CIAO DATE: 06/02

A New Beginning: Recasting the U.S.-Japan Economic Relationship

Summary

The time is ripe for a bold new initiative to recast the U.S.-Japan economic partnership for the 21st century. A new Japan is emerging. Foreign investment is on the rise. Tokyo is deregulating and restructuring its economy. A new generation of Japanese entrepreneurs and venture capitalists has arrived on the stage.

But a more vibrant, sustainable Japanese economy is not foreordained. It has a limited time to take root before the crushing weight of Japan's mounting public debt, the burden of its aging and shrinking population, and the cumulative toll of years of economic stagnation could cripple the world's second-largest economy and America's principal economic and security partner in Asia.

New governments in Washington and Tokyo must seize this moment.To reinvigorate the U.S.-Japan relationship and to accelerate the pace and redirect the nature of change in the Japanese economy, the next American president should challenge his Japanese counterpart to create a U.S.-Japan "open marketplace"—one free of tariffs and with minimal regulatory impediments and an increasing freedom to do business—by the year 2010.

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