exercise the rights of both individual and collective self-defense if an armed
attack occurs. The Japanese government maintains that Japan has the sovereign right to engage in
collective self-defense, but a 1960 decision by the Cabinet Legislation Bureau interpreted the
constitution to forbid collective actions because they would exceed the minimum necessary use of
force to defend Japan itself. Participation in non-combat logistical operations and rear area
support of other nations, however, has been considered outside the realm of collective self-
defense. Prime Minister Abe has repeatedly proposed that this restriction be reconsidered, a move
that has been welcomed by U.S. officials in the past.
During the deployment of Japanese forces to Iraq, the interpretation prevented the SDF from
defending other nations’ troops. Some Japanese critics have charged that Japanese Aegis
destroyers should not use their radar in the vicinity of American warships, as they would not be
allowed to respond to an incoming attack on those vessels. As the United States and Japan
increasingly integrate missile defense operation, the ban on collective self-defense also raises
questions about how Japanese commanders will gauge whether American forces or Japan itself is
being targeted. Under the current interpretation, Japanese forces could not respond if the United
States were attacked.
Burden-Sharing Issues
In December 2010, Japan agreed to continue Host Nation Support (HNS), the funds provided to
contribute to the cost of stationing U.S. troops in Japan, at current levels for the next five years,
starting in FY2011. The agreement came as a compromise, as the government of then-Prime

32 See “Partnership for Recovery and a Stronger Future; Standing with Japan after 3-11,” http://csis.org/files/
publication/111026_Green_PartnershipforRecovery_Web.pdf.
Congressional Research Service
17

---

Japan-U.S. Relations: Issues for Congress

Minister Naoto Kan had been pressured to cut Japan’s contribution due to Japan’s ailing fiscal
health. 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 188 billion yen annually (about
$2.2 billion at 82 yen to one USD) through FY2016 to defray the costs of stationing troops in
Japan. The agreement also commits to reducing the number of Japanese nationals working for the
U.S. military and affirms that the proportion of utility costs paid by the Japanese government will
fall from 76% to 72% over a five-year period.
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 defensive-
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.
Japan’s Counter-Piracy Mission in the Gulf of Aden
Japan’s military, known as the Self-Defense Force (SDF), has been engaged in counter-piracy
activities in the Gulf of Aden since March 2009. Approximately 400 personnel are stationed in
Djibouti and currently housed in Camp Lemonier, the large U.S. military base located close to
Djibouti’s airport. In April 2010, the Japanese government announced plans to build its own $40
million facility in Djibouti, effectively establishing an overseas base for its military. Although this
would be Japan’s first foreign base since World War II, the move has sparked little controversy
among the generally pacifist Japanese public.
Congressional Research Service
18

---

Japan-U.S. Relations: Issues for Congress

Figure 2. Map of U.S. Military Facilities in Japan

Source: Map Resources. Adapted by CRS.
Economic Issues33
Trade and other economic ties with Japan remain highly important to U.S. national interests and,
therefore, to the U.S. Congress.34 By the most conventional method of measurement, the United
States and Japan are the world’s largest and third-largest economies (China is number two),
accounting for around 30% of the world’s gross domestic product (GDP) in 2012. Furthermore,
their economies are intertwined by trade in goods and services and by foreign investments.

33 This section was written by William Cooper.
34 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.
Congressional Research Service
19

---

Japan-U.S. Relations: Issues for Congress

Overview of the Bilateral Economic Relationship
Japan is an important economic partner of the United States, but its importance has slid as it has
been edged out by other 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 China, Canada, and Mexico) at the end of 2012. These numbers probably
underestimate the importance of Japan in U.S. trade since Japan exports intermediate goods to
China that are then used to manufacture finished goods that China exports to the United States.
The United States was Japan’s second-largest export market and second-largest source of imports
as of the end of 2012. The global economic downturn had a significant impact on U.S.-Japan
trade: both exports and imports declined in 2009 from 2008. U.S.-Japan bilateral trade has
increased since 2009 reflecting the recovery, albeit weak, from the economic downturn. (See
Table 1.)
Table 1. U.S. Merchandise 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
2010 60.5
120.3
-59.8
2011 66.2
128.8
-62.2
2012 70.0
146.4
-76.3
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 have contributed to this trend:
• Japan’s slow, if not stagnant, economic growth, which began with the burst of the asset
bubble in the latter half of the 1990s and continued as a result of the 2008-2009 economic
downturn and the 2011 disasters, has changed the general U.S. perception of Japan from
one as an economic competitor to one as a “humbled” economic power;
• the rise of China as an economic power and trade partner has caused U.S. policymakers
to shift attention from Japan to China as a source of concern;
Congressional Research Service
20

