Bilateralism, multilateralism, or regionalism? Japan's trade forum choices.

The Japanese government today is actively and strategically choosing among various institutional thrums to deal with its trade partners, namely bilateral venues, multilateral settings, and even preferential regional arrangements. This ongoing high-profile institutional selection is somewhat unprecedented for Japan, and demands a review of the historical and analytical reasons that drive decisionmakers to select one forum over another. Overall, the Japanese case suggests that the aggregate trade forum choices are influenced both by the desire to institutionalize mechanisms for stabilizing a range of expectations and by the necessity of guaranteeing market access and protection of investment in the fastest time possible.

KEYWORDS: Trade policy, bilateralism, multilateralism, regionalism, preferentialism, General Agreement on Tariffs and Trade (GATT), World Trade Organization (WTO), free trade agreement (FTA), forum choices/forum shopping, international institutions

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At perhaps no point in its postwar history has Japan been quite at the crossroads in terms of its foreign trade diplomacy as it is today at the beginning of the twenty-first century. Unlike in the past, when it focused largely on managing its bilateral trade relationship with the United States, or remained centered on the GATT/WTO (General Agreement on Tariffs and Trade/World Trade Organization) system to manage its overall economic relations, today the Japanese government confronts and appears to be actively choosing among various institutional forums to deal with its trade partners: bilateral venues, multilateral settings, and even preferential regional arrangements. Since this kind of high-profile institutional selection in its trade diplomacy is somewhat unprecedented for Japan, it deserves attention and explanation.

Theoretically and practically, the issue of why states emphasize certain venues at the international level and not others remains a surprisingly underexplored area of research. Political science research has tended to focus largely on the importance and design of and compliance with international institutions, and it is only recently that scholars have even begun to assess the impact of variations in the design of institutional structures along such dimensions as legalization. (1) In the same way that private parties choose among different methods for commercial dispute resolution, so governments, too, always have the choice to pursue their trade diplomacy through various forums at the international level that are not necessarily mutually exclusive or dichotomous. (2) Since we know little about why governments might emphasize one forum over another as a vehicle for trade liberalization or dispute resolution, this article takes a first step forward by focusing on the important case of Japanese trade policy. Japan is engaging in genuine trade forum selection for really the first time, and this allows us to study the factors affecting such choices from the ground up. Moving from its volatile bilateral trade relationship with the United States to its increased emphasis on legalized multilateral diplomacy at the WTO and on to what appears to be a concentration on preferential regional free trade agreements (FTAs), the focus is on extracting the historical and analytical reasons for why officials in the Japanese trade policy establishment turn to one forum rather than another.

The aggregate shifts over time--from bilateral to multilateral to regional/preferential--suggest that there is an evolutionary progression that has brought the substance of Japanese trade diplomacy closer in line to that of the other advanced industrial actors, such as the United States and the European Union (EU). Like these actors, Japan today too actively uses a variety of forums to manage and conduct its trade relations; like them, it is doing so deliberately to increase its leverage both across and within forums. But this is not simply a matter of playing catch-up for Japan or one of increasing leverage through issue-linkages. While there are historically peculiar sets of factors in each of the aggregate turns in Japanese trade diplomacy, this article suggests that the choice of trade forums is driven by two crucial factors. First, officials emphasize the importance of stabilizing and channeling expectations for actors both in government and especially in business in some set institutional forum. Whether one looks at the multilateral framework of the WTO, which has had a crucial impact on pacifying a range of Japan's trade disputes, or the burgeoning FTA diplomacy, which is a building block for direct formal legal relationships with Japan's trade partners, this institutional element is consistently mentioned across the board. Second, officials stress the role of industry and big business pressures that constrain government choices to the forums that deliver benefits in terms of market access or protection of investment in the fastest time possible. The critical issue here is not one of trade liberalization per se. Indeed, Japanese trade officials happily acknowledge the gains in trade liberalization for Japanese industries under the rubric of the multilateral framework. Rather, pushed by Japanese business forces, their perception is that preferential/regional frameworks deliver targeted market benefits in a speedier fashion.

This article is divided into four sections, with the first three sections concentrating on each of the three principal forums through which the Japanese government has chosen to pursue its overall trade diplomacy related to trade liberalization or trade dispute resolution. For each forum, the focus is on explicating the historical context in which the Japanese government conducted its trade diplomacy. The first section turns to Japan's trade relationship with the United States, which was conducted in a bilateral paradigm for most of the postwar period. Although Japanese officials do not believe that their interaction in this strict bilateral paradigm represented a choice per se on their part, this experience nevertheless set an important benchmark by which they judge the efficacy of other forums. The fact that they chose not to choose such a forum with respect to conducting their diplomacy with the United States is all the more interesting because the importance of this bilateral forum is certainly making a vigorous comeback in Japan's more recent decision to pursue what at present are a set of bilateral FTAs both regionally and extraregionally. The second section of this article turns to the legalized multilateral framework of the WTO, which the Japanese government consciously chose to use in dealing with its trade partners, particularly with respect to dispute resolution. Here also the bilateral forum history with the United States is a critical factor in understanding the turn to the multilateral, and in underscoring the factors that may be critical to choices by a country with weak bargaining power. It served foremost as an antidote to the problems of being trapped in a bilateral setting where the United States acted as judge and jury especially when trade disputes rose to the fore. The third section turns to the vigorous choice to use preferential FTAs, both bilateral and regional, to pursue trade liberalization--the latest emerging trend in Japan's trade diplomacy. Unlike the painstaking and comprehensive effort at trade liberalization under the multilateral framework, which has served Japan quite well economically in the past, there is now an emphasis, as there is by all major economic powers today, on securing targeted market access and benefits for a range of industries through such specific forums. It is this latest emerging trend that really forces the issue of Japan's trade forum choices to the fore, and that allows us to focus on the analytics of such choices. The article concludes by extracting the overall factors that appear to be important over time in Japan's choices at critical junctures and by highlighting some theoretical and policy implications stemming from this analysis.

The Bilateral Venue

The departure point for understanding Japan's trade forum choices begins with some appreciation of the past scope and substance of Japanese trade diplomacy, especially its contentious bilateral one with the United States. Since the story of U.S.-Japanese trade relations is relatively well known, this section offers only a brief overview of some of the principal cases and paradigms that governed the relationship between the two countries. In a way, it is difficult to speak of choice on the part of the Japanese government in this forum with the United States, because Japan spent a great deal of time and energy actually trying to supersede interaction with the United States within it. According to most Japanese officials, few avenues existed to allow Japan any choice until very recently, and the United States was largely dominant in agenda-setting and dispute resolution in what very often became high-profile trade conflicts in the bilateral forum. A focus on this forum, however, serves as a very important historical and analytical benchmark by which to judge the Japanese government's attempts at trade forum selection at present.

The perceptions and beliefs of foreign corporations and pundits, especially revisionists, were very critical to fueling the U.S.-Japanese trade conflict from the early postwar period onward. In large part, an economically successful and, in the 1980s, what appeared to be an industrially unstoppable Japan was an easy target for charges of predatory behavior. (3) Popular stories of "Japan Incorporated" out to take over the world were legion, and even celebrated with the cover of one Newsweek magazine showing the statue of liberty wrapped in a kimono. Over time, as the United States became preoccupied with the "diminished-giant syndrome," dealing with the Japanese challenge took on increased importance, especially as it seemed to strike at the very heart of U.S. industrial preeminence in the world. (4) The story of postwar U.S.-Japanese trade relations was largely about industrial competition. Here successive sets of industries, subject to import competition from Japanese firms in the United States or market access problems in Japan or both, pressured the U.S. government to take up their cause ever more aggressively. A brief overview of industry cases as well as negotiating paradigms that set the tenor of U.S.-Japan trade diplomacy is set out below, as they are critical to extracting the factors affecting Japan's subsequent trade forum choices.

