U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

62–791 PDF 2010

S. HRG. 111–754 

U.S.–JAPAN RELATIONS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON EAST ASIAN 

AND PACIFIC AFFAIRS 

OF THE

COMMITTEE ON FOREIGN RELATIONS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

APRIL 15, 2010 

Printed for the use of the Committee on Foreign Relations 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

COMMITTEE ON FOREIGN RELATIONS

JOHN F. KERRY, Massachusetts, Chairman

CHRISTOPHER J. DODD, Connecticut 

RUSSELL D. FEINGOLD, Wisconsin 

BARBARA BOXER, California 

ROBERT MENENDEZ, New Jersey 

BENJAMIN L. CARDIN, Maryland 

ROBERT P. CASEY, JR., Pennsylvania 

JIM WEBB, Virginia 

JEANNE SHAHEEN, New Hampshire 

EDWARD E. KAUFMAN, Delaware 

KIRSTEN E. GILLIBRAND, New York 

RICHARD G. LUGAR, Indiana 

BOB CORKER, Tennessee 

JOHNNY ISAKSON, Georgia 

JAMES E. RISCH, Idaho 

JIM DEMINT, South Carolina 

JOHN BARRASSO, Wyoming 

ROGER F. WICKER, Mississippi 

JAMES M. INHOFE, Oklahoma 

FRANK G. LOWENSTEIN, Staff Director

KENNETH A. MYERS, JR., Republican Staff Director

——————

SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS

JIM WEBB, Virginia Chairman

CHRISTOPHER J. DODD, Connecticut 

RUSSELL D. FEINGOLD, Wisconsin 

BARBARA BOXER, California 

ROBERT P. CASEY, JR., Pennsylvania 

KIRSTEN E. GILLIBRAND, New York 

JAMES M. INHOFE, Oklahoma 

JOHNNY ISAKSON, Georgia 

JOHN BARRASSO, Wyoming 

ROGER F. WICKER, Mississippi 

(II)

C O N T E N T S 

Page 

Auslin, Michael, director of Japanese Studies, American Enterprise Institute, 

Washington, DC ................................................................................................... 30 

Prepared statement .......................................................................................... 34 

Inhofe, Hon. James M., U.S. Senator from Oklahoma, prepared statement ...... 5 

Katz, Richard, editor in chief, The Oriental Economist Report, New York, 

NY ......................................................................................................................... 12 

Prepared statement .......................................................................................... 16 

Packard, George, president, United States-Japan Foundation, New York, NY . 6 

Prepared statement .......................................................................................... 10 

Webb, Hon. Jim, U.S. Senator from Virginia, opening statement ....................... 1 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Toland, Paul, Commander, U.S. Navy, prepared statement ................................ 45 

Letter from Moises Garcia ...................................................................................... 46 

Letter from Shoko Matsuda .................................................................................... 48 

Letter from Scott Sawyer, general secretary of Global Future: The Parents 

Council on International Children’s Policy ........................................................ 50 

(III)

(1) 

U.S.–JAPAN RELATIONS 

THURSDAY, APRIL 15, 2010 

U.S. SENATE, SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS, COMMITTEE ON FOREIGN RELATIONS, Washington, DC. 

The subcommittee met, pursuant to notice, at 11:07 a.m., in room 

SD–419, Dirksen Senate Office Building, Hon. Jim Webb (chairman 

of the subcommittee) presiding. 

Present: Senator Webb. 

OPENING STATEMENT OF HON. JIM WEBB, 

U.S. SENATOR FROM VIRGINIA 

Senator WEBB. Good morning. The hearing will come to order. 

The past 60 years have produced a dramatically different Asia 

from the region that had been ravaged by World War II. Europe’s 

colonial powers withdrew from their colonies, the United States 

gave independence to the Philippines, Japan left the countries that 

it occupied and returned inside its historical borders. Whether in 

peace or war, new nations have been born. The governments of existing ones have risen or fallen, and on Asia’s map, borders far and 

wide have been erased or redrawn. New political systems, too, have 

been created, while others have crumbled, and still others have 

held steady and matured. Good governments have formed, and bad 

ones, as well. And all of this change, along with the energy that 

it unleashed, has let loose, in untold millions, an immense store of 

aspirations, not always successfully. And, above all, it has kindled, 

in nearly the whole of Asia, a steady, and sometimes surprising, 

economic growth. 

Throughout, the United States has always been on hand, providing the region with a balance and a guarantee of stability that 

it had previously lacked. We fought two hard wars, in Korea and 

Vietnam, losing more than 100,000 American lives, as a measure 

of our commitment to this region’s stability. 

The wars aside, our military strength has provided overarching 

regional security, while commercial, economic, and political ties 

have emerged and flourished. To no small extent, the American 

presence has quelled larger uncertainties when, from time to time, 

they have threatened to engulf Asia. 

In this sense, we have been an indisputable and indispensable 

partner, even as we ourselves have steadily become more of an 

Asian nation, in terms of commerce, military security, and with respect to our own culture here at home. 

2 

In a region where the national interests of Russia, China, Japan, 

and the United States directly intersect, we’ve provided a rare historical balance that has allowed the people of East Asia to prosper 

and to advance further along a path leading to a better life than 

ever known before. 

Yet, change is a constant. Peace and stability are not to be found 

everywhere at any time, and certainly this holds true in today’s 

Asia. China’s emergence requires special care, both in the region 

and elsewhere, to communicate our strong national conviction that 

China’s sense of responsibility in the world must match its increasing influence. 

We continue to face a truculent and reckless regime in North 

Korea. We look on with care and deep concern as our good friends 

in Thailand struggle to find a more accommodating political mechanism and broader opportunities. 

In Burma, we see early but clear signs of transition stirring. 

Where, or how far, it will go, no one can yet tell, but any evidence 

of change in Burma, however fashioned, is to be acknowledged, if 

only for the eternal—excuse me—if only for the eventual good it 

may hold. 

Also, in Japan, new elections have brought a new party to power 

for the first time in more than half a century, and along with that 

political change, we are seeing signs of deeper thought and concerns that infect the entire national mood. Predictably, this brings 

the prospect of some new policies, fresh priorities, and added perspectives. We should study the possible impact of these changes in 

order to ensure that this vital alliance remains both vital and an 

alliance. For, above all, it is to be remembered that the relationship 

between our two countries has endured the test of the many challenging decades since World War II, and, as a result, now rests 

firmly on a foundation of mutual and rock-hard trust and respect. 

This year, in fact, we and Japan celebrate the 50th anniversary 

of our Treaty of Mutual Security and Cooperation. This treaty, 

along with strong economic and political ties between our countries, 

has served us well. In many ways, we are more than allies. Indeed, 

the ties that bind Japan and America are sometimes overlooked because they have become so complete. It would be hard for either 

country to envision a future without consideration of the other. 

Today, even with the remarkable rise of China and its burgeoning economic growth, the largest economies in the world are in 

the United States and Japan, respectively. Combined, they account 

for nearly 30 percent of the world’s GDP. And despite a global 

financial crisis, our trade last year reached $147 billion with over 

$50 billion in United States exports to Japan. Moreover, Japan is 

our fourth-largest trading partner and the largest holder of United 

States Treasury securities. 