---

Japan-U.S. Relations: Issues for Congress

• the increased use by both Japan and the United States of the WTO as a forum for
resolving trade disputes has de-politicized disputes and helped to reduce friction;
• shifts in U.S. and Japanese trade strategies that have expanded the formation of bilateral
and regional trade areas with other countries has lessened the focus on their bilateral ties;
and
• the rise of China as a military power and the continued threat of North Korea have forced
U.S. and Japanese leaders to give more weight to security issues within the bilateral
alliance.
Japan was hit by two economic crises in the last few years that affected U.S.-Japan economic
relations. The first was the global financial crisis which began to hit in 2008 and intensified in
2009. Japan was hit hard by the decline in global demand for its exports, particularly in the
United States and Europe. Japan had become dependent on net export growth as the engine for
overall GDP growth, as domestic consumer demand and investment lagged.
The second crisis was the March 11, 2011, earthquake, tsunami, and nuclear accidents in
northeast Japan. (See section on the March 2011 “Triple Disaster.”) The Japanese government has
responded with a series of four supplemental fiscal packages to finance reconstruction. The
implementation of the reconstruction efforts has been slower than expected, dampening the
stimulus effect on economic growth. In addition the country has had to cope with electricity
shortages and search for alternative sources of power, including increased fossil fuel imports.
The two crises and the economic problems in Europe, among other factors, have adversely
affected Japan’s economic growth. Japan incurred growth rates of -1.1% in 2008 and -5.5% in
2009 but recovered in 2010 to expand by 4.7%. That recovery proved short-lived as Japan
experienced -0.5% growth in 2011 and an estimated 1.8% in 2012. The Economist Intelligence
Unit forecasts weak economic growth in Japan for the next few years.35
Prime Minister Abe has made it a priority of his administration to grow the economy and to
eliminate deflation, which has plagued Japan for many years. On assuming power, Abe’s
government announced a $122 billion stimulus package aimed at spending on infrastructure,
particularly in areas affected by the March 2011 disasters. While the package is expected to boost
growth somewhat, it will also add to Japan’s already large public debt.36 In addition, the
ostensibly independent Bank of Japan (Japan’s central bank) announced a continued loose
monetary policy with interest rates of 0% , quantitative easing measures, and a target inflation
rate of 2%.37
A likely by-product of these measures will be weakening of the yen. For the past five years, the
yen had exhibited unprecedented strength in terms of the dollar. In January 2007 the yen’s
average value was ¥120.46=$1 during the month, but after rapid appreciation, it reached as high
as ¥76.65=$1 in October 2011. Since that time, it has depreciated somewhat to ¥89.10=$1 in
January 2013. The relatively strong yen was a result of investors seeking a safe haven from
financial turmoil in the Eurozone and of carry-trading (investors borrowing in currencies with

35 Economist Intelligence Unit, Country Report: Japan, February 2013, p. 34.
36 Ibid., p.25.
37 Ibid., p.27.
Congressional Research Service
21

---

Japan-U.S. Relations: Issues for Congress

low interest rates and lending in high interest rates profiting from the difference). The strong yen
made Japanese exports more expensive and imports less expensive causing Japan to experience
trade deficits for the first time in many years. Some governments have already charged that
Japan’s monetary actions will spark a currency war because other countries will try to counter the
trade effects of a weaker yen.38
Bilateral Trade Issues
Japan’s Ban on U.S. Beef39
On February 1, 2013, the Japanese government loosened its restrictions on beef imports from the
United States to allow beef from cattle 30 months or younger for the first time since December
2003. According to a joint press release from the Office of the United States Trade Representative
and the Department of Agriculture, the Japanese government’s Food Safety Commission would
continue to monitor shipments of U.S. beef and would consider the possibility of allowing U.S.
beef from cattle of any age to be imported into Japan. These steps would appear to provide the
opportunity for growth in U.S. beef imports to Japan and to resolve an issue that had been a major
irritant in the bilateral trade relationship.
The issue arose in December 2003 when 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. 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 Mike Johanns expressed regret that the prohibited material had
entered the shipments.
Japan and the Trans-Pacific Partnership Agreement (TPP)
The TPP is an evolving regional free trade agreement (FTA). Originally formed as an FTA among
Singapore, New Zealand, Chile, and Brunei (who were known as the P-4), the TPP is now an
agreement under negotiation among the original four countries plus the United States, Australia,
Canada, Mexico, Peru, Malaysia, and Vietnam. The TPP partners have conducted 15 rounds of
negotiations, and the next round is scheduled to take place in May 2013 in Singapore. The
negotiators envision a comprehensive arrangement to liberalize a broad range of trade and trade-