The salient industry cases in U.S.-Japanese trade relations included textiles, steel, television, automobiles, and semiconductors. In the early 1950s, the U.S. textile and apparel industry confronted the twin facts of falling profits and increased imports from Japan. (5) As early as 1957 the United States negotiated a five-year program to restrain Japanese exports, and then also went on to actively and successfully seek an organizational deviation from the GATT rules for global trade in textiles that eventually resulted in the Multifiber Agreement. The textile wrangle, especially in the late 1960s, set the substance and style of subsequent trade diplomacy between the two countries for much of the postwar period. Over the next two decades, this diplomacy, if it could be called that, became increasingly volatile and results-oriented. The 1970s were equally difficult in terms of managing trade relations with Japan, especially as ever higher value-added sectors came to be dominated by competitive Japanese firms. (6)

The steel industry, long one of the most politically active sectors in the domestic U.S. arena, was instrumental in eventually pushing for specific bilateral deals with Japan. The specific argument by the U.S. industry was that the protected home-market prices of foreign rivals allowed them to increase their U.S. market share by pricing exports below average costs. Since the 1970s, this emphasis on unfair practices and consequent charges of dumping by foreign producers have become staples in the U.S. steel industry's case for protection. (7) Along with several controversial trade remedies such as antidumping duties, the United States also negotiated direct voluntary export restraints with Japan starting in 1969 and continuing into the early 1990s.

The U.S. television receiver industry was similarly faced with import competition from Japanese rivals, first in monochrome and then in color units. (8) A widespread source of decline in the industry was attributed to comparative factor cost differentials that disadvantaged U.S. producers, some of which were attributed to the Japanese government's initial protection and promotion of its home industry. Due to huge pressures for trade adjustment from the industry, the United States eventually instituted a three-year orderly market arrangement with Japan in 1977.

Two more strategic sectors seemed to follow this classic pattern of the rise and fall of U.S. domination as well. Automobiles were the major bone of contention in U.S.-Japan trade friction, especially as they came to compose the larger part of the trade imbalance between the two countries in the 1980s. The Japanese entered the U.S. market in successive waves with distinct strategies in the postwar period, which had immediate implications for the adjustment and competitive abilities of U.S. firms. (9) By the early 1980s, it was clear to many members of Congress that the auto industry's distress had become a political issue, and hearings then began about the possibility of import restrictions. Although the U.S. International Trade Commission was unable to find imports as a substantial source of injury to the U.S. industry, the politics of "unfair trade" led to the imposition of a voluntary export restraint (VER) in March 1981, which was extended an additional year to 1985. (10)

The semiconductor industry was also one that had started off with pioneering U.S. firms as the dominant players in global competition. (11) From the Japanese government's perspective, the U.S.-Japanese negotiating outcomes in this particular industry were crucial to shifting the tide against the bilateral prism. While there is a great deal of dispute about the role played by the Japanese government in promoting the competitiveness of its home firms, there is none about the fact that the onslaught by Japanese firms forced the U.S. firms to seek trade policy actions on two fronts, market access in Japan and antidumping protection at home. Ultimately, if there was to be no market access agreement between the two sides, Japan stood to face not only the imposition of automatic and nonnegotiable duties but also the possibility of U.S. Section 301 action. Under duress, the Japanese side negotiated the 1986 Semiconductor Agreement, with a focus on voluntary import expansion in the Japanese marketplace, and this was extended more explicitly in 1991.

Apart from dealing with specific industry concerns, the U.S. government spent a great deal of rhetorical and diplomatic capital on structuring trade negotiations with Japan in thematic bursts that increasingly focused on market access in Japan. (12) Among the more salient here are the 1985 Market-Oriented Sector-Selective (MOSS) talks, which again forced Japan to focus on specific industries, such as forest products and medical equipment. From the perspective of Japanese business concerns, the results of the MOSS talks were mediocre to barely satisfactory. (13) The 1989 Structural Impediments Initiative (SII) talks, which really lasted only a year or so, were designed to showcase the U.S. administration's willingness to deal with the Japan problem, especially since the United States had a U.S.$50 billion trade deficit with Japan. The goal was nothing less than the identification and resolution of structural problems in both countries that impeded the flow of trade. (14) While Japan attempted to counter by pointing out what it felt to be structural deficiencies in the United States, it was again relegated largely to deflecting U.S. demands for structural reforms in its domestic marketplace. Finally, although all the negotiating paradigms had results in mind, the 1993 framework agreement was more explicitly results-oriented than its predecessors. The focus was once again on structural and sectoral issues of concern in both the United States and Japan, with clear quantitative indicators as a benchmark for change. Although agreements were signed in all the areas of concern, most notably in automobiles, actually translating the results-oriented language of the framework agreement into workable bilateral agreements proved to be impossible. By and large, like the thematic negotiating paradigms before it, the framework agreement, too, appeared to lose steam fairly quickly by 1995.

Overall, the U.S.-Japanese interaction as sketched out above, in terms of both industry pressures and negotiating paradigms, helped institutionalize a stereotypical pattern of bilateral interaction between the world's first and second largest economies. In neither context did Japan enjoy any measure of equality with the United States. Historically, the upshot of pressures from traditional to strategic sectors was so intense in the United States that eventually even the idea of departing from the traditional U.S. stance of free trade and laissez-faire markets became acceptable in mainstream public discourse. (15) In very high-profile settings, the United States appeared to demand certain sectoral trade agreements and the Japanese appeared to obfuscate and eventually to acquiesce to such demands. So entrenched was this dominant mode of dealing with Japan, whether at the industry or government level, that the United States earned itself the label of being aggressively unilateral; Japan, in the meantime, was merely reactive, meaning also that there was little by way of choice in terms of trade forum selection. (16) While Japanese firms in industries such as automobiles and semiconductors ended up being the beneficiaries of quantitative restraints, the Japanese government, specifically at that point MITI (Ministry of International Trade and Industry, now the Ministry of Economy, Trade and Industry  [METI]), portrayed itself successfully as a victim of and merely reacting to U.S. power in trade negotiations and dispute resolution. In reality, the widespread perception among Japanese trade officials was that U.S. domestic political pressures were the root cause of aggressive unilateralism, which therefore constituted little more than U.S. posturing for electoral reasons. (17) And the United States, which normally followed a global economic strategy vis-a-vis its trade partners, found itself consistently forging a country-specific strategy toward Japan. (18) This process, as traced above, resulted in much publicity and commotion about a trend toward results-oriented, quantitative, or managed trade between the two countries--critical failings, as far as Japan was concerned, in the bilateral forum.