Japan’s military is often overlooked, but it is strong, and it is 

large, and it has taken a strong role in international security and 

humanitarian missions. It is participating in the Combined Task 

Force 151, a multilateral force protecting global shipping from 

Somali pirates. More recently, Japan dispatched 160 members of 

its Self-Defense Force to Haiti to aid in the earthquake recovery 

there. Japan is a leading donor for Afghanistan reconstruction, contributing more than $2 billion in aid, thus far. Last year, it publicly 

3 

committed to providing at least $5 billion more. Japan is also the 

second-largest contributor to Iraq’s reconstruction. 

Many Americans tend to forget that Japan itself is host nation 

to about 85,000 American servicemembers, dependents, and civilians, also provides billions of dollars each year, $4.3 billion in 2008 

alone, for support and upkeep of these bases. Furthermore, Japan has committed an additional $6 billion to 

help pay for the restructuring of the United States military presence. Such significant monetary and force contributions clearly 

demonstrate, in real terms, that Japan remains stalwartly side by 

side and shares America’s highest goals and aspirations. 

Naturally, relationships evolve. America and Japan are no different. One can find ready evidence of this in the attention presently 

trained on the future disposition of the Futenma Marine Corps Air 

Station in Okinawa. It’s been widely reported, the new Japanese 

Government is in the midst of reviewing the provisions of a 2006 

agreement to relocate this base to a northern portion of Okinawa, 

and we have heard that a decision would be forthcoming within the 

next month or so. 

Whatever the result, resolution of this issue will have a direct 

bearing on the larger consideration of America’s defense posture in 

all of Asia. 

Thirty-five years ago, I was retained by the Government of Guam 

to assess our military strength as it existed then in the region, including looking at our forces in the Philippines, Korea, and in 

Japan, and to map out how our land, sea, and air forces should 

best be deployed a new strategic posture, including Guam, Tinian, 

and potentially Saipan. 

I continued to scrutinize this issue, both as Assistant Secretary 

of Defense and later as Secretary of the Navy, and on many occasions as a journalist traveling extensively in Asia. In February of 

this year, I visited Tokyo to meet with Japanese and U.S. officials 

in order to discuss our diplomatic, economic, and security relations. 

Following those meetings, I then visited Okinawa, Guam, Saipan, 

and Tinian to examine the restructuring of United States military 

forces now stationed in Japan. I heard from many stakeholders involved in the proposed relocation of the Futenma Marine Corp Air 

Station and the movement of 8,000 marines from Okinawa to 

Guam. 

And it’s important to keep in mind that such a move would involve a nearly 50-percent reduction in what we call the Marine 

Corps footprint, the forward presence in Japan. If executed properly, I am confident that this relocation can keep us strong in Asia, 

can alleviate concerns of those affected by this change, and result 

in continuing to have the kind of forward and flexible force needed 

to keep overall stability in the region. The question, of course, is 

how to bring about a proper execution of this plan. 

The question before us today is, obviously, much larger than the 

basing issues that have drawn so much attention. Given the dynamic changes in the region and the inordinate amount of national 

attention that has gone into our complex and still-evolving relationship with China, how do we best move forward on every level with 

our true and tested ally, Japan? What measures should be taken 

to ensure that Americans and Japanese alike understand the vital 

4 

importance of a continued friendship and alliance? And how do 

Japan and the United States best move forward together to ensure 

our extraordinary bonds continue to grow even stronger and evermore interwoven? 

To discuss these issues today, I am pleased that we are joined 

by an incredibly well-qualified group of witnesses. I look forward 

to hearing their views on the strengths and challenges of our relations with Japan, and the future of that alliance. 

And, gentlemen, I very much appreciate all of you having taken 

the time to prepare testimony and also come and exchange ideas 

today. 

Our first speaker will be Dr. George Packard, who’s president of 

the United States-Japan Foundation, former dean of the School of 

Advanced International Studies at Johns Hopkins University. He 

founded the Johns Hopkins Foreign Policy Institute, the SAIS 

Review, the Reischauer Center for East Asian Studies, the Hopkins-Nanjing Center in China. Dr. Packard is the author of 9 books 

on Japan and East Asia, maybe 10. He just gave me his latest 

book. 

Is this No. 9 or No. 10, Doctor? [Laughter.] 

Dr. PACKARD. Number nine. 

Senator WEBB. I very much appreciate it. 

Second, Mr. Richard Katz, editor in chief of the Oriental Economist Report, veteran journalist with more than three decades of experience writing on Japan and United States-Japan relations. Mr. 

Katz has testified before congressional committees on United 

States-Japan and United States-Asian relations, as well as lessons 

from United States—for the United States from Japan’s banking 

crisis. Mr. Katz is the author of two books on Japan’s economy and 

is a frequent commentator on United States-Japan’s relations. 

Our third speaker will be Dr. Michael Auslin, who is director of 

Japan Studies at the American Enterprise Institute for Public Policy Research. He is also resident scholar there in foreign and defense policy studies. Dr. Auslin was associate professor of history 

at Yale University, senior research fellow at Yale’s MacMillan Center for International and Area Studies prior to joining AEI. He is 

the author of a book on negotiating with Japan, and is currently 

completing a book on the cultural history of United States-Japan 

relations. 

So, we have decades of experience here, from people who have 

examined the United States-Japan extensively and, by my count, 

14 books, which is half a library. 

At this time, I would like to place in the record statements that 

we received here on the subcommittee on the issue of parental 

child abduction in Japan. This is an issue of continuing concern between American and Japanese relations. I met with a group of 

these parents when I was in Tokyo recently, and their testimony 

will be entered into the record at this time. 

[EDITIOR’S NOTE.—The statements mentioned above can be found in 

the ‘‘Additional Material Submitted for the Record’’ section of this 

hearing.] 

Senator WEBB. And now, at this time, Senator Inhofe’s statement 

also will be entered into the record. He may or may not be able to 

5 

attend, but this is the appropriate place for his statement to be entered. 

[The prepared statement of Senator Inhofe follows:] 

PREPARED STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM OKLAHOMA

Thank you, Senator Webb, for chairing this subcommittee hearing today on 

United States-Japan relations. 

As we celebrate the 50th year of the United States-Japan Security Treaty, whereby Japan granted the United States military base rights on its territory in return 

for a U.S. pledge of protection, we are witnessing potential fundamental changes in 

our relationship with Japan. Much of this has to do with the historic victory in 

August 2009, of the Democratic Party of Japan (DPJ) which ended the almost uninterrupted rule of the Liberal Democratic Party (LDP) in postwar Japan. The impact 

of this victory is being felt across nearly every aspect of Japanese policymaking, 

from security alliance relations to Japan’s budgetmaking process to the relationship 

between politicians and career Japanese civil and foreign service employees who 

served under the LDP—the present opposition party—for close to a half century. 

Clearly, a transition was expected and necessary. And it is expected that those 

who have been out of power for close to two generations, will need time to gain on 

the job training in running a government. Experienced observers, however, have remarked that this has not been a ‘‘smooth’’ transition by any standard. These same 

authorities have also suggested that part of the problem is driven by political instead of policy exigencies. 

It is a fact that in July 2010, half of Japan’s Upper House seats will be up for 

election. The DPJ controls that chamber of the Diet by virtue of its alliance with 

two smaller parties, the left-of-center Social Democratic Party (SDP) and the populist/conservative People’s New Party (PNP). The results of the July Upper House 

election may have a formative impact on a number of issues in United States-Japan 

relations. And it is in this present runup to this election that, in many observers’ 

minds, politics is intruding into the national security decisionmaking process of the 

current leadership. There is no better example of this alleged intrusion, than in the 

controversy over U.S. military base realignment plans in Okinawa; the ‘‘Futenma’’ 

issue. 

