Currency exchange rates The currency exchange rate over the semester of the Japanese Yen to US dollars has not been a stable one at all. From the highest exchange rate of 91.7872 Yen for 1 US dollar on14 th June 2009, it dropped to 80.382 yen/dollar on 1 st November 2010. The export and business phases being experienced in most East Asian countries is being caused by the yen to dollar fluctuations in exchange rate (kamakura, 2005). Moreover, the fluctuations are believed to have caused industrial shocks leading to instability in most sectors of the economy. Balance of trade International trade entails the exchange of goods and services across the borders of nations or states. In this regard, goods and services are either imported or exported among different countries. The total volume of exports and imports and difference between the two components obtained over a given period of time, it is referred to as the balance of trade. Japan and United States have been close economic partners for a considerable length of time. Japan trades about 31.5 percent of its total exports to Unite States. On the other hand, 22.3 percent of its total volume of imports originates from United States. On the same note, Japan’s direct investment overseas mainly targets the US markets. For instance, in 1990, about 50 % of Japan’s direct investment overseas landed in the US markets. The total export value from Japan to United States in 2009 was $28,913,700,000.00 while the imports from United States totaled $12,547,100,000.00. This resulted in favorable balance of trade of about $16,366,600,000.00. Trade restrictions imposed by Japan Japan does not allow the importation of certain products. For instance, it prohibits the importation of harmful products such as narcotics, small weapons like firearms, and pornographic materials (Barnes/Richardson, Global Trade Law, 2010). Other restrictions on trade imposed by Japan include certain health products that may be harmful or unnecessary to its population, pharmaceuticals, food substances as well as some forms of chemical based products. One of the rationales of imposing restrictions on trade is that certain goods may hamper the growth of local industries by destabilizing the market through unfair competition (Barnes/Richardson, Global Trade Law, 2010). There are other goods which may not meet the set hygiene or health requirements. Among the restricted products include animal parts which may be facing extinction like ivory, meat and other agricultural related products, certain items that have been banned from trading by international treaties in addition to cosmetics and medical products that have been supplied for over two months (Barnes/Richardson, Global Trade Law, 2010). One of the most important concerns while negotiating trade deal with other countries is the impact of the import-export trade on the economy of Japan. For example, Japan has of late requested some pertinent information concerning BSE. The two countries are currently negotiating on the possibility of resuming trade of beef products in spite of the fact that Japan lifted the ban on beef products from US sometimes back. Japan had restricted the importation of be