Analytically, several concrete reasons also emerge as to why a non-rule-based bilateral forum was not viewed favorably by Japan. First, the agenda and resolutions often turned out to be so politicized and ad hoc that negotiations often did not move beyond finger pointing toward consistent and persistent issues of concern. Moreover, the party that was disadvantaged for whatever reason, as Japanese officials believed they were, was unlikely to be able to set the agenda or voice its concerns with a sense of equality. The ad hoc nature of the relationship also led to uncertainty with respect to future issues and engendered instability in overall expectations about where the trade relationship was headed. Second, translating even specific quantitative bilateral solutions into a workable reality, without irritating domestic constituencies or other trade partners, was well nigh impossible. The party that demanded such measures--the United States--was condemned to suffer from a negative power-oriented imagery that harmed its reputation in the global trading regime; the party that had to institute them--Japan--had the unenviable task of figuring out implementation, especially as the two sides often had different interpretations of the importance and accuracy of quantitative indicators. And finally, the lack of a rule-based dispute resolution mechanism left both parties without recourse to a set and equal means of settling their differences. Meanwhile there was a real perception in Japan that negotiated solutions resulted from imbalances--strong United States, weak Japan--in the bargaining process. Over time, the combination of the historical and analytical elements sketched out above was substantial enough that the Japanese government concertedly began to seek a way out of the confines of the bilateral forum altogether. Multilateralism provided an opportunity.

The Multilateral Setting

Since the late 1980s, and especially in the aftermath of the controversial 1986 Semiconductor Agreement, officials in the Japanese trade policy establishment have decried their inability to deal with U.S. demands in the strictly bilateral forum that governed trade relations between the two countries. (19) The main alternative at that point, GATT, especially its legal rules and dispute resolution procedures, was not perceived as a favorable instrument for advancing Japanese interests. (20) Japan's trade diplomacy was thus largely about reacting to U.S. trade diplomacy bilaterally--a forum that was not actively chosen by Japan but rather, according to Japanese officials, thrust upon it by its more powerful trade partner. The analytical constraints in a bilateral framework as described above--namely the volatility in agenda and expectations, uncertainty and confusion in implementation of quantitative targets as a means of achieving trade liberalization and market access, and absence of rule-based dispute resolution--all represented major problems for the Japanese side. According to leading Japanese officials, these factors helped fuel the politics of resentment against U.S. unilateralism in the bilateral context, and were crucial in the search for alternative means of trade negotiation and resolution on the part of the Japanese government. (21)

But from the perspective of the Japanese trade policy establishment, what exactly was to be done? Where could Japan go? The answer came in the form of the WTO. The WTO-centered choice of the Japanese foreign trade policy establishment, which famously signaled the end of the era of bilateralism, was in fact designed explicitly with the past behavior of the United States and also, and not unimportant, China's future actions in mind. The factors affecting Japan's choice of a multilateral trade forum, not surprisingly, turned out to be the mirror opposite of those Japan sought to get away from in the bilateral forum--stable channeling of expectations, multilaterally negotiated liberalization and market access across the board, and the presence of a rule-based dispute settlement system. Some of these factors of course arose to the surface only after Japan had spent some time interacting with the WTO system, particularly in the area of dispute resolution, and again these need to be understood in their historical context.

Through a series of maneuvers, Japan proved itself to be very adept in parlaying the rules and framework of the WTO. One of the first indications of the Japanese government's intention to arm itself legally came in 1994, a year before the WTO was formally launched. At that point Prime Minister Morihiro Hosokawa showed the world how Japan could say no to U.S. demands for numerical targets. (22) Washington's insistence on numerical targets and Tokyo's recalcitrance on the matter were both clear, and this had already become a key bone of contention in the negotiations preceding the signing of the framework agreement. By saying no to U.S. demands for results-oriented measures, and thus making headline news around the world, Hosokawa signaled a clear shift in Japan's trade diplomacy from reactive to active, and from a bilateral to a multilateral forum. However, as the United States continued to insist on a results orientation in its trade negotiations and agreements with Japan, it was greeted with another, much stronger signal that Japan wanted to foreclose any such possibility. In 1996, a leading Japanese official made the explosive statement that the "era of bilateralism," and especially bilateralism where the U.S. demanded and Japan acquiesced, was over. (23) By all accounts, it was the presence of the multilateral WTO forum that made such forceful statements by the Japanese side possible. (24)

All this rhetoric was not just mere posturing. In fact, it was matched with concrete actions at several levels. Domestically, the Japanese government, especially METI and the Ministry of Foreign Affairs (MOFA), moved human and monetary resources onto the WTO agenda. But it was internationally that the advantages materialized most concretely for Japan. Not only was Japan very successful in thwarting U.S. pressures for changes the Japanese government deemed unacceptable, but also, unlike in the previous bilateral forum, it was able to directly challenge and indict U.S. measures it considered damaging to its economic interests. This section lays out the processes and events that highlight the advantageous factors for Japan for dealing with its trade partners in a WTO multilateral framework--a framework that channels even highly volatile trade friction into a stable legal framework, and gives the cover of legitimacy and civility to what can fundamentally be very hostile trade wars.

Japan's turn to a rule-based approach, as opposed to the results-oriented or managed trade approach of a bilateral framework, also came to the fore successively in the kinds of agreements that it signed with the United States. While the bilateral approach may be considered a valid approach for dealing with Japan, especially for areas not covered by the existing WTO rules, it is useful to understand how and in what ways it is limited in a WTO world. Two examples of trade liberalization and access, which had been particularly contentious in bilateral U.S.-Japanese trade relations, make this clear.

In 1995, a few months after the birth of the WTO, the U.S. Trade Representative (USTR) targeted the market access issue in Japan for automobiles. While the United States initially talked about taking the case to the WTO, it eventually threatened the imposition of retaliatory tariffs on about U.S.$5.9 billion worth of Japanese luxury cars entering the country. (25) This time, the Japanese responded in kind, filing their first case against the United States in the WTO. (26) All this noise on the part of the United States was muted by the fact that its sanctions did not have the force of WTO authorization, which probably lessened its bargaining power on the matter in subsequent automobile negotiations with the Japanese. More important, the auto agreement that eventually resulted in 1995 did not mention quantitative indicators, very much in line with Japan's negotiating position.

The 1986 Semiconductor Agreement serves as another useful indicator of the way strictly bilateral resolutions are likely to go, especially with the United States. Japan moved as early as 1987 with a case against the U.S. retaliatory measures for Japan's failure to live up to the agreement, but that legal effort did not even lead to the establishment of a panel. Instead in 1991, after extensive negotiations, Japan extended the controversial agreement, this time with the clause that it recognized the U.S. industry expectation that foreign market shares in Japan would grow more than 20 percent. (27) The 20 percent target was surpassed in late 1992 and went about as high as 30 percent at the end of 1995. (28) But as U.S. pressure began to move toward a new agreement in 1996, the Japanese side proved adamant in rejecting any emphasis on results or quantification. (29) Japan's obduracy on the matter was given a legitimate impetus by the insistence of Japanese officials that such agreements were no longer permissible in a WTO world. Conveniently, the Japanese were also able to point to the fact that key aspects of the 1986 agreement had been successfully challenged by the EU at an earlier GATT panel in 1987, and that such challenges would increase especially under the stricter legal provisions of the WTO. (30)

Subsequently, when the 1996 accord was signed between the United States and Japan, the Japanese government was able to successfully use the presence of the WTO to avoid even the mention of numerical targets in the text. (31) The agreement also transferred the responsibility for monitoring to the World Semiconductor Council, based largely on industry, not government-level, input. By the time the U.S.-Japanese agreement expired in 1999, the original bilateral 1986 agreement had metamorphosed into a joint five-nation multilateral talking forum. (32) The era of a results-oriented bilateral forum was indeed over. By relying on the rules in a multilateral framework, Japan showed how even countries with weak bargaining powers could equal the strong in negotiating liberalization and market access outcomes in the global trading regime.