As you know, beginning in the Clinton through the Bush and into the present administration, negotiations were successfully concluded to realign and expand our 

mutual security alliance with Japan beyond its existing framework. A key feature 

of this new arrangement includes relocating the U.S. Marine’s Futenma Air Station 

from crowded Ginowan to Camp Schwab, in the less populated part of northern 

Okinawa. This realignment of U.S. forces in Japan also includes the redeployment 

of the III Marine Expeditionary Force (III MEF), which includes 8,000 U.S. personnel and their dependents (when at full capacity), to new facilities in Guam, and 

thus lead to the return of thousands of acres of land to the Japanese. This move 

will reduce the number of U.S. Marines on Okinawa by nearly half. United States 

and Japanese officials settled on Camp Schwab because of its far less populated and 

congested location. 

But now, after 13 years of negotiations, and an agreement signed in 2006 by the 

United States and Japanese Governments, the present government has stated that 

it might not honor the agreement in part or whole. Why? 

Does the new government want to alter fundamentally the United States-Japan 

security alliance? Prime Minister Hatoyama has in the past made statements suggesting that U.S. troops in Japan either be significantly reduced or withdrawn altogether, though he backed away from these statements once he was elected, and confirmed the centrality of the alliance to Japan’s security. Is it because the present 

government has a vision of a Japan that is more ‘‘normal,’’ in that it is more assertive and independent on the international stage? Members of the Hatoyama government have been quoted as supporting increased contributions in personnel and 

materiel to international security operations, but to do so only in missions that are 

authorized by the U.N. Security Council. 

The answer to this question at present is that there is no answer. The Hatoyama 

government has put off twice giving a definitive response whether it will honor 

Japan’s treaty commitments relating to Futenma. Unsettlingly, there are those who 

confidently predict that a final decision will be further delayed until after the July 

2010 Upper House elections. And even if the election brings a greater majority, the 

present government will find itself still bound to implicit domestic political promises 

that fundamentally alter our longstanding security relationship. 

6 

I would be very interested in your responses to these troubling predictions, and 

what implication this politics-over-policy decision—making process allegation might 

have on other security related issues in the region; e.g., future provocative actions 

taken by North Korea against Japan. 

I would like to raise another less visible, but no less important issue for discussion before this panel today on United States-Japan relations. It is the problem of 

parent child abduction. 

We are experiencing an increasing problem with Japanese citizens abducting their 

American children and successfully returning to a safe harbor in Japan. The 

Department of State reports that since 1994, 269 American children have been kidnapped from America to Japan. Shockingly, it is my understanding that since 1952 

when Japan regained its sovereignty, not a single kidnapped child from an American parent has ever been returned to the U.S. from Japan. In addition, I understand these American children living in Japan are often denied access to their 

American parent after a parental separation or divorce. And, to my knowledge, 

there are no joint custody or visitation rights in Japan. As a result, these children 

are alienated from their loving American parent, and the psychological trauma is 

extremely damaging. This tragedy for these American children and their left-behind 

American parents is overwhelming and must come to an end. 

The 1980 Hague Convention on the Civil Aspects of International Child Abduction 

has not been ratified by Japan. The United States, Great Britain, Canada, Australia, New Zealand, France, Italy, and Spain have all called upon Japan to ratify 

this treaty. Japan is a modern industrialized society, and ally of the U.S. American 

children, however, are kidnapped and denied access to their American parents, and 

no child has been returned. If Japan truly wishes to participate in the international 

community, it must follow international norms and ratify this treaty. 

In the past, private frankness followed by public discretion had been tried to resolve this issue on a case-by-case basis, but to no avail. Recently, however, the tragedy of Japanese child abduction has been made public. I applaud Assistant 

Secretary of State Kurt Campbell’s extended public discussion of the problem of 

child abductions at a press availability at the U.S. Embassy in Tokyo on February 

2, 2010. His comments can be found on the State Department’s web page at: http:// 

www.state.gov/p/eap/rls/rm/2010/02/136416.htm. In addition, he recently met with 

the American parents of abducted children last Friday, April 9, 2010, at the State 

Department here in Washington, DC. It is my understanding that a number of those 

parents who attended that ‘‘Town Hall’’ meeting with Assistant Secretary Campbell 

and other senior State Department officials are in the audience today. Their organizations, Bring Abducted Children Home (BAC Home), and American Citizen 

Children Kidnapped by Japan, can be found at: www.bachome.org and 

www.japanchildabduction.com. 

I encourage this panel to study this problem, if they have had not done so previously, and contribute their scholastic efforts to end the suffering of all concerned. 

Thank you again, Senator Webb, for chairing this subcommittee hearing on 

United States-Japan relations. 

Senator WEBB. And, with that, I would like to welcome the 

panel. We normally have a 7-minute summary period, but I’ve read 

through these statements. I would like to say you can take up to 

10 minutes, if you like, all three of you. There’s a tremendous 

amount of experience and information in the statements and on the 

panel. 

So, Dr. Packard, welcome. 

STATEMENT OF GEORGE PACKARD, PRESIDENT, UNITED 

STATES-JAPAN FOUNDATION, NEW YORK, NY 

Dr. PACKARD. Thank you very much, Mr. Chairman. 

It is a great honor to have this opportunity to testify before your 

committee on the complex relationship between the United States 

and Japan. As requested, I will focus on the future of that relationship, particularly the political and security issues that face the two 

nations. 

Today, the United States and Japan are allied under the terms 

of a treaty that took effect in January 1960, more than 50 years 

7 

ago. Not a single word of that treaty has been changed for over a 

half a century, even though since 1970 either side could have called 

for its abrogation by giving 1 year’s advance notice. 

The treaty commits the United States to come to the defense of 

Japan if Japan comes under attack from any country, and commits 

Japan to provide bases and ports for the United States to station 

its forces in Japan. It was correctly seen by both sides as a ‘‘grand 

bargain.’’ It enabled Japan to recover its independence, gain security from the most powerful nation in the world at low cost, avoid 

remilitarizing, stay out of the nuclear weapons race, and win access 

to the American market as it rebuilt its devastated economy after 

its defeat in World War II. It gave Japan time to nurture the seeds 

of parliamentary democracy that the United States planted during 

the occupation. It enabled the United States to project power into 

the western Pacific; its troops and bases in Japan could not only 

help to defend Japan but also lend credibility to its commitments 

to defend South Korea and Taiwan, and to contain the Soviet 

Union and Communist China. 

The treaty has clearly served the interests of both signatories; 

otherwise, it would not have survived. It has endured despite dramatic changes in world politics: the Vietnam war, collapse of the 

Soviet Union, the spread of nuclear weapons to North Korea, and 

the dramatic rise of China. 

But, I would suggest to the committee that we can’t assume it 

will survive into the indefinite future. And I say this for the following reasons. 

First, the original treaty of 1952, predecessor to this one, was 

negotiated between victor and vanquished between a victor and an 

occupied nation, not between two sovereign states. Every Japanese 

voter knows that. 

Two, Japan, which had never in its history accepted foreign 

troops on its soil, today, 65 years after the end of the war, has had 

to accept the indefinite stationing of close to 100,000 American 

troops, civilian employees, and dependents at some 85 facilities in 

a nation that is smaller than the State of California. Some 75 percent of the U.S. forces are based on the small island of Okinawa, 

in the Ryukyu chain. 

