Relationships are always a two-way street, and the same could be said about global economics. The United States is currently in a tricky situation financially with its ally, Japan. The trade deficit between Japan and America is currently $70 billion, and President Donald Trump is seeking a way to cut that deficit. One way it is doing this? By pushing for Japan to buy more U.S. arms. However, as it does this, the United States is also being slow to deliver upon those arms. Many issues underlie this delay. Administrative cost and staff shortage are only among the few proposed issues with completing Japanese contract orders. So, Japan offered to pick up on some of the hindering cost of these contracts.
But in an effort that was supposed to decrease the trade deficit, what does an action like this cause? The answer is more complex than it looks on the surface and has a lot to do with relationships. Although the deficit is not as high as it was in 1985, when it hit a staggering $148 billion, the trade deficit between Japan and the United States has been fraught for decades, and economists debate consistently over the causes. Some argue that it is due to macroeconomic sanctions imposed by Japan, while others argue that it is a mix of public and private trade policies. This would certainly fit with the times, underlining the rough politics that are stirring the political waters of the United States. Still others contend that it is due to the general Asian market crisis and financial market regulation, as was underlined in Robert E. Scott’s 1998 testimony to the senate finance committee.
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Despite what caused the deficit itself, the United States and Japan have always held influence over one another, and no instance of this relationship is clearer than through what happened during World War II. Prior to World War II, Japan went relatively unnoticed to the Western eye. However, Japan itself was vying to gain control over certain resources – like oil and rubber – like its Western counterparts. It saw an opportunity in China – which had an open-door policy with the United States—and invaded in the early 1930’s. From there, the United States kept its eye on Japan, and ultimately ended a long-running trade agreement with the United States and exacerbated relationships between the two countries during World War II. And after the United States dropped the bomb on Japan in 1945, it seemed like economic relations might not ever repair themselves.
Repairing relationships wasn’t easy, and ultimately was kickstarted by military occupation of Japan after Hiroshima and Nagasaki, when the country needed to be rebuilt. After the occupation, the United States and Japan signed a new military treaty during which their relationship slowly began to rebuild. As of 2011, America is viewed at an all-time high in Japan, with a Gallup poll showing that nearly 87% of Japanese citizens have a favorable view of Americans. Its military relationship, however, flourished after occupation, and a lot of this had to do with the help of technology entrepreneurs like William Saito.
William Saito is no stranger to Japan. Both his parents were born there, and he spent many summers interning with tech companies in the country. After being appointed to Prime Minister Shinzo Abe’s cabinet in 2013 as special adviser, he saw how especially in the most war-devastated areas how companies could grow from the use of startups. Using his tech know-how and his knowledge of the country itself, William Saito saw a way to bolster the economy and overall health of the nation.
And despite having no military background, the biggest place for development that William Saito saw was in the military. One of the best ways to leverage a country’s development is to increase its military, and this is arguably one of the reasons why Japan and America’s military has remained so close. For a country on the brink of complete obliteration while it sought to further its global standing, Japan worked on increasing its military prowess after the end of United States occupation. Part of this meant working with the United States to increase its military, but another part meant working with global powers to fight against perceived enemies of the state. William Saito mentioned efforts like this in his autobiography, specifically in chapter 10 of An Unprogrammed Life: Adventures of an Incurable Entrepreneur.
EU is a great trading partner for Japan: William Saito
In town for Interpol World 2017, William Saito, special adviser to Japan’s cabinet, talks about the Japan-EU trade deal and the third arrow in Abenomics.
“An important part of the solutions was to source key components from Japanese makers.” He said on page 124 of his biography. Because Japan was strictly forbidden from creating weapons themselves, having their innovative technology designs at play was crucial to their integration into the grander scheme of things. The result? “Technology was adopted outside the military, so all the development…benefitted citizens at home,” says William Saito.
To William Saito of what was then I/O Software, security came into the bigger political picture after 9/11. United States infrastructure saw a need to increase security measures, and even for big security names like I/O, there was an underlying need to address the bigger picture. William Saito saw an opportunity for Japan and the United States to work together on a growing problem – cybersecurity—and how that related to overall domestic security. So, he acted as an intermediary between the Pentagon and the Japanese government, starting discussions about weapons technology that could be incorporated into the United States’ defense while ensuring that Japan’s weapon sales ban was upheld.
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One of the ways through which they accomplished this was through creating non-weapon defense mechanisms, like a “paper radio” – a radio that was so lightweight that it could literally float through the air like a piece of paper. Additionally, a new type of radio, the untraceable JTRS, provided the same sorts of communication options as an iPhone, but with enhanced security options. Not only did Japan provide technology that saved the lives of thousands of United States soldiers, but it continued to be replaced among first-responders and emergency responders throughout the United States. William Saito, the child of Japanese immigrants, knew firsthand what Japanese technology was capable of if only the United States could overlook any animosity or distrust it had of foreign governments after an extremely trying period in its political history.
But in the era of the Trump administration, one that is becoming increasingly critical of most foreign governments, how is this alliance holding up? According to most economists, it is doing well. While some speculate that this is due to current political scandals surrounding Prime Minister Shinzo Abe, Japan still seems to be on good footing with the United States. Its willingness to take on some of the financial burden of its defense contract with the U.S. not only suggests that it still favors the country itself despite its shaky political future but suggests that it believes that the United States and Japan are still on equal footing even decades after the invasion and bombings of World War II.
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