The emphasis on choosing the multilateral forum was most evident with respect to dispute settlement processes, whereby Japan filed a number of high-profile complaints against the United States. Although Japan's legal activity in terms of complaints filed at the WTO is modest, in comparison especially with both the United States and European Union, it asserts a power beyond just the number of cases. (33) Since 1995, Japan has been involved in a series of high-profile disputes that have further drawn attention away from the strict bilateral forum of U.S.-Japanese trade relations and also has demonstrated its willingness to take on the United States within the WTO in a legally confrontational manner largely to tame U.S. unilateralism. (34) While the initial stages of Japan's WTO strategy were about containing U.S. pressures and demands, its subsequent phases have increasingly involved filing complaints on behalf of concrete trade-related interests within its borders.

The overall trend in Japan's WTO activities makes this point effectively, and also indicates the fault lines where the Japanese government, especially METE is most likely to be combative with respect to protecting its domestic interests in the future as it has been in the past. Since the inception of the WTO in 1995, Japan has been involved in twenty cases, divided equally between defenses and complaints. (35) In terms of defenses, the Japanese government, given the electoral clout of the domestic agricultural sector, has dealt largely with agriculture-related cases, such as the shochu and varietal testing method cases, in which it suffered clear legal setbacks. It has also benefited from spectacular legal victories, as in the Consumer Photographic Film and Paper, or Fuji-Kodak, case, which made it very clear to the United States that it would be difficult to challenge intractable problems of market access in Japan within the strict legal confines of the WYO. (36) The Fuji-Kodak case was instrumental in reinforcing the Japanese government's desire to use the WTO legal rules as both a "shield" for controversial domestic practices and a "sword" for problematic foreign measures. (37)

Japan has gone on the offensive especially against the United States in the antidumping arena, long a bone of contention between the two countries. (38) These disputes have become increasingly virulent because, in one way or another, they have involved the economic fortunes of the steel industry, which is politically powerful in both countries. (39) Half of the total WTO complaints filed by Japan from 1995 to 2002 can be traced back to its domestic steel interests, which are confronted with antidumping and, most recently, safeguard concerns abroad. Thus far, all of these Japanese complaints have been filed against the United States.

Japan's first case was concerned with the U.S. Antidumping Act of 1916, which allowed for civil and criminal penalties if foreign producers intentionally undertook dumping to harm U.S. industries. (40) The remarkable thing about the panel ruling was not just that it found the act to be in violation of the WTO rules, but also that it recommended repeal of the act as one way for the United States to bring its trade obligations in line with its legal obligations. Since the United States stretched out the implementation of the ruling, Japan, in an extremely bold move on January 7, 2002, went on to finally request authorization for suspension of obligations to the United States--in short, legal retaliation in the form of sanctions. The saga in this case is ongoing, and it remains to be seen how far Japan will take the issue on legal principles.

A second case filed by Japan more visibly involved the interests of its domestic steel industry. (41) Not surprisingly, the origins of this case also lay in the Asian financial crisis, and the fear among U.S. steel producers that they would be deluged by cheaper steel from abroad in the aftermath of the crisis. Here Japan challenged both the determination and the imposition of antidumping duties by U.S. authorities on hot-rolled steel products from Japan, claiming also that the U.S. domestic processes lacked transparency. As in the 1916 Antidumping Act case, Japan also asked for the revocation of U.S. duties. While both the panel and the appellate body upheld a few of the Japanese claims, they did not take the more important step of recommending the withdrawal of U.S. duties. Although this was a weaker legal conclusion than Japan wanted, it was not deterred from subsequently filing a range of other cases against the United States involving antidumping concerns in the steel industry. (42)

Japan was also involved in challenging the U.S. Continued Dumping and Subsidy Offset Act of 2000, or the Byrd Amendment, which allows antidumping and countervailing duties collected in U.S. unfair trade cases to be given to injured U.S. companies. (43) It filed another complaint against U.S. antidumping determinations on carbon steel products from Japan, claiming that here, too, were clear violations by U.S. authorities of the WTO rules. (44) Finally, Japan moved to file a case against the U.S. decision to impose tariffs on steel imports. (45) In addition to the formal invocation of WTO dispute settlement processes, Japan is playing a determined role in moving the antidumping agenda forward in the new Doha Round, in conjunction with a host of other countries similarly concerned with antidumping abuses by the United States.

Looking back at Japan's solid moves in the WTO system, there is no doubt that it actively chose the multilateral WTO forum to deal with its trade partners. What factors motivated the Japanese government toward choice of this forum? First, the historical experiences of U.S.-Japanese relations cannot be disregarded, because Japan's story of spearheading the rule-based WTO strategy is largely a story about trying to supersede the bilateral forum to which those relations were confined. At the most basic and perhaps the most important level, the scope and substance of the legal rules that constitute the WTO system are negotiated and agreed upon by all members. While these rules may well be long and cumbersome in the making, this very process legitimizes their existence in the global trading community, as they emerge out of a hard-won consensus where every member has a nominal say in setting the agenda. Historically, there is no question that the avoidance of volatility in agendas and expectations was a critical factor in pushing the Japanese government toward the rule-based WTO. In the judgment of the Japanese trade policy establishment, the presence of the WTO substantive and procedural rules, with respect to both the scope of trade liberalization and the much improved dispute settlement, allows all members to operate in a structured, stable, and fairly efficient environment, with more or less clear expectations about the behavior of other members.

Second, with respect specifically to trade liberalization, the multilateral WTO was, until very recently, as will be discussed in the next section, the forum of choice. Several factors were critical here, and are expressed by Japanese officials in terms of advantages of expanding market access abroad and encouraging reforms at home. In a multilateral framework, while there are losses for domestic economic concerns, countries also stand to make joint economic gains across, not just within, narrow trade-related issues in an all-inclusive manner. The hard-won consensus over liberalization emerges from a process that ensures that every member has, at the very least, engaged in quid pro quo bargaining over as wide and as linked an economic agenda as possible, whether individually or as part of a bloc. Moreover, the binding trade liberalization gains are transparent and extended to all members equally. Japan has been able to use credible cross-sector linkages and the normative pressures of legal adjudication to deal with recalcitrant protectionist interests not just abroad but also at home. (46) In fact, the Japanese government is more able to use the legitimacy of these twin factors to facilitate liberalization and market access in Japan, and also abroad, than the threat of unilateral action in a bilateral setting. Here, domestic ministries, such as METI, have every incentive to rely on invoking normative and reputational concerns in a multilateral framework, because this framework also empowers them legitimately vis-a-vis both foreign actors and other domestic actors such as ministries and economic interests they do not see as being viable in the long run, like agriculture and textiles.

Finally, factors related to the presence of a rule-based dispute settlement system were perhaps most critical of all in the decisive turn to the WTO. As the official Japanese thinking suggests, for countries with weak bargaining powers that are magnified in the volatile and unpredictable structure of the bilateral route, the advantage of the rule-based WTO forum is that it is set before disputes arise between Japan and its trade partners, weak or strong. There is little question that the WTO dispute settlement system has the unprecedented ability to handle trade disputes in an orderly and robust fashion while giving disputing parties a certain amount of flexibility in coming to negotiated settlements even while formal panel processes are under way. Another factor affecting the choice of WTO dispute settlement mechanisms is that Japan gains both diplomatic and legitimacy advantages by being on the "right side" of the law in trade disputes, and these advantages are further enhanced by the fact that the WTO imposes binding international legal obligations on countries. (47) Although the United States, for instance, is constantly being chided for failure to implement certain WTO rulings, such as those involving steel products and antidumping, in which Japan has been at the forefront of complaints, the fact is that pressure for implementation routed through the WTO is not only more visible to the world community but also therefore more likely to hold greater weight in U.S. calculations than pressure from an individual country with weak bargaining powers. This emphasis on sustained legal pressure under the global glare of the WTO is likely to play an even greater role in Japan's looming trade relationship with China, in which, given Japan's historical military conduct toward China, avoiding power-oriented imagery may be of importance.