Three, the U.S.—the continued presence of such a large U.S. 

military footprint brings with it environmental damage, crime, accidents, noise in crowded cities, and red-light districts. 

Four, the American presence is governed by a Status of Forces 

Agreement, a SOFA, which has never been ratified by the Japanese 

Parliament and which increasingly strikes thoughtful Japanese as 

an extension of the extraterritorial arrangements that characterized Western imperialism in Asia in the 19th century. 

Five, in order to soften the criticism of its mercantilist trade policies in 1978, Japan agreed to provide ‘‘host-nation support’’ which, 

Senator, you have already mentioned—that helps pay for the Japanese workers employed at U.S. military bases. That cost has run, 

as you mentioned, up to $4.3 billion a year. It is called in Japanese 

the ‘‘omoiyari yosan’’ or ‘‘sympathy budget,’’ a term which should 

embarrass both sides. That budget paid, in 2008, for 76 bartenders, 

48 vending machine personnel, 47 golf course maintenance personnel, 25 club managers, 20 commercial artists, 9 leisure boat 

8 

operators, 6 theater directors, 5 cake decorators, 4 bowling alley 

clerks, 3 tour guides, and 1 animal caretaker—I don’t know what 

he does, but he’s there. 

It is only natural that a new generation of Japanese who did not 

live through the cold war will increasingly question why they 

should put up with foreign troops and bases on their soil. The 

United States has reduced its military footprint in South Korea, 

Germany, and the Philippines, and it should not be surprising that 

a new generation of Japanese is growing restive in this situation. 

Of course, the United States has problems with the treaty, as 

well. It is not reciprocal. Japan is not obliged to come to the aid 

of the United States if the United States comes under attack outside Japan. And Japan, while admitting that it has the right to engage in ‘‘collective self-defense,’’ as provided in the U.N. Charter, 

has declared that it cannot exercise that right because of Article IX 

of its Constitution, which renounces war as a ‘‘sovereign right of 

the nation and the threat or use of force in settling international 

disputes.’’ Repeated efforts by the United States to persuade Japan 

to change this interpretation have, so far, failed. 

Japan has, in a gingerly and painstaking process, taken some 

steps to meet American concerns that it is enjoying a ‘‘free ride.’’ 

It has taken steps to make its military equipment interoperable 

with that of the U.S. forces in the country, has engaged in joint 

planning and training exercises, currently has the seventh-largest 

defense budget in the world, and, as you know, sent 600 troops to 

Iraq from 2003 to 2006 to engage in noncombat operations. 

A critical turning point in the relationship between our two countries came last August when, after almost 53 years of uninterrupted rule by the Liberal Democratic Party, Japanese voters overwhelmingly threw out the LDP in Lower House elections, and gave 

a strong majority to the opposition Democratic Party of Japan, or 

DPJ. The new Prime Minister, Hatoyama Yukio, took office in September 2009, and he has a record of seeking closer relations with 

other nations in east Asia, and wishing to reduce the presence of 

the United States military in Japan. On his watch, Japan ended 

its refueling mission in the Indian Ocean. 

In October 2009, Secretary of Defense Robert Gates came to 

Tokyo and demanded the Hatoyama Cabinet should carry out a decision reached in 2006 between the Bush administration and an 

earlier LDP administration regarding the relocation of the U.S. 

Marine air base in Futenma. I believe this was a mistake. 

Hatoyama’s Cabinet was unprepared to act on this demand; his 

party and coalition consists of a broad spectrum of views on that 

issue. Many Okinawans feel they have been treated as second-class 

citizens by both the Japanese and the American governments, and 

they resent having their small island treating as a kind of ‘‘dumping ground’’ for United States bases that are not welcome on the 

main islands. 

I believe the United States should have given Hatoyama more 

time to sort out these views. Even more important, I think the 

United States should have celebrated the rise in Japan of a twoparty system, sure evidence that the roots of democracy that we 

helped to establish are robust. 

9 

Public opinion counts in Japan, and the future of the alliance 

will depend on the degree to which Japanese voters accept military 

bases. This means that the United States and Japan need to hold 

new and broad-ranging talks on grand strategy, on roles and missions of United States forces, and be prepared to explain their decisions to the Japanese public. 

Until now, the United States has not made an effective case for 

why the U.S. Marine air base needs to be in Okinawa. What is the 

mission for those 8,000 marines? General Stalder—Marine General 

Stalder, it was reported recently, said that they were stationed in 

Okinawa to be ready for the possible collapse of the North Korean 

regime and to seize control of fissile material to prevent rogue elements of that government from gaining control. It strikes me as 

almost unthinkable that the South Korean and Chinese Governments would welcome such a mission. 

The main point is that Futenma should not be the primary determinant of the United States-Japan relationship. Far more is at 

stake. We are the two strongest democracies and economies in East 

Asia, as you have pointed out, Mr. Chairman. Peace and security 

in the region can only be maintained by our joint leadership. We 

are the only two nations of East and West who have successfully 

overcome huge cultural and historical barriers to forge a genuine 

partnership of friendship and shared values. The treaty rests on 

the strong bonds of friendship that have been forged in the last 50 

years. 

But, there are disturbing signs that the new generation of young 

Japanese may be changing their views of America. The Washington 

Post reported on April 11 that undergraduate enrollment of Japanese students in United States universities has fallen by an 

astounding 52 percent since 2000. Graduate enrollment has fallen 

by 27 percent. This is happening at a time when enrollment from 

China is up by 164 percent; from India, up 190 percent. We can 

only speculate about why this is happening. Clearly it should focus 

our attention. 

The alliance, while crucial, is only one part of the overall partnership that has been built so carefully over the last 50 years. It 

would be a tragedy to allow Futenma—the Futenma issue to derail 

all of this. 

My bottom line, Mr. Chairman, is that there should be a reexamine of the entire alliance. And I am urging that a new ‘‘Wise 

Man’’—or, I should say ‘‘Wise Person’s Commission’’ to be set up 

similar to those that have played an important part in the past. 

The Commission should be charged, among other things, with devising new ways in which younger Americans and Japanese can 

communicate with each other. The foundation that I run has a 

United States-Japan leadership program that brings together two 

dozen of the most promising young leaders from both countries for 

intensive conversations. I am proud to say that Dr. Auslin, on my 

right here, has been one of those young leaders over the past 10 

years. 

I believe the Commission should look into expanding educational, 

cultural, and scientific exchanges, figure out ways to reach out to 

young Chinese leaders, ensuring that there will be networks of 

communication between the future leaders of all three countries. 

10 

Finally, Mr. Chairman, I am recommending that President 

Obama, during his November visit to Japan, would go to Hiroshima 

and use the symbolism of that place to declare his vision of a 

nuclear-free world. Then Prime Minister Hatoyama should visit 

Pearl Harbor and declare that his nation will work to create a 

world in which such an attack will never occur again. Neither 

leader should offer the hint of an apology, and both should praise 

the brave men, living and dead, who fought on both sides during 

World War II. I believe these symbolic gestures would go far to 

healing the remaining scars that are still painful to both nations, 

and would solidify the alliance for years to come. 

In conclusion, please let me repeat, the future of the alliance will 

depend on the degree to which it is acceptable to a majority of Japanese voters. Every Japanese politician knows that, and we Americans should respect and celebrate the fact that democracy is alive 

and well in Japan. 

