The US, Japan, and trade liberalization: from bilateralism to regional multilateralism to regionalism

Japan's foreign economic policy has undergone two crucial changes in the past decade and a half: first the shift from predominantly US-Japan bilateralism to the addition of regional multilateralism, and then the recent extension to regional bilateral FTAs for the first time. To what extent did these shifts in Japan's behavior in the trade area represent a deep shift in the purposes and goals of Japanese foreign economic policy? This article looks at how American policy changes and developments in the US-Japan relationship, and economic globalization, produced the changes in Japan's domestic policy thinking and process that led to these outcomes and to the particular pattern of development of these policy shifts. Using a simple version and modification of 'strategic interaction theory' it concludes that despite recent arguments that the shift to bilateral FTAs may presage a turning point toward an Asian bloc, instead it reflects a remarkable continuity in Japan's foreign economic goals in the post-war period. Although an important change, it indicates only using new means to adapt to the changed regional economic security environment after the East Asian financial crisis and the debacle of trade liberalization in EVSL in APEC. Japan now has a full 'multi-tiered' range of trade alternatives to advance its constant goals of maintaining a US 'military shield' and promoting its own 'economic sword' in the region.