The Regional Turn

Even as Japan's choice of centering its trade diplomacy on the multilateral framework of the WTO got under way, and appeared to be serving its trade interests quite well, a new turning point emerged in its overall trade diplomacy that captured world attention, namely the trend toward regional free trade agreements. (48) This has propelled talk of Asian economic regionalism to new levels. Of course, there has always been talk of Asian regionalism, if not formally then at least factually in terms of economic trends such as capital movement and investment. (49) Although Japan has had a tremendous economic presence in the region, it has until recently had to play a very low-key leadership role, whether in terms of fostering regional cooperation or otherwise. And even when it has allegedly played a role, it has been less than thrilling, as in the Early Voluntary Sectoral Liberalization (EVSL) debacle in the Asia Pacific Economic Cooperation forum (APEC) from 1996 to 1999. (50)

Against this background, the critical new development is that Japan has never before in its postwar history endorsed regional or preferential trade arrangements, whether with its Asian countries or otherwise. Because Japan's emphasis on regionalism, and preferential FTAs more specifically, was unprecedented in its postwar trade diplomacy, it deftly drew attention away from its quieter, but very successful, legal diplomacy at the WTO. For analysts, this is a particularly important move because, for the first time, it really allows us to assess the issue of choice between trade forums on the part of the Japanese government--multilateralism and what is more accurately described as preferentialism, whether bilateral or regional. There are clear indications that the new emphasis on preferential regional and bilateral forums is now entrenched in the Japanese foreign trade policy establishment.

The relevant ministries, for instance, are devoting considerable attention to Japan's FTA policy. As of summer 2004, while MOFA has set up additional sections to deal with the burgeoning FTA policy, enthusiasts of the preferential FTA policy can rightly charge that the ministry made more powerful in the FTA diplomacy by virtue of its long-standing links with the business world, namely METI, has moved resources out of the WTO division and into the preferential FTA section, although there are plans to reallocate them back. And across the board, officials have moved beyond a discussion of whether Japan has a preferential trade strategy; rather they have begun to speak more concretely of Japan's first-generation FTA policy with Asian countries like Singapore, Malaysia, Thailand, the Philippines, and also Mexico, and looking forward, even a second-generation FTA policy with, for example, Australia, New Zealand, Indonesia, India, Chile, and Argentina.

In addition, a series of FTA negotiations visibly indicates that this largely regional trend is the new diplomacy of choice. In January 2002, Japan signed its first-ever FTA with Singapore, known formally as the Agreement Between Japan and the Republic of Singapore for a New-Age Economic Partnership (JSEPA). (51) The agreement itself was a surprise, considering its inauspicious beginnings. When Singapore floated proposals for a bilateral agreement in late 1999, Japan was initially not receptive to the idea since, for most of its postwar trade diplomacy, it had spent much diplomatic capital railing generally against the idea of regional pacts altogether. Moreover, some of its regional institution-building efforts were stymied in the 1960s because of its contentious historical legacy in East Asia, and for this reason Japan tended to endorse an informal and soft form of economic regionalization. (52) The JSEPA agreement, focused on trade liberalization and facilitation, is broad in scope and consistent with the rules of the WTO, specifically GATT Article XXIV:8, which calls for the inclusion of "substantially all the trade" between proposed FTA partners.

Substantively, however, JSEPA is not considered a hugely important agreement, but was rather meant to be an instrument through which the Japanese government could overcome its aversion to a regional or FTA policy as a whole. (53) By that measure it was certainly something of a successful catalyst. As of late 2004, Japan was inking an agreement with Mexico, an extraregional partner, and it is also in the process of negotiating agreements with Asian neighbors such as Malaysia, Thailand, the Philippines, and Korea, possibly to include Indonesia in the near future. (54) There is even talk afoot of Chilean, Argentinean, and Indian interest in an FTA with Japan, as well as ongoing talks with Australia and New Zealand. Reports suggest that the Japanese government has even reached a tripartite agreement with South Korea and China about the viability of institutionalizing economic cooperation among them. (55) In addition, according to MOFA officials, there is an effort under way to coordinate, at the very least, investment treaties among Korea, China, and Japan, which would be vital to safeguarding Japanese corporate interests abroad.

And in the not-too-distant future, and perhaps already in motion at an informal level, there is talk of a Japan-China FTA, since this is considered the pivotal axis in East Asia, and the top brass recognizes that ultimately without such an agreement genuine economic and political Asian regionalism may well be meaningless. (56) More important, the concern seems to be that the potential gains to Japanese corporate interests may be negated or wiped out if China embarks even more seriously on the preferential trading bandwagon. China made overtures toward an FTA with the Association of Southeast Asian Nations (ASEAN) in 2000. Under the watchful eye of Japan, the negotiations for the China-ASEAN FTA were speedily launched in November 2001 and stand to be completed within a ten-year framework. If it stays its course, it will be the world's largest free trade area, with a combined gross domestic product of U.S.$2 trillion and an estimated 1.7 billion people. (57) Shortly after this announcement, China also announced plans to create a free trade area comprising mainland China, Taiwan, Hong Kong, and Macau, again to be completed in a ten-year framework. According to Chinese officials, who display a strong interest in moving up the ranks of great economic powers, this free trade area will be the fourth-largest economic entity in the world after the United States, Japan, and Germany. (58)

Why has Japan turned to preferential regional or bilateral forums? Numerous factors have been advanced by observers of Japan's trade diplomacy, (59) and even more have been revealed by officials in both MOFA and METI through personal interviews: a sense of panic that Japan was being left behind in a global FTA game being played vigorously by the United States and the European Union and would therefore be without bargaining chips in multilateral negotiations and rulemaking; a concern that foreign FTAs could extend beyond the substantive scope of WTO-led negotiations, thus disadvantaging Japanese economic interests; a forced appreciation of the necessity of having robust regional institutions that could withstand shocks such as the Asian financial crisis; a swift recognition that genuine regional alternatives were needed for what fast became the defunct APEC forum after the EVSL debacle, in which Japan balked at the liberalization of fisheries products; a much bandied idea that preferential agreements could stimulate domestic reform and stagnant businesses and even sectors like agriculture; a pervasive belief that having FTAs or preferential agreements in countries with similar such arrangements with third parties would help to counter the deleterious effects of trade diversion and discrimination suffered by Japanese corporate interests under such conditions; the related conclusion that, despite strict rules of origin, any such Japanese FTAs would allow allegedly damaged corporate interests to gain market access to the larger, previously exclusive and preferential economic entities with which its FTA partners were already aligned; and certainly not to be forgotten, a marked desire to counter China's growing regional economic influence and FTA policy.