Thank you very much, Senator. 

[The prepared statement of Dr. Packard follows:] 

PREPARED STATEMENT OF DR. GEORGE PACKARD, PRESIDENT, UNITED STATES-JAPAN

FOUNDATION, NEW YORK, NY 

It is a great honor to have this opportunity to testify before the Senate Foreign 

Relations Committee on the complex relationship between the United States and 

Japan. As requested, I will focus on the future of that relationship, particularly the 

political and security issues that face the two nations. [I have elaborated on these 

ideas in the current (March–April 2010) edition of Foreign Affairs magazine.] 

Today, the United States and Japan are allied under the terms of a Security 

Treaty that took effect in January 1960—50 years ago. Not a single word of that 

treaty has been changed for over a half century, even though since 1970 either side 

could have called for its abrogation by giving 1 year’s advance notice of its intent 

to do so. The treaty commits the U.S. to come to the defense of Japan if Japan 

comes under attack from any country, and commits Japan to provide bases and 

ports for the U.S. to station its forces in Japan. 

It was correctly seen by both sides as a ‘‘grand bargain.’’ It enabled Japan to recover its independence, gain security from the most powerful nation in the world 

at low cost, avoid remilitarizing, stay out of the nuclear weapons race, and win access to the American market as it rebuilt its devastated economy after its defeat 

in World War Two. It gave Japan time to nurture the seeds of parliamentary democracy that the U.S. planted during the Occupation. It enabled the U.S. to project 

power into the Western Pacific; its troops and bases in Japan could not only help 

defend Japan but also lend credibility to its commitments to defend South Korea 

and Taiwan, and to contain the Soviet Union and Communist China. 

The treaty has clearly served the interests of both signatories; otherwise it would 

not have survived. It has endured despite dramatic changes in world politics: the 

Vietnam war, collapse of the Soviet Union, the spread of nuclear weapons to North 

Korea and the dramatic rise of China. It has also survived fierce trade disputes between the two allies from 1971–1990, and it remains strong in spite of the deep cultural and historical differences between the two nations. 

But I would suggest to the committee that we cannot assume that it will survive 

into the indefinite future. I say this for the following reasons: 

• The original treaty that entered into force in 1952, predecessor to the current 

treaty, was negotiated between a victor and a vanquished, occupied nation, not 

between two sovereign states. Every Japanese voter knows that. 

• Japan, which had never in its history accepted foreign troops on its soil, today 

(65 years after the end of the war) has had to accept the indefinite stationing 

of close to 100,000 American troops, civilian employees and dependents at some 

85 facilities in a nation that is smaller than the State of California. Some 75 

percent of the U.S. forces are based on the small island of Okinawa, in the Ryukyu Island chain. 

• The continued presence of such a large U.S. military footprint brings with it environmental damage, crime, accidents, noise in crowded cities, and red light districts. 

11 

• The American presence is governed by a ‘‘Status of Forces Agreement’’ (SOFA) 

which has never been ratified by the Japanese Diet (Parliament) and which increasingly strikes thoughtful Japanese as an extension of the extraterritorial 

arrangements that characterized Western imperialism in Asia in the 19th 

century. • In order to soften the criticism of its mercantilist trade policies in 1978, Japan 

agree to provide ‘‘host nation support’’ that helps pay for the Japanese workers 

employed at U.S. military bases. That cost has run between $3–4 billion per 

year. It is called in Japanese the ‘‘omoiyari yosan’’ or ‘‘sympathy budget,’’ a term 

which should embarrass both sides. That budget paid in 2008 for 76 bartenders, 

48 vending machine personnel, 47 golf course maintenance personnel, 25 club 

managers, 20 commercial artists, 9 leisure boat operators, 6 theater directors, 

5 cake decorators, 4 bowling alley clerks, 3 tour guides, and 1 animal caretaker. • It is only natural that a new generation of Japanese who did not live through 

the cold war will increasingly question why they should put up with foreign 

troops and bases on their soil. The U.S. has reduced its military footprint in 

South Korea, Germany, and the Philippines, and it should not be surprising 

that the new generation of Japanese is growing restive in this situation. 

The United States, of course, has its own problems with the treaty: 

• It is not reciprocal. Japan is not obliged to come to the aid of the U.S. if the 

U.S. comes under attack outside of Japan. 

• Japan, while admitting that it has the right to engage in ‘‘collective selfdefense’’ as provided in the U.N. Charter, has declared that it cannot exercise 

that right because of Article IX of it’s Constitution, which renounces ‘‘war as 

a sovereign right of the nation and the threat or use of force in settling international disputes.’’ Repeated efforts by the U.S. to persuade Japan to change 

this interpretation have all failed. 

Still, Japan has in a gingerly and painstaking process, taken some steps to meet 

American concerns that it was enjoying a ‘‘free ride.’’ It has taken steps to make 

its military equipment interoperable with that of the U.S. Forces in the country, and 

has engaged in joint planning and training exercises. It currently has the seventhlargest defense budget in the world. It sent 600 troops to Iraq from 2003–06 to engage in noncombat operations, and from 2001 to early this year, stationed naval vessels in the Indian Ocean to supply fuel to coalition forces fighting in Afghanistan. 

It has agreed to share its technology with the U.S. in the field of antimissile defense 

programs. It regularly engages in U.N. peacekeeping operations. Japan is second 

only to the U.S. in supporting the work of the United Nations. 

A critical turning point came last August when, after almost 53 years of uninterrupted rule by the Liberal Democratic Party, Japanese voters overwhelmingly threw 

out the LDP in Lower House elections and gave a strong majority to the opposition 

Democratic Party of Japan (DPJ). The new Prime Minister, Hatoyama Yukio, who 

took office in September 2009, has a record of seeking closer relations with other 

nations in East Asia, and wishing to reduce the presence of the U.S. military in 

Japan. On his watch, Japan ended its refueling mission in the Indian Ocean. 

In October 2009, Secretary of Defense Robert Gates came to Tokyo and demanded 

that the Hatoyama Cabinet should carry out a decision reached in 2006 between the 

Bush administration and an earlier LDP administration regarding the relocation of 

the U.S. Marine Air Base in Futenma to a new location in Okinawa. This was a 

mistake. Hatoyama’s Cabinet was unprepared to act on this demand; his party and 

coalition consists of a broad spectrum of views on the issue. Many Okinawans feel 

they have been treated as second-class citizens by both the Japanese and American 

Governments; they resent having their small island treated as a ‘‘dumping ground’’ 

for U.S. bases that are not welcome on the main islands (the NIMBY syndrome). 

The U.S. should have given Hatoyama more time to sort out those views. Even 

more important, the U.S. should have celebrated the rise in Japan of a two-party 

system—sure evidence that the roots of democracy that we helped to establish are 

robust. Public opinion in Okinawa generally favors moving the Futenma base out 

of Okinawa altogether. Hatoyama has delayed making any decision on this, but 

promises to put forward his own plan by the end of May. 

Public opinion counts in Japan, and the future of the alliance will depend on the 

degree to which Japanese voters accept the military bases. This means that the U.S. 

and Japan need to hold new and broad-ranging talks on grand strategy, and on 

roles and missions for U.S. Forces, and be prepared to explain their decisions to the 

Japanese public. Until now, the U.S. has not made an effective case for why the 

U.S. Marine Air Base needs to be in Okinawa. What is the mission for those 8,000 

Marines? General Stalder, it was reported recently, said that they were stationed 

in Okinawa to be ready for the possible collapse of the North Korean regime and 

12 

to seize control of fissile materiel to prevent rogue elements of that government from 

gaining control. It strikes me as almost unthinkable that the South Korean and Chinese Governments would welcome such a mission. 