38 Ferguson, Niall, “Global Currency Wars Are Best Fought on the Quiet,” Financial Times, January 26-27, 2013, p.7.
39 For more information, see CRS Report RS21709, Mad Cow Disease and U.S. Beef Trade, by Charles E. Hanrahan
and Geoffrey S. Becker.
Congressional Research Service
22

---

Japan-U.S. Relations: Issues for Congress

related activities. But they also envision the TPP to be a “21st century” framework for conducting
trade within the Asia-Pacific region and, therefore, addressing cross-cutting issues that are
relevant now and will be in the future. These issues include regulatory coherence;
competitiveness and business facilitation, also known as transnational supply and production
chains; issues pertaining to small and medium-sized companies; economic development; and the
operations of state-owned enterprises. Therefore, while the TPP countries negotiate the
agreement, they expect that other economies in the region will seek to join in those negotiations
or will accede to the agreement after it has been concluded.
As the second largest East Asian economy and a crucial link in the Asian production networks,
Japan would be a strategically and economically important candidate. Japan’s participation in the
TPP was, and continues to be, the subject of debate within Japan’s political leadership and among
other stakeholders.
The bilateral consultations with Japan on its possible participation in the TPP negotiations have
been ongoing. However, the possibility of the United States and Japan participating in an FTA has
refocused attention on and raised concerns about long-standing, deep-seated, and difficult issues.
For example, U.S. auto manufacturers have argued for many years that the Japanese market is
inhospitable to imports of cars made by the big three Detroit-based auto manufacturers. The
manufacturers cite, in particular, Japanese tax regimes and safety regulations that discriminate
against imported vehicles.40
U.S. insurance providers have asserted that they are at a competitive disadvantage vis-á-vis the
insurance subsidiary of Japan Post, the government-owned postal system, in marketing some
types of insurance (see below). Industry representatives and some Members of Congress have
stated that the United States should not welcome Japan into the TPP unless Japan deals with the
issues satisfactorily. However, U.S. companies in other sectors, such as agriculture, see TPP as an
opportunity to improve their access to the large Japanese market and, at the same time, create a
more significant agreement with Japan’s entrance.
Even before resolving issues with the United States and the other TPP partners, Japan must
resolve its internal political debate on whether to enter the TPP negotiations. For years, opposition
to the TPP from a vocal agricultural sector and political paralysis prevented the DPJ from
reaching a final agreement on whether to participate in the TPP negotiations. Similar
considerations affect the LDP. The LDP, which is heavily reliant upon support from agricultural
interests, has said it is opposed to entering the agreement if it does not allow for some
exemptions. Many observers believe that Prime Minister Abe personally would like Japan to join
the talks. However, he is unlikely to try to do so before Japan’s Upper House elections in July
2013. A decision to push for TPP participation would likely galvanize the TPP’s well-organized
opponents in Japan and split the LDP, leading to its defeat in the election. Yet, if Japan does not
join negotiations soon, it could lose its chance to influence the terms of the agreement. The 11
TPP countries have announced their intention to complete a final agreement text by October
2013.