Perhaps the most important, and also the most commonsensical, factors in this preferential forum of choice are speed and specificity of market benefits--virtues seen to be lacking in a multilateral forum, especially by businesses interested in the speedy protection of market access and investment. It is not a surprise that Japanese automobile and steel makers, which constitute some of Japan's most formidable global competitors, are behind the turn to FTAs just as they were central to Japan's WTO litigation. Indeed officials acknowledge that the Japanese-Mexican FTA agreement was pushed and applauded by the Japanese automobile as well as electronics industry. (60) The same is true even of declining sectors in Japan, such as textiles and even agriculture, whose competitive high-value-added niches are going all out for Japan's FTA policy. (61)

It is not particularly surprising to note that organized special business interests benefit from preferential arrangements. What is of greater interest is that such forums deliver immediate, direct, and concentrated benefits to the sectors concerned. Key economic sectors need market access and they need their investments protected in foreign settings. FTAs, it appears, are the speediest means of achieving these twin goals, especially as the investment rule-making in the ongoing WTO round has faltered and by all accounts Japan is now taking a far more muted approach in that area of negotiation, at least at the multilateral level. (62) Clearly at this point in time, business and government bodies both perceive that Japanese interests are far too diffused, and the results slow, in painstaking multilateral negotiations involving the economic cross-linkages that are a hallmark of GATT/WTO rounds. Thus it is vitally important to remember that it is not the effectiveness of the multilateral WTO forum that is being questioned, rather just its speed.

It is therefore very easy to get carried away by Japan's regional preferential diplomacy, especially because it is backed enthusiastically by powerful forces in the Japanese business world. The advantages for Japanese business in this new trade diplomacy of choice are that it promises quick, fast, and narrow liberalization benefits to specific sectors in designated countries that may even, as enthusiasts remind us, spill over and force changes in usually highly protectionist sectors like agriculture by making them focus on competitive edges. Some experts suggest that liberalization, no matter what the forum in which it is based, has some concrete benefits for the involved parties, and therefore a positive impact on aggregate global welfare. (63) It can, in other words, generate fast-paced building blocks for further slow-paced liberalization on a global scale. The advantages for the Japanese government itself, namely attempting to balance growing Chinese economic influence or playing a more dynamic leadership role in Asia regionalism and institutionalism, are also considered relevant, though many officials and lawyers suggest that, unlike immediate liberalization payoffs, these are a little more difficult to pinpoint.

Conclusion

For observers of Japanese trade diplomacy, these are surely heady times. For perhaps the first time in its postwar trade history, Japan is active across numerous forums that can be characterized at the most basic (though also artificial) levels as bilateral, multilateral, and regional. These forums vary across important dimensions--number and type of participants, degree of legality, range of substantive scope, and even extent of newness--in the international system, and as such they offer tremendous opportunity for analyses concerning why they exist and also, as focused on in this article, when and why countries, such as Japan, choose among them. Rather than the systemic characteristics of the forums alone, what we find from the foregoing analysis is that Japan's choice of trade forums can be attributed to a conjunction of historical and analytical factors.

In retrospect, we can identify at least two aggregate trade forum choices on the part of the Japanese government--the turn from a bilateral to a multilateral forum in the 1990s, and the turn from a multilateral to a regional preferential forum in the 2000s. The choice of turning to the multilateral forum, which was in large part spearheaded to thwart U.S. unilateral pressures, can be attributed to determinants such as stabilizing expectations, fostering cross-linked liberalization, and conducting rule-based dispute resolution. The choice of turning from the multilateral forum to a preferential regional one, which may be spurred by China's growing economic influence in the region, can be attributed primarily to the desire to secure trade liberalization with speed and specificity.

At first blush, then, it is difficult to derive any common factors in these aggregate trade forum choices, but in my judgment there are at least two that can also no doubt be important for considering choices made by other governments in other contexts. First, in the very same way that the Japanese government sought to avoid volatility in its trade relations with the United States, so it seeks to do the same in its relations with its Asian neighbors. Some perspective here is necessary in order to understand why we may speak about Japan's relations with its Asian neighbors being marred by volatility and uncertainty in the same breath as that characterizing past U.S.-Japanese relations. Only in the aftermath of the Asian financial crisis did Japan's perceptions about itself, and outside perceptions about Japan, begin to change. (64) Just as Japan began to seek a more assertive role in the region, much of the ASEAN unease about Japan began to dissipate as it continued to be mired in economic problems, turning from a source of development ideas to a cause of economic crises in the region. The unease also dissipated further with the rise of China, both economically and militarily, making many ASEAN countries look to Tokyo as well as Washington as a counterweight power in the region. Interestingly, even as Japan is making an economic comeback, the fear of Japanese economic hegemony does not appear to be a factor in Asian countries' calculations to sign FTAs with Japan. All of these elements suggest that at some level Japan was seeking to correct its political and diplomatic inability to engage with Asia in a set, stable, and concrete institutional environment in the trade context. Thus, whether the forum of choice was the WTO multilateral one as with the United States, or bilateral/regional as with Asian countries, the very presence of a structured institutional mechanism allows for some stability of political and business expectations about partners' behavior, and also allows for dealing with ad hoc crises and uncertainties within the same set forum. This emphasis, then, on stabilizing and channeling expectations for the Japanese government, thus emerges as a very important determinant across different institutional forums.

A second common element that goes across the trade forum choices is the role of industrial pressures. Just as a close examination of Japan's WTO complainant litigation activities reveals a strong focus on some of its top global competitors, in such industries as automobiles and steel, much of the enthusiasm for Japan's FTAs can be traced back to business concerns, such as automobiles, steel, and electronics, and also competitive niches in the textiles and agricultural sector. Domestic industries are critical to trade forum choices in the global economy, and this is why the emphasis on speed and specificity of trade liberalization--or, conversely, on swift preferential access to and control of entry to particular markets--takes on added importance, because it fundamentally affects business competitiveness and economic livelihood in a concrete manner. Speaking at least for METI, watching out for Japan's topmost and competitive industrial interests is what it does best, and that focus is consistent across the multiple forums considered here. Combined with state interests, there is, to be sure, a domestic political economy of trade policy at work in this saga of institutional choice across countries and time. The critical theoretical questions of course concern when and why some sectors are able to advance their choice of forum agenda (motivated, say, by profits) and how that combines with state interests (motivated, say, by desire for stabilizing political and business expectations) to produce such aggregate turns in international institutional choices. That remains a task for future research.

For now, it would be helpful to end by briefly suggesting that the theoretical elements of choice in Japanese trade diplomacy at present are also of considerable practical interest, especially as they bear upon Japan's ultimate global and regional ambitions. They lead to concrete policy issues such as the impact of Japan's behavior on the institutional underpinnings of the global trading system, especially the direction, scope, and intensity of multilateral liberalization efforts vis-a-vis preferential ones in the future; the impact on the standardization and harmonization of rules in new substantive areas such as investment that will directly affect global businesses; the impact on other Asian powers, especially China and even India, of the game of regional balancing and counterbalancing of preferential pacts; and finally, perhaps most consequential of all for the long run, the impact on the very economic and political structure of the Asian region and its subsequent collective place in the global system.

I wish to thank numerous officials in the Ministry of Economy Trade and Industry and the Ministry of Foreign Affairs, especially Junichi Ihara, Shinichi Kitajima, Setsuo Ohmori, Tadaatsu Mouri, Naoko Munakata, Kuni Sato, Yuichi Suzuki, Tanaka Shigehiro, and Masakazu Toyoda, for sharing their views with me. I also thank Edward Lincoln and Ellis Krauss for their very thoughtful comments on earlier versions of this article presented at the Brookings Institution in 2002. Finally, at the Journal of East Asian Studies, I thank the editor Stephen Haggard, the former editor Byung-Kook Kim, and the anonymous reviewers for their very constructive criticisms.