The main point is that Futenma should not be the primary determinant of the 

United States-Japan relationship. Far more is at stake. We are the two strongest 

democracies and economies in East Asia. Peace and security in the region can only 

be maintained by our joint leadership. 

We are the only two nations of East and West who have successfully overcome 

huge cultural and historical barriers to forge a genuine partnership of friendship 

and shared values. The treaty rests on the strong bonds of friendship that have 

been forged for the last 50 years. But there are disturbing signs that the new generation of young Japanese may be changing their views of America. The Washington 

Post reported on April 11, 2010, that undergraduate enrollment of Japanese students in U.S. universities has fallen an astounding 52 percent since 2000. Graduate 

enrollment has fallen by 27 percent. This is happening at a time when enrollment 

from China is up 164 percent, and from India, up 190 percent. We can speculate 

about why this is happening. Clearly it should focus our attention on the future of 

the alliance. 

The alliance, while crucial, is only one part of the overall partnership that has 

been built so carefully over the last 50 years. It would be a tragedy to allow the 

Futenma issue to derail all of this. U.S. policy toward Japan should not be dictated 

solely by the needs of U.S. Marine Corps, however legitimate they may be. 

With the proper civilian leadership, we must work together to curb North Korean 

nuclear ambitions, and to bring about reunification of the Korean Peninsula. 

Together we can strengthen environmental protection, human rights, antipiracy 

measures, securing sea-lanes of communication, and combating terrorism. 

My bottom line, Mr. Chairman, is that there should be a reexamination of the entire alliance, taking a new look at the rationale for troops and bases, their roles and 

missions, and how Japan can contribute to our joint goals without violating its 

peace constitution. It should explore ways to create a permanent security organization along the lines of NATO for all of Northeast Asia. Then and only then can a 

wise decision, acceptable to both governments, be made regarding the future of the 

Futenma Air Base. 

I would urge that a new ‘‘Wise Man’s Commission’’ be set up—similar to those 

that have played an important role in past years—to conduct this examination and 

make recommendations to both governments. The Commission should of course include military leaders, but it should appointed by and report to, elected leaders in 

both countries. 

The Commission should be charged with devising new ways in which younger 

Americans and Japanese can communicate with each other. Our foundation runs a 

United States-Japan Leadership program that brings together two dozen of the most 

promising young leaders from both countries for intensive conversations, the creation of new friendships and continuing communication across the Pacific via the 

Internet. The Commission should look into expanding educational, cultural, and scientific exchanges. It should explore new ways to reach out to younger Chinese leaders insuring that there will be networks of communication between future leaders 

of all three countries. 

I am also recommending that President Obama, during his November visit to 

Japan, should go to Hiroshima and use the symbolism of that place to declare his 

vision of a nuclear-free world. Then Prime Minister Hatoyama should visit Pearl 

Harbor, and declare that his nation will work to create a world in which such an 

attack will never again occur. Neither leader need offer the hint of an apology, and 

both should praise the brave men, living and dead, who fought on both sides during 

World War Two. I believe these symbolic gestures would go far to healing the remaining scars that are still painful to both nations, and would solidify the alliance 

for decades to come. 

In conclusion, let me repeat: the future of the alliance will depend on the degree 

to which it is acceptable to a majority of Japanese voters. Every Japanese politician 

knows that, and we Americans should respect and celebrate the fact that democracy 

is alive and well in Japan. 

Senator WEBB. Thank you very much, Dr. Packard. 

Mr. Katz, welcome. 

STATEMENT OF RICHARD KATZ, EDITOR IN CHIEF, THE 

ORIENTAL ECONOMIST REPORT, NEW YORK, NY 

Mr. KATZ. Thank you much. 

13 

If we were meeting about 15 years ago, the main topic on economics would be bilateral trade frictions and the fear among some 

Americans that Japan was a threat because it was too strong. If 

we were meeting 7 to 8 years ago, the main topic would be Japan’s 

banking crisis, and alarmist talk about our government bond crisis, 

and the fear that Japan was a threat because it was too weak. 

Well, actually, as it turned out, it was the American financial system which caused the global crisis, not that of Japan. 

As we meet today, it seems to me the main focus is not—on economics—is not the bilateral relationship. It’s whether or not the 

two nations can work together on global issues, such as the rise of 

China, such as moving into an era in which critical resources, like 

oil or water, are no longer cheap and abundant, but, rather, becoming expensive and scarce, which has economic and geopolitical 

implications. 

Yet, there are fears in both countries that we will not be able to 

have that cooperation. On the part of Japan, there is fear that the 

United States is bypassing Japan and moving into a so-called 

‘‘group of two’’ relationship with China, it was symbolized, perhaps, 

by the different treatment of the President of China and Prime 

Minister of Japan during this week’s nuclear summit. There is also 

a fear—one exaggerated, as I believe—on the part of Japan about 

the United States turning inward and becoming protectionist. 

There is a mirror-image fear in the United States about Japan. 

There is talk that Hatoyama wants to move away from the United 

States in both economics and security, and wants to orient toward 

China, a view which I think is unfounded, as I’ll discuss later on. 

There’s also fears that the government is so paralyzed that it 

really cannot make good decisions; and then, in both countries, the 

issue of whether the Futenma crisis will become the end-all and beall of policy and spill over into other issues. 

So, what I’d like to go through is which fears are justified, which 

fears are not justified, and what assets the United States has to 

play in trying to build about this cooperation, and what obstacles 

and assets there are in Japan. 

First of all, I think one of the most important things to realize 

is the dog that did not bark. There was widespread fear that this 

recession would create protectionism all over the world. That has 

not happened. We have the remarkable spectacle that both General 

Motors and Chrysler went bankrupt, and nobody blamed Honda or 

Toyota. Think back to the 1980s, when we had import quotas 

against Japanese cars for years. The ‘‘Buy America’’ provisions in 

the stimulus bill was adopted in a way that has the United States 

adhering to the WTO rules with other countries that have government procurement codes, including Japan, Europe, and other major 

allies. So, we don’t have this danger of protectionism. 

What we do have, I believe, in both countries, is a political obstacle to moving forward on trade liberalization as symbolized in this 

country by the United States-Korea Free Trade Agreement—I don’t 

think could get ratified by Congress today—and, in Japan—the EU 

has just broken off talks with Japan on their FTA, because they 

don’t think Japan is going to be forthcoming on negotiations. So, 

that’s an issue. 

14 

I think the biggest background context for all discussions of 

United States-Japan relations is the ongoing weakness of the Japanese economy. By conventional forecasts, it will not be until 2013 

that Japanese GDP gets back to the level it had in 2008. And then, 

going forward, the potential growth of the Japanese economy, once 

it reaches full employment and full capacity, is estimated at about 

1 percent. So, we’re talking about a country that’s going to be 

mired in low growth, continued low growth, for years to come. 

And these are, basically, political problems. The Japanese Government, the DPJ, came into power with some very good ideas of 

realizing the core of Japan’s short-term economic problems was insufficient household income. So, instead of consumer income and 

domestic demand driving the economy, Japan was inordinately dependent upon a rising trade surplus for growth. And when the 

world went into crisis, Japan went into really, really worse crisis; 

it had a recession far worse than that of the United States. 