40 The Center for Automotive Research produced a study sponsored by Ford Motor Co. that suggests that including
Japan in the TPP would lead to the loss of three million U.S. jobs. Center for Automotive Research, The Effects a U.S.
Free Trade Agreement Would Have on the U.S. Automotive Industry, August 21, 2012.
Congressional Research Service
23

---

Japan-U.S. Relations: Issues for Congress

While considering participation in the TPP, Japan is pursuing or considering other regional trade
arrangements. On November 20, 2012, Japanese, Chinese, and South Korean trade ministers
announced the launching of negotiations on a trilateral FTA. The negotiations are to begin in
early 2013. The scope of the possible agreement remains undefined but would likely not match
the ambition of the TPP. Market access for agricultural products will likely be a point of
contention as the small but vocal agriculture interests in South Korea and Japan confront the
possibility of increased rice imports from China under an FTA arrangement.41
In addition, Japan, along with the 10 members of the Association of Southeast Asian Nations
(ASEAN), China, South Korea, Australia, New Zealand, and India, announced on November 20,
2012, their intention to begin negotiations to form a trade arrangement—the Regional
Comprehensive Economic Partnership (RCEP). While not ostensibly in conflict with the TPP,
some have suggested the RCEP could be a less ambitious alternative to the more comprehensive
TPP. While RCEP would include some TPP partners, it is noteworthy for the absence of the
United States and the inclusion of China.42
Insurance
Japan is the world’s second largest insurance market, next to the United States. U.S.-based
insurance providers have found it difficult to access the Japanese market especially in life and
annuity insurance. They have been concerned about favorable regulatory treatment that the
government gives to the insurance subsidiary of Japan Post, the national postal system that holds
a large share of this market. For example, they cite subsidies to the insurance operations from
revenues from other Japan Post operations. Also, Japan Post-owned insurance companies are not
subject to the same regulations as other, privately-owned insurance providers, both domestic and
foreign-owned. On October 1, 2007, the government of then-Prime Minister Junichiro Koizumi
introduced reforms as part of a privatization process. However, the successor government, led by
the Democratic Party of Japan (DPJ), took steps to roll back the reforms. On April 27, 2012, the
Diet passed legislation that appears to loosen regulatory requirements, according to U.S. industry
sources.43 The bill is reportedly a compromise package by the lawmakers from the DPJ, the LDP,
and the Komeito Party.44 The United States is also concerned about insurance sold by
cooperatives that, they claim, are regulated more leniently than private firms. The United States
considers Japan’s treatment insurance to be a confidence-building measure that must be addressed
if Japan is to be considered for participation in the TPP.
“Zeroing”
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. 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

41 International Trade Reporter, May 31, 2012.
42 See, for example, Pakpahan, Beginda, “Will RCEP Compete with the TPP?” EastAsiaForum,
http://www.eastasiaforum.org.
43 Inside U.S. Trade, April 27, 2012.
44 World Trade Online, April 5, 2012.
Congressional Research Service
24

---

Japan-U.S. Relations: Issues for Congress

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.45 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.46 On May 5, 2010, Japan asked the
WTO to proceed with determining if Japan can impose the sanctions. However, the United States
and Japan decided to try to resolve the issue informally and requested that the WTO arbitration
panel suspend its work until September 8, 2011, at which time the suspension would terminate
and the panel would proceed.47 Japan subsequently announced that it would postpone reactivation
of the proceeding until November 7.48 On February 6, 2012, the Office of the USTR announced
that the United States had reached an agreement with Japan whereby the United States would end
the use of zeroing in its antidumping duty calculations and would also recalculate antidumping
duty margins in certain cases involving Japanese imports. Japan would withdraw its request for
permission to impose sanctions against the United States. A similar agreement was reached with
the European Union.
The Doha Development Agenda
Japan and the United States had been major supporters of the Doha Development Agenda (DDA),
the latest round of negotiations in the WTO. Yet, the two countries had taken divergent positions
in some critical areas of the agenda. For example, the United States, Australia, and other major
agricultural exporting countries 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
to determine how much they would liberalize their agricultural markets and reduce agricultural
subsides. Negotiators met from time to time to try to resuscitate the talks. However, Lamy’s
attempt to hold a ministerial meeting in December 2008 failed when the major parties to the
negotiators could not resolve their differences, and the DDA negotiations have been dormant
since. Japan and the United States are among the countries exploring other options, such as a
plurilateral services agreement, expansion of the information technology agreement, and
improvement in trade facilitation.