Notes

(1.) For an overview, see Stephen D. Krasner, ed., International Regimes (Ithaca: Cornell University Press, 1983); Judith L. Goldstein, Miles Kahler, Robert O. Keohane, and Anne-Marie Slaughter, eds., Legalization and World Politics (International Organization special issue) (Cambridge: MIT Press, 2001); and Barbara Koremenos, Charles Lipson, and Duncan Snidal, eds., The Rational Design of International Institutions (International Organization special issue) (New York: Cambridge University Press, 2003).

(2.) Walter Mattli, "Private Justice in a Global Economy: From Litigation to Arbitration," International Organization 55, no. 4 (2001): 919-947; Christina L. Davis, "Setting the Negotiating Table: The Choice of Institutions for Trade Disputes," paper prepared for delivery at the 2003 annual meeting of the International Studies Association, 2003.

(3.) Jagdish Bhagwati, The World Trading System at Risk (Princeton: Princeton University Press, 1991), p. 28.

(4.) Ibid., pp. 15-16.

(5.) I. M. Destler, Haruhiro Fukui, and Hideo Sato, The Textile Wrangle: Conflict in Japanese-American Relations, 1969-1971 (Ithaca: Cornell University Press, 1979), especially pp. 8, 57-62, 315-316; Vinod K. Aggarwal and Stephen Haggard, "The Politics of Protection in the U.S. Textile and Apparel Industries," in John Zysman and Laura Tyson, eds., American Industry in International Competition: Government Policies and Corporate Strategies (Ithaca: Cornell University Press, 1983), pp. 271-282, 289-294.

(6.) James C. Abegglen, Tadao Kato, Louis J. Mulkern, Keiske Yawata, Walter E. Hoadley, and Koei Narusawa, US-Japan Economic Relations: A Symposium on Critical Issues (Berkeley: Institute of East Asian Studies, 1980), pp. 5-6.

(7.) Saadia M. Pekkanen, "At Play in the Legal Realm: The WTO and the Changing Nature of US-Japan Antidumping Disputes," in Ellis S. Krauss and T. J. Pempel, eds., Beyond Bilateralism: The US-Japan Relationship in the New Asia Pacific (Stanford: Stanford University Press, 2004), pp. 221-247; Michael O. Moore, "Steel Protection in the 1980s: The Waning Influence of Big Steel?" in Anne O. Krueger, ed., The Political Economy of American Trade Policy (Chicago: University of Chicago Press for the National Bureau of Economic Research, 1996), pp. 73-130.

(8.) James E. Millstein, "Decline in an Expanding Industry: Japanese Competition in Color Television," in John Zysman and Laura Tyson, eds., American Industry in International Competition: Government Policies and Corporate Strategies (Ithaca: Cornell University Press, 1983), pp. 106-141.

(9.) David Friedman, "Beyond the Age of Ford: The Strategic Basis of the Japanese Success in Automobiles," in John Zysman and Laura Tyson, eds., American Industry in International Competition: Government Policies and Corporate Strategies (Ithaca: Cornell University Press, 1983), pp. 365-367; Douglas R. Nelson, "The Political Economy of U.S. Automobile Protection," in Krueger, Political Economy of American Trade Policy, pp. 134-146, 169-177.

(10.) The Japanese proved willing in this deal. Considering that there was an estimated U.S.$2 billion in domestic profit rent transfers to the Japanese firms over the first three years of the VER's operation, it was also not a surprise to find their willingness to continue the VER from 1988 to 1989.

(11.) Michael Borrus, James E. Millstein, and John Zysman, "Trade and Development in the Semiconductor Industry: Japanese Challenge and American Response," in Zysman and Tyson, American Industry in International Competition, pp. 156, 209; Daniel I. Okimoto, "Political Context," in Daniel I. Okimoto, Takuo Sugano, and Franklin B. Weinstein, Competitive Edge: The Semiconductor Industry in the U.S. and Japan (Stanford: Stanford University Press, 1984), pp. 95-99, 133; Kenneth Flamm, Mismanaged Trade? Strategic Policy and the Semiconductor Industry (Washington, D.C.: Brookings Institution, 1996), pp. 425-459; Douglas A. Irwin, "Trade Politics and the Semiconductor Industry," in Krueger, Political Economy of American Trade Policy.

(12.) Edward J. Lincoln, Japan's Unequal Trade (Washington, D.C.: Brookings Institution, 1990), pp. 142-150.

(13.) American Chamber of Commerce in Japan (ACCJ), Making Trade Talks Work: Lessons from Recent History (Tokyo: ACCJ, 1997), pp. 25-26, 43-46, 131-132.

(14.) The following discussion draws on Merit E. Janow, "Trading with an Ally: Progress and Discontent in U.S.-Japan Trade Relations," in Gerald L. Curtis, ed., The United States, Japan, and Asia: Challenges for U.S. Policy (New York: W. W. Norton, 1994), pp. 65-68, 73-82; Leonard Schoppa, Bargaining with Japan: What American Pressure Can and Cannot Do (New York: Columbia University Press, 1997), especially pp. 86-94, 257-294; and Edward Lincoln, Troubled Times: U.S.-Japan Trade Relations in the 1990s (Washington, D.C.: Brookings Institution, 1999), pp. 118-166.

(15.) Laura D. Tyson, Who's Bashing Whom? Trade Conflict in High-Technology Industries (Washington, D.C.: Institute for International Economics, 1992), pp. 1-14.

(16.) Jagdish Bhagwati, "Aggressive Unilateralism: An Overview," in Jagdish Bhagwati and Hugh T. Patrick, eds., Aggressive Unilateralism: America's 301 Trade Policy and the World Trading System (Ann Arbor: University of Michigan Press, 1990), pp. 1-45; Kent E. Calder, "Japanese Foreign Economic Policy Formation: Explaining the Reactive State," World Politics 40, no. 4 (1988): 517-541.

(17.) Author interview with former METI official, Tokyo, March 18, 2001.

(18.) Fred C. Bergsten, Takatoshi Ito, and Marcus Noland, No More Bashing: Building a New Japan-United States Economic Relationship (Washington, D.C.: Institute for International Economics, 2001), p. 233.

(19.) Author interview with former METI official, Tokyo, August 13, 1997.

(20.) For an overview of the historical trajectory, see Saadia M. Pekkanen, "International Law, the WTO, and the Japanese State: Assessment and Implications of the New Legalized Trade Politics," Journal of Japanese Studies 27, no. 1 (2001): 41-79.

(21.) Author interview with METI official, Tokyo, December 6, 2001.

(22.) Nihon Keizai Shinbun, February 13, 1994.

(23.) Daily Yomiuri, March 16, 1996.

(24.) Asahi Shinbun, February 14, 1994.

(25.) Washington Post, May 11, 1995.

(26.) WTO WT/DS6.

(27.) Douglas A. Irwin, "Trade Politics and the Semiconductor Industry," in Krueger, Political Economy of American Trade Policy, pp. 56-64.

(28.) New York Times, December 21, 1996.

(29.) New York Times, May 28, 1996, and July 30, 1996.

(30.) See General Agreement on Tariffs and Trade (GATT), GA 1987, pp. 63-65; and GATT, BISD 35th Supplement, 1987-1988, pp. 116-163.

(31.) See USTR, Press Release no. 96-65, "U.S. and Japan Reach Semiconductor Accord," August 2, 1996; and ACCJ, Making Trade Talks Work, pp. 62-63.