The government has some very good programs to increase consumer income: child allowances, free high school education. Currently it’s not free. But, because of fears about a bond government 

crisis, the government has really waffled—given with one hand, 

taken back with the other hand—and therefore does really have 

good macroeconomic policies to get Japan out of this mire of this 

deep recession. 

I believe, I should say, these fears about the Japanese Government bonds are way overdone. We’ve seen this alarmism before. It’s 

unfounded. I can go into detail, if you want. 

Similarly, by the way, I think the fear in America, that the Japanese or the Chinese would pull out of United States treasuries, 

either as a political weapon, or because of fear of the United States 

budget deficit, are, again, way overdone. To pull out would be 

shooting themselves in the foot. It would raise their currencies, 

hurt their exports; it ain’t gonna happen. If it did, the Fed could 

manage it. Again, I’ll go into detail, if you want. 

On the longer term prospects, the political situation is that the 

DPJ faces the same dilemma as the LDP before it, which is that 

part of its base would be helped by reform, part would be hurt by 

reform, and so the party is divided between reformers and 

antireformers. There are lots of really smart, younger Diet members who have great ideas about reform, but the current leadership, because of the political weakness of the party, is sort of playing to the galleries of the special interest groups. It also needs a 

coalition with two very small parties of the Upper House of the 

Diet, and these are problematic both on reform issues and on security issues. And the chances are, in this election, the DPJ will not 

do well, and therefore become even more dependent upon 

antireformist groups. And so, its hands are tied a little bit in pushing reform. 

On the other hand, the pressures for reform are growing. It becomes increasingly impossible to solve political problems without 

economic growth. How do you finance social security or health care 

for the growing ranks of the elderly when your tax revenues are 

shrinking? How do you help out the farmers who are being hurt by 

imports without making urban—food prices so high when you don’t 

15 

have the budget to, say, give income subsidies? So, you get conflicts 

of interests among the different constituencies. 

In addition, too, the voter behavior has changed. As Dr. Packard 

mentioned—and I endorse his comments on this—we now have, 

finally, two-party democracy in Japan, instead of one-part democracy. It was the last remaining one-party democracy in the 

advanced sector. That’s good, because you need competition in politics as much as in business. 

And the voters are more volatile than ever. Instead of just concern about their local Diet member, they’re concerned about which 

national party is going to run the country and what their performance is going to be. And therefore parties, in order to rule and win 

reelection, and members to rule and win reelection, have got to 

deal with economic performance. The pressures for reform will 

grow, but it’s not going to come quickly; more years of political 

turmoil. 

The other issue which I would say is very, very important to consider—and I’d just say, in that era of economic weakness and political turmoil, it becomes more difficult for Japan to take decisive 

steps on the world stage, and that becomes their foray problem— 

the other issue is concern about the United States, that somehow 

there’s a decoupling of Japan—and of Asia, in general—from the 

United States, and an orientation toward China. I believe this fear 

is way overblown. You could have very simplistic numbers that say, 

‘‘Look at the share of Japan’s exports that are rising to China and 

shrinking to the United States.’’ Yes, those numbers are true, but 

they’re misleading, because most of those Japanese exports to 

China—this is true of Korea and offshore Asia, as well—the exports to China are, in fact, inputs for China’s own exports to the 

United States. So, I have some really snazzy diagrams here which 

show, if you look at the ups and downs of Japanese exports to 

China, they don’t depend upon Chinese GDP, they depend upon 

China’s own exports to the United States. The same thing is true 

of Japan’s exports to offshore Asia; they depend upon Asia’s exports 

to the United States. In fact, Japan’s exports to Asia depend upon 

China’s exports to the United States, because they have a whole integrated supply chain. But, at the end of the chain, the locomotive 

is the United States. So, Japan and Asia could not decouple from 

the United States, even if they wanted to; and from talking to people, they don’t want to, anyway. 

And I would look at, for example, President—first of all, I’ve had 

my own talks to people in the DPJ and President Lee of Korea’s 

interview in the Washington Post on this issue, of why they want 

strong reliance on the United States to diversify. It’s solely dependent upon China. 

That being said, there is this integrated supply chain in Asia 

that China is increasingly the organizing hub. And therefore, nations and firms that want to be part of that supply chain have got 

to satisfy the needs of Chinese companies and Chinese standards. 

And that’s a concentration that people don’t like. So, yes, Asia, as 

a whole, can’t decouple, but within Asia, China is becoming a hub. 

And to the extent that the United States and Japan are not able 

or willing to play an active role, that becomes more problematic, 

because people do want a balance there. 

16 

Now, the U.S. asset, here, is our own huge market. We are the 

locomotive. We have this asset. But, because of our own political 

problems, we’ve been unable to leverage this asset to the extent 

that I think we ought to be able to. For example, I don’t think 

KORS could pass the Congress today. And I think to have it rejected by Congress would be worse than not voting it at all. Hopefully, at some point, it will be able to be ratified. 

So, we’re not able to leverage our own asset, which is unfortunate. We say we want a seat at the table if there’s ever an East 

Asian economic community. Without fast-track, without being able 

to ratify agreements of Congress, what do you bring to the table? 

And finally, a quick word on Futenma. Now, I’m not a security 

guy, so I have no expertise on the security aspect. But, the first 

thing they teach you in Economics 101 is, ‘‘There ain’t no free 

lunch.’’ Economists have bad grammar. And the point is, if I accept 

the administration point of view, that there’s no viable alternative 

to the 2006 agreement, there’s still—the issue is, Are the benefits 

more than the costs? What are the costs? 

We have, for the first time, two-party democracy in Japan. That 

is something in the interest of both Japan and the United States. 

And while the DPJ is causing its own problems, we’re adding some 

more straws to the camel’s back through this sort of pressure. Polls 

show that half the people in Japan want Hatoyama to resign if he 

can’t reach agreement with the United States on this, but that 

doesn’t mean that they support the United States position. Half of 

the voters say they want the U.S. troops out of Okinawa altogether. 

We’re also incurring the resentment of a government that campaigned on this thing. There’s also the spillover effect, or the potential for spillover effect. 

So, what I’m saying is, I don’t know the answer: Are the costs 

or the benefits more? What I am worried about is, I don’t think 

there’s been an open asking of the question and answering of the 

question: What are the benefits, what are the costs, and how do 

they match each other? And that should be asked and answered. 

Thank you very much. 

[The prepared statement of Mr. Katz follows:] 

PREPARED STATEMENT OF RICHARD KATZ, EDITOR OF THE ORIENTAL ECONOMIST

REPORT, NEW YORK, NY 

GLOBAL COOPERATION, NOT BILATERAL RELATIONS, ARE NOW THE PIVOT

If we were meeting 15 years ago, the main theme of the economic discussion 

would be bilateral trade friction, the widespread fear in the United States that 

Japan’s strength was a threat to the United States. If we were meeting 7–10 years 

ago, the main theme would be that Japan was a threat, not because it was too 

strong, but because it was too weak. Its weakness was a contributing factor, though 

certainly not the main factor, in the 1997–98 financial storms in Asia. In 2003, 

there were even some who feared global financial storms resulting from a crisis in 

Japan’s banking system and/or its government bond market. As it turned out, it was 

problems in America’s financial system which wreaked global havoc over the past 

2 years. And, although there is some talk of an impending crisis in Japan’s Government debt market, that fear is just as exaggerated today as it was 7 years ago, for 

reasons I’ll detail below. 

