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April 2005 -- Steven K. Vogel is Associate Professor of Political Science at the University of California, Berkeley. He specializes in the political economy of the advanced industrialized nations, especially Japan. He is a regular columnist for Newsweek-Japan, and he has worked as a reporter for the Japan Times in Tokyo and as a freelance journalist in France. He has a B.A. from Princeton University and a Ph.D. in Political Science from the University of California, Berkeley.

JETRO: In terms of the general Japan-US business environment, where are we today?

VOGEL: I would say things are pretty peaceful if you contrast to 10 years ago, the end of the era of the big trade wars. The American government and the business community see Japan much less as a threat than they used to. And with the rise of China, the US is not so focused on Japan as the primary economic challenger, so that takes the heat out of bilateral economic conflicts.

The gradual increase in the power and influence of international organizations, such as the WTO or APEC, also takes pressure off the bilateral relationships. There are still minor skirmishes – the latest is about when Japan is going to start buying American beef again – but it’s more restricted to the working level and you don’t have top American and Japanese politicians hollering about practices in the other country or putting a lot of legislative effort into that area.

For the Japanese, the US market is still huge, but they are obviously interested in what’s going on in China. China has definitely gotten to be a bigger trade partner. Japanese companies continue to have a strong interest in the development of the Asian market as a whole. But the Japanese business community generally still puts top priority on the US market.

JETRO: In your opinion, is business reform in Japan being driven by the government or by industry?

VOGEL: The overwhelming conventional wisdom is that the business community is driving change. I am going to dissent from that. If you look at corporate governance or corporate restructuring, for example, the Japanese government has been very active over the past 5 years or so, with revisions to the commercial code, the Big Bang financial reforms and related accounting reforms, and some labor market reforms. These kinds of micro-level and relatively technical measures accumulate to have a real impact. The Japanese government has done a lot, and the business community hasn’t picked up on all of those changes.