(32.) See USTR, Press Release no. 99-50, "United States, Japan, European Union, Korea and Taiwan Announce New Accord on Semiconductor Trade Practices," June 10, 1999.

(33.) From 1995 to 2000, Japan defended 6 percent, the United States 25 percent, and the EU 17 percent of the total number of distinct matters at the WTO. During the same time, Japan filed 4 percent, the United States 30 percent, and the EU 26 percent of the total number of complaints. Figures for the United States and European Union are from U.S. Government Accounting Office (USGAO), World Trade Organization: Issues in Dispute Settlement, GAO/NSIAD-00-210 (Washington, D.C.: USGAO, 2000), pp. 3-4; and USGAO, World Trade Organization: U.S. Experience to Date in Dispute Settlement System--The First Five Years, GAO/NSIAD/OGC-00-196BR (Washington, D.C.: USGAO, 2000), pp. 9-12. Figures for Japan are based on calculations by the author of WTO dispute settlement data from 1995 to the present, and include both cases in which Japan is a single complainant and those in which it is a co-complainant.

(34.) Keisuke Iida, "Is WTO Dispute Settlement Effective?" Global Governance 10 (2004), especially pp. 215-216.

(35.) References to all data for Japan are based my calculation of WTO dispute settlement data from 1995 to 2002. Cases refer to those involving Japan in which consultations were initiated using the WTO dispute settlement machinery, irrespective of final outcome.

(36.) Saadia M. Pekkanen, "Aggressive Legalism: The Rules of the WTO and Japan's Emerging Trade Strategy," World Economy 24, no. 5 (2001): 717-721.

(37.) Saadia M. Pekkanen, "Sword and Shield: The WTO Dispute Settlement System and Japan," Japanese Economy 28, no. 6 (2000): 3-26.

(38.) Saadia M. Pekkanen, "At Play in the Legal Realm: The WTO and the Changing Nature of US-Japan Antidumping Disputes," in Krauss and Pempel, Beyond Bilateralism, pp. 221-247.

(39.) Author interview with MOFA official, March 15, 2001.

(40.) The following discussion is based exclusively on the Report of the Panel WTO WT/DS162/R; the Report of the Appellate Body, which heard a joint appeal by Japan and the EU in WTO WT/DSI36/AB/R and WT/DS162 /AB/R; the Arbitration Report, which merged the complaints of both the EU and Japan in the single document numbered WTO WT/DS136/11 and WTO WT/DS/162/14; and also Japan's formal request for imposing sanctions in WTO WT/DS 162/18.

(41.) The following discussion is drawn from the Report of the Panel WTO WT/DS184/R, the Report of the Appellate Body WTO WT/DS184/AB/R, and the Arbitration Report WTO WT/DS184/13.

(42.) For an update on Japan's antidumping agenda, see Saadia M. Pekkanen, "The Politics of Japan's WTO Strategies," Orbis 48, no. 1 (2004): 135-147.

(43.) WTO WT/DS217/1.

(44.) WTO WT/DS244/1; G/L/508; G/ADP/D39/1. Reports have also emerged that Japan may be filing another case involving U.S. antidumping measures that target imports of surface-treated sheet steel. See Japan Times, January 24, 2002.

(45.) Kyoto News, March 9, 2002.

(46.) Christina L. Davis, Food Fights over Free Trade: How International Institutions Promote Agricultural Trade Liberalization (Princeton: Princeton University Press, 2003), especially pp. 27-28.

(47.) John H. Jackson, "Designing and Implementing Effective Dispute Settlement Procedures: WTO Dispute Settlement, Appraisal, and Prospects," in Anne O. Krueger, ed., The WTO as an International Organization (Chicago: University of Chicago Press, 1998), p. 164.

(48.) Author interview with MOFA official, December 6, 2001.

(49.) Peter J. Katzenstein, "Varieties of Asian Regionalism," in Peter J. Katzenstein, Natasha Hamilton-Hart, Kozo Kato, and Ming Yue, Asian Regionalism, East Asia Series (Ithaca: Cornell University Press, 2000), pp. 1-8; S. J. Maswood, "'Japanese Foreign Policy and Regionalism," in S. J. Maswood, ed., Japan and East Asian Regionalism (New York: Routledge, 2001), pp. 5-23; Kevin G. Cai, "Is a Free Trade Zone Emerging in Northeast Asia in the Wake of the Asian Financial Crisis?" Pacific Affairs 74, no. 1 (2001): 7-10.

(50.) Ellis S. Krauss, "The United States and Japan in APEC's EVSL Negotiations: Regional Multilateralism and Trade Negotiations," in Krauss and Pempel, Beyond Bilateralism: John Ravenhill, APEC and the Construction of Pacific Rim Regionalism (New York: Cambridge University Press, 2001), pp. 180-185; Michael Wesley, "APEC's Mid-Life Crisis? The Rise and Fall of Early Voluntary Sector Liberalization," Pacific Affairs 74, no. 2 (2001).

(51.) METI, The Agreement Between Japan and the Republic of Singapore for a New Age Economic Partnership (the JSEPA), January 2002, available at http://www.meti.go.jp (accessed March 16, 2002). See also METI, "Joint Statement for First Formal Negotiations of the Japan-Singapore Economic Agreement for a New Age Partnership (JSEPA)," February 1, 2001, available at http://www.meti.go.jp (accessed March 16, 2002).

(52.) Walter Hatch and Kozo Yamamura, Asia in Japan's Embrace (New York: Cambridge University Press, 1996), p. 5; Edward Lincoln, Japan's New Global Role (Washington, D.C.: Brookings Institution, 1993), pp. 13-14.

(53.) Author interview with attorney-at-law at Nishimura & Partners, July 21, 2004.

(54.) Author interview with MOFA official, July 20, 2004.

(55.) Kevin G. Cai, "Is a Free Trade Zone Emerging in Northeast Asia in the Wake of the Asian Financial Crisis?" Pacific Affairs 74, no. 1 (2001): 12-14; Japan Times, November 2, 2001; The Australian, March 27, 2002.

(56.) Author interview with METI official, July 21, 2004.

(57.) Business Times (Malaysia), December 3, 2001.

(58.) Straits Times (Singapore), December 10, 2001.

(59.) Naoko Munakata, Evolution of Japan's Policy Toward Economic Integration, Center for Northeast Asian Policy Studies (Washington, D.C.: Brookings Institution, 2001); Mireya Solis, "Japan's New Regionalism: The Politics of Free Trade Talks with Mexico," Journal of East Asian Studies 3, no. 3 (2001), especially pp. 380-387.

(60.) Author interview with MOFA official, July 21, 2004.

(61.) Reportedly, a Japanese textile industry association, which wanted to expand its high-tech fiber products, has reached an agreement concerning textile tariff elimination with its counterparts in Thailand, Malaysia, and the Philippines. See International Herald Tribune/Asahi Shimbun, July 21, 2004.

(62.) Author interview with MOFA official, July 20, 2004.

(63.) Author interview with attorney-at-law at Nagashima, Ohno, & Tsunematsu, July 20, 2004.

(64.) Saori Katada, "Japan's Counter-Weight Strategy: U.S.-Japan Cooperation and Competition in International Finance," in Krauss and Pempel, Beyond Bilateralism.

Saadia M. Pekkanen is Job and Gertrud Tamaki Professor at the Henry M. Jackson School of International Studies, University of Washington, Seattle.