45 International Trade Reporter, January 17, 2008.
46 International Trade Reporter, July 23, 2009.
47 International Trade Daily, December 16, 2010.
48 Inside U.S. Trade, September 16, 2011.
Congressional Research Service
25

---

Japan-U.S. Relations: Issues for Congress

Japanese Politics49
The December 2012 Elections: A Landslide Without a Mandate for the LDP
Since 2007, Japanese politics has been plagued by instability. Six men have been prime minister,
including the current occupant of the post, Shinzo Abe (born in 1954), who was also prime
minister for a twelve-month period from 2006-2007. The LDP’s dominant victory in the
December 2012 Lower House elections swept the party back into power. However, in the view of
most observers—and even many in the LDP—the results were more attributable to voters’ desire
to eject the Democratic Party of Japan (DPJ) from power rather than enthusiasm for the LDP or
its policy proposals.50 Indeed, by some measures, the LDP garnered less support than in the last
Lower House election, in 2009. Nonetheless, it was able to secure a commanding number of seats
because of one of the lowest turnouts (59%) in the post-World War II era and the splitting of the
anti-LDP vote among the DPJ and a number of new or relatively new parties.
In two ways, the December elections are likely to partially break some of the logjams that for
more than half a decade have paralyzed Japan’s political system and have complicated U.S.-Japan
coordination on a number of issues. First, since 2007, no party has controlled both the Lower and
Upper Houses of the Diet for more than a few months. Currently, the LDP and its coalition
partner, New Komeito, together form the largest bloc in the Upper House, which will make it
easier for the Abe government to pass legislation than its recent predecessors. Second, the two
parties won enough seats in December to form a “super majority” (i.e. two-thirds) in the Lower
House, so that even if they cannot secure an Upper House majority, they could override the Upper
House’s actions and pass legislation.

49 This section was written by Mark Manyin and Emma Chanlett-Avery. For more, see CRS Report R40758, Japan’s
Historic 2009 Elections: Implications for U.S. Interests, by Weston S. Konishi.
50 On the night of the election, for instance, Abe said of his party’s victory, “it’s not because the LDP regained full
public confidence. It’s the public judgment to put an end to political confusion and stalemate resulting from the three
years of the DPJ’s improper political leadership.” NHK press conference, as reported by U.S. Embassy Tokyo, Japan
Media Analysis Afternoon Edition, December 17, 2012.
Congressional Research Service
26

---

Japan-U.S. Relations: Issues for Congress

Figure 3. Party Affiliation in Japan’s Lower House of Parliament
The LDP and its partner, New Komeito, control the Lower House, which elects the Prime Minister

Source: Kyodo News, December 26, 2012.
Figure 4. Party Affiliation in Japan’s Upper House of Parliament
The LDP-New Komeito coalition, with smaller parties, control the Upper House

Source: Kyodo News, December 26, 2012.

Abe’s Priorities
During and since the election campaign, Abe has spoken of building a “new Japan.” He has
placed primary emphasis on economic recovery, particularly fighting what he describes as
deflationary tendencies, an over-valued yen, and delayed reconstruction of areas affected by the
triple disasters of March 2011.51 Abe has also revived many of the security-oriented themes of his
first stint in office, when he upgraded the Japan Defense Agency into a full-fledged ministry and
spoke of loosening or abandoning the legal and political restrictions on the operations of Japanese

51 Prime Minister’s Office, “New Year’s Reflection by Prime Minister Shinzo Abe,” January 1, 2013.
Congressional Research Service
27