Today, trade frictions with Japan are, for most part, little different from the occasional trade frictions we have with other allies—despite occasional exceptions like 

the beef episode of a few years back. The biggest fear these days is that the two 

nations are ‘‘decoupling,’’ that neither one needs the other as much as it used to. 

17 

If that were true, it would have big implications for cooperation between the two 

nations on economic as well as security matters. 

In the United States, there is fear among some that, under the new government 

led by the Democratic Party of Japan (DPJ), Japan is moving away from a focus 

on the United States to a focus on Asia, particularly China. This was fed by talk 

that Prime Minister Yukio Hatoyama wanted to form an East Asian Economic Community excluding the United States. There is also fear that Japan will be so lame 

economically and troubled politically that it will have neither the desire nor the resources for playing an activist role on the Asian or global stage. 

In Japan, there is fear that the United States has moved from ‘‘Japan-bashing’’ 

to ‘‘Japan passing,’’ and that the United States and China are forming a de facto 

‘‘Group of 2.’’ Ears perked up in Japan when Secretary of State Hillary Clinton, then 

a candidate for President, wrote in Foreign Affairs that, ‘‘Our relationship with 

China will be the most important bilateral relationship in the world in this century.’’ A couple decades earlier, that description was being applied to United StatesJapan ties by then-Ambassador to Japan Mike Mansfield. There is also fear in 

Japan that the United States is turning inward and becoming more hawkish on 

trade, a fear symbolized by, among other things, the inability to push through the 

Korea-U.S. Free Trade Agreement (KORUS). Finally, there are fears that tensions 

over the Futenma base issue—symbolized by President Obama’s refusal to have an 

official meeting with Prime Minister Hatoyama during this week’s nuclear summit—could spill over into economic arenas. 

In both countries, there is concern that the two allies will not be able to cooperate 

in the face of a rising China and that, as a result, the rest of Asia will orient economically toward China. The goal in both capitals is not to contain China, but to 

integrate it as a ‘‘responsible stakeholder’’ in the Asia-Pacific economic community 

of nations. That smooth integration becomes harder if the two nations cannot cooperate well, or are preoccupied with internal problems. 

The rise of China is not the only area where cooperation is needed. In the last 

couple decades, an era of relative peace and prosperity was fed by, among other 

things, cheap resources. But now, as India and other countries join China in achieving rapid growth, demand for energy and water is growing faster than supply. Rising prices and a potential scramble for resources has not only economic but also geopolitical implications. Then, there is the needed repair of the financial system. 

These are all areas where problems would be far more manageable to the degree 

that Japan and the United States can work together. 

Let us discuss a bit which concerns are justified, which are not, and the ability 

of the two nations to overcome the obstacles that do exist. 

PROTECTIONISM: THE DOG THAT DID NOT BARK

One of the most remarkable features of the recent global economic crisis is the 

dog that did not bark: protectionism. It was widely predicted that the sharpness of 

the recession would produce beggar-thy-neighbor policies in country after country. 

In reality, a September 2009 report by the World Trade Organization (WTO) showed 

no surge in the use of the ‘‘safeguard clause’’ or of ‘‘antidumping’’ cases, or similar 

measures. 

Many in Japan, misinterpreting some of the statements made by Barack Obama 

during the Democratic primary campaign, feared that he would be a trade hawk. 

Not only was that a misunderstanding of President Obama, but it failed to consider 

the relative lack of political pressure on the administration and Congress to take 

harsh protectionist measures. It is remarkable that, when both General Motors and 

Chrysler went bankrupt, no one blamed Toyota and Honda. No one called for a repeat of the 1980s when a far less severe crisis for the Detroit Three led to years 

of de facto quotas on imports of Japanese cars. On the contrary, by some estimates, 

half of the cars sold under the U.S. cash for clunkers program were Japanese 

brands, many of them made in the United States but many imported. 

This does not mean that there are no bilateral trade frictions. The rules of Japan’s 

own cash for clunkers program, its continued partial restrictions on beef imports, 

and the move to roll back reforms of the banking and insurance operations of the 

government-owned Japan Post have all become contentious issues. Inward foreign 

direct investment in Japan, while higher than before, is still very low, partly because it remains harder than in other countries for foreigners (or Japanese) to acquire domestic firms. But most of these problems are akin to the frictions the 

United States has with many other allies. Moreover, it is Japan’s low growth, rather 

than import barriers, which poses the biggest obstacle to an increase in U.S. exports 

to Japan. 

18 

Similarly, Japan and other countries were concerned about the ‘‘Buy America’’ 

provisions that were added to the stimulus program last year. However, at the administration’s request, Congress made sure that the provision complied with WTO 

rule and thus its implementation is governed by the Government Procurement Code 

signed by the United States, Japan, Europe, and others. There are some in Japan 

who see the Toyota recall case as an example of disguised U.S. protectionism, but 

that is not the predominant view. 

In short, bilateral trade frictions are no longer the keystone of United StatesJapan economic relations, as they were in the past. What is the case, as we’ll discuss below, is the political inability in both Japan and the United States to take 

further proactive governmental measures toward trade liberalization, such as truly 

substantive Free Trade Agreements (FTAs). 

PROLONGED ECONOMIC STAGNATION; DPJ TARGETS ONLY 1 PERCENT REAL GROWTH

RATE THROUGH 2020

The biggest background factor is Japan’s prolonged economic stagnation. I believe 

that Japan will eventually undertake the economic reforms it needs, because it can 

have neither economic vitality nor political stability without better growth. However, the medium-term picture is not encouraging. 

The conventional forecast is that Japan will grow at an annualized rate of around 

2 percent for the next few years. But that is from a very low starting point. Japan’s 

GDP suffered a peak to trough plunge of 8.4 percent, which is more than twice as 

bad as the U.S. downturn. At 2 percent, it would take Japan until mid-2013 just 

to get back to level of GDP it had reached 5 years earlier at the beginning of 2008 

(see Figure 1). 

Worse yet, once Japan reaches full employment and full capacity-utilization, its 

potential for further growth is exceedingly mediocre, among the lowest in the OECD 

(see Figure 2). Conventional estimates are about 1 percent per year or so. The reason is twofold. GDP growth in any country is the sum of growth in the number of 

workers plus growth in output per worker; i.e., productivity growth. In Japan, the 

working age population is now shrinking. As a result, says the OECD, the labor 

force will shrink by about 0.7 percent per year during the coming decade. Meanwhile, trend productivity growth is only around 1.7 percent per year according to 

the OECD; 1.7 percent growth in productivity minus 0.7 percent due to fewer workers results in annual GDP growth of 1 percent a year. 

19 

The tragedy is that Japan could enjoy much higher rates of growth if it undertook 

productivity-enhancing reforms that brought it up to global benchmarks. While 

Americans tend to think of Japan as a high-productivity country because we see the 

likes of Toyota and Sony, the reality is that there are two Japans. One is the highproductivity exporting sectors, which have to be efficient because they face fierce 

competition in the global market. But then there is the domestic Japan, which 

makes up the lion’s share of the country. It neither exports nor faces much competition from imports or Foreign Direct Investment. Moreover, in many cases, firms in 

these domestic sectors face little domestic competