I want to announce today a separate Administration initiative with Japan. I have directed the Secretaries of State and Treasury and the U.S. Trade Representative to form a high-level committee to include Commerce, Labor and other interested agencies to propose negotiations with Japan on structural adjustment matters. Such matters include structural impediments to trade, balance-of-payments adjustment, and such issues as bidrigging, market allocation, and group boycotts. These negotiations would initially focus on major structural barriers to imports such as rigidity in the distribution system and pricing mechanisms. The negotiations sought by the United States in this Structural Impediments Initiative will address broader issues and will take place outside section 301, which appropriately deals with the investigation and resolution of particular unfair trade practices.
- George Bush, Statement on United States Action Against Foreign Trade Barriers, May 26, 1989
So there you have it. Around the end of the
Cold War, Japan was kicking everyone's behind as far as economics were concerned.
Sony and
Toyota were sending boatloads of
stereoes and
cars to America, and bringing boatloads of
cash back. It wasn't a good arrangement for the United States, and the U.S. government was becoming increasingly concerned about its
trade deficit with Japan. Hence, the SII, to open up Japan's markets to American goods and services.
On July 14, Bush met with Japanese prime minister Uno Sosuke, and got the first tenuous Japanese commitment to the SII. They agreed to set up binational committees of sub-cabinet bureaucrats to work out the details of a more egalitarian trade arrangement between the two countries.
Uno then left office. On September 1, Kaifu Toshiki came to the White House. Bush subtly made fun of Japan's inferior defense structure, while Kaifu subtly made fun of America's economy and education system. Shortly after Kaifu's visit, the SII talks began.
Pretty much nothing happened. Japan agreed to some superficial measures, including the partial lifting of barriers on supercomputers, satellites, and timber. However, the core of the debate, electronics and cars, never quite made it into serious discussion.
Bush became so enamored in the SII deadlock that he visited Japan on January 7, 1992. No new deals were struck with Miyazawa Kiichi, but Bush did manage to contract stomach flu and vomit in Miyazawa's lap at dinner, which probably didn't help him in the election that year.
The SII ended along with the Bush administration. The main downfall of the program was that it was attempting to bring American companies, working in a very laissez-faire environment, into the same sphere as highly organized and highly regulated keiretsu conglomerates, which could easily outmaneuver U.S. companies on Japanese soil. Of course, most U.S. negotiators didn't even understand the wide variety of definitions that can accompany a term like keiretsu, and that didn't help either. Bush abandoned what was increasingly looking like a pointless endeavor, and ended up overthrowing several Congressional initiatives to cap imports from Japan, apparently in the interest of maintaining the two countries' security relationship.