---

Japan-U.S. Relations: Issues for Congress

military forces. He has revived the latter goal and has pledged to increase Japanese defense
spending for the first time in a decade. Notably, however, Abe has presented national security as
secondary to economic revitalization. In contrast, Abe’s fall from power in 2007 was in part
attributable to his tendency to downplay economic and social welfare issues at the expense of his
security policy priorities. At the time, the opposition Democratic Party of Japan (DPJ) was able to
take advantage of this, which contributed to perceptions that his Cabinet was incompetent and
allowed the DPJ to wrest control of the Diet’s Upper House from the LDP in 2007 elections.
Shortly thereafter, Abe suddenly resigned. One difference between now and then is that the
Japanese polity, especially the LDP and its supporters, appear more willing to support tough
positions on national security, in part due to a widely held sentiment that China, Russia, and
South Korea have been asserting themselves at Japan’s expense.
Abe’s main electoral priority will be ensuring that the LDP and its coalition partner, the New
Komeito party, do well in the July 2013 elections for half of the seats of Japan’s Upper House.
Because these elections will be pivotal—if the LDP loses seats, the Diet once again could become
divided—many analysts believe Abe is unlikely to take steps in the next seven months that are
politically controversial, such as joining the Trans-Pacific Partnership or loosening Japan’s ban on
participating in “collective self-defense,” that is, combat cooperation in defense of another
country. Two key developments to watch are whether the July elections weaken or deepen the
LDP’s reliance on New Komeito and, relatedly, the extent to which New Komeito leaders assert
themselves in various policy issues. Specifically, New Komeito opposes efforts to weaken or do
away with Japan’s collective self-defense ban. In practice, however, New Komeito leaders often
have placed a greater priority on maintaining their coalition with the LDP than upholding the
party’s principals in many matters of national security.
In 2007, Abe cited his poor health as one reason for his abrupt resignation. Days after he stepped
down he was hospitalized for what was later revealed to be ulcerative colitis, a chronic and
episodic form of inflammatory bowel disease in which ulcers and sores in the colon can cause
pain and other symptoms. Stress can trigger flareups, and Abe’s symptoms reportedly became
nearly unbearable in the weeks after he led the LDP to its 2007 Upper House defeat. Abe
reportedly says that the disease is now under control thanks to medication that was not available
in Japan until 2009.52
The DPJ and Alternative Political Forces
The DPJ appears to have been thrown into a state of disarray by the magnitude of its December
2012 defeat, which saw a number of prominent DPJ leaders lose their seats. In the days following
the election, the remnants of the former ruling party chose Banri Kaeda as their leader. Although
the DPJ is Japan’s second-largest party, as of early 2013 the prevailing narrative is such that its
actual power appears less than its numerical strength. Formed in the late 1990s by an
amalgamation of former conservative and progressive politicians, the party continues to be riven
by divisions among its more hawkish and dovish factions. It remains to be seen whether some of
the DPJ’s advocates for a tougher security stance will break with the other members of their party
and support some of Prime Minister Abe’s security initiatives.

52 Alexander Martin, “Japan’s New Leader Says Recovered From Illness,” The Wall Street Journal Online, December
16, 2012.
Congressional Research Service
28

---

Japan-U.S. Relations: Issues for Congress

Over the past twenty years, growing frustration with Japan’s political status quo has periodically
given rise to small-to-moderate protest movements. One such wave resulted in the defeat of the
LDP in the 2009 Lower House elections, ushering in the DPJ’s three-year reign. Many Japanese
have embraced alternative leaders such as Osaka mayor Toru Hashimoto, who since mid-2011 has
captured national attention as the de facto leader of a populist deregulatory and decentralization
movement. Together with former Tokyo mayor Shintaro Ishihara, Hashimoto formed the Japan
Restoration Party (JRP, also known as Ishin No Kai) in the fall of 2012 and captured enough seats
to almost overtake the DPJ as the leading opposition party. Both Hashimoto and Ishihara are
known to support nationalist positions on matters of security and history, and thus could perhaps
be natural ad hoc allies for Abe on these issues.
Structural Rigidities in Japan’s Political System
The turmoil of the past six years at the top of the political structure has compounded Japan’s
political peculiarities. Compared to most industrialized democracies, the Japanese parliament is
structurally weak, as is the office of the prime minister and his cabinet. Though former Prime
Minister Junichiro Koizumi (who served from 2001 to 2006) and his immediate predecessors
increased politicians’ influence relative to bureaucrats’, with important exceptions Japan’s
policymaking process tends to be compartmentalized and bureaucratized, making it difficult to
make trade-offs among competing constituencies on divisive issues. The result is often paralysis
or incremental changes at the margins of policy, particularly during periods of weak premierships
such as the one Japan has experienced in recent years.
Five of the past six prime ministers have confronted a major structural challenge: overcoming a
divided parliament. Japan’s Diet, as its legislature is called, is divided into two chambers, the
Lower House and the Upper House. Although the Lower House is the more powerful—among
other powers, it chooses the Prime Minister—in reality, it is numerically and politically difficult
for it to exert its will over the Upper House. For decades after World War II, the Upper House’s
effective veto was not an issue because one party, the Liberal Democratic Party (LDP), controlled
both chambers. However, in recent years, the Diet’s two chambers have been controlled by
different parties. From 2007-2009, the LDP was ascendant in the Lower House (and therefore the
ruling party), with the DPJ in control of the Upper House. From mid-2010 until the December
2012 elections, the reverse was true. Both times, the party in control of the Upper House has
blocked most of the ruling party’s bills, in an attempt to force the prime minister to hold early
elections. As discussed above, for this reason, a major priority for the Abe government will be
ensuring that the LDP does well in the July 2013 Upper House elections.
Japan’s Demographic Challenge
Japan’s combination of a low birth rate, strict immigration practices, and a rapidly aging
population presents 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 population
size. Japan’s current population of 127 million is projected to fall to about 95 million by mid-
century. Concerns about a huge shortfall in the labor force have grown, particularly as the elderly
demand more care. The ratio of working age persons to retirees is projected to fall from 5:2 at
present to 3:2 in 2040, reducing the resources available to pay for the government social safety
Congressional Research Service
29

---

Japan-U.S. Relations: Issues for Congress

net.53 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.
Selected Legislation
112th Congress
H.Res. 172 (Honda). Expressing heartfelt condolences and support for assistance to the people of
Japan and all those affected in the aftermath of the deadly earthquake and tsunamis of March 11,
2011. Subcommittee hearings held.
S.Res. 101 (Reid). A resolution expressing the sense of the Senate relating to the March 11, 2011,
earthquake and tsunami in Japan. Passed/agreed to in Senate on March 14, 2011.
S.Res. 333 (Feinstein). A resolution welcoming and commending the Government of Japan for
extending an official apology to all United States former prisoners of war from the Pacific War
and establishing in 2010 a visitation program to Japan for surviving veterans, family members,
and descendants. Submitted in the Senate, considered, and agreed to without amendment and with
a preamble by Unanimous Consent on November 17, 2011.
S.Res. 543 (Boxer). A resolution expressing the sense of the Senate condemning the international
parental abduction of all children. Passed/agreed to with an amendment and an amended
preamble in Senate on December 4, 2012.
111th Congress
H.R. 44 (Bordallo). Sought 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). Sought 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, authorized 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

53 Lynann Butkiewicz, “Implications of Japan’s Changing Demographics,” National Bureau of Asian Research,
Washington, DC, October 2012.
Congressional Research Service
30

---

Japan-U.S. Relations: Issues for Congress

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). Commended the Government of Japan for its current policy against
currency manipulation and encouraged 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). Called 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
recommended that all other nations, including Japan, that have unresolved international child
abduction cases join the Hague Convention and establish procedures to promptly and equitably
address the tragedy of international child abductions. Passed/agreed to in House on March 11,
2009.
H.Res. 997 (Sutton). Expressed 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). Expressed 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.
H.Res. 1464 (Ros-Lehtinen). Recognized the 50th anniversary of the conclusion of the United
States-Japan Treaty of Mutual Cooperation and Security and expressing appreciation to the
Government of Japan and the Japanese people for enhancing peace, prosperity, and security in the
Asia-Pacific region. Passed/agreed to in House on June 24, 2010.
Congressional Research Service
31

---

Japan-U.S. Relations: Issues for Congress

S.Res. 564 (Webb). Recognized the 50th anniversary of the ratification of the Treaty of Mutual
Security and Cooperation with Japan, and affirmed support for the United States-Japan security
alliance and relationship. Resolution agreed to in Senate without amendment and with a preamble
by Unanimous Consent on June 29, 2010.
H.Res. 1326 (Moran). Called on the Government of Japan to immediately address the growing
problem of abduction to and retention of United States citizen minor children in Japan, to work
closely with the Government of the United States to return these children to their custodial parent
or to the original jurisdiction for a custody determination in the United States, to provide left-
behind parents immediate access to their children, and to adopt without delay the 1980 Hague
Convention on the Civil Aspects of International Child Abduction. Passed in the House on
September 29, 2010.

Author Contact Information

Emma Chanlett-Avery
William H. Cooper
Specialist in Asian Affairs
Specialist in International Trade and Finance
echanlettavery@crs.loc.gov, 7-7748
wcooper@crs.loc.gov, 7-7749
Mark E. Manyin
Ian E. Rinehart
Specialist in Asian Affairs
Analyst in Asian Affairs
mmanyin@crs.loc.gov, 7-7653
irinehart@crs.loc.gov, 7-0345

Congressional Research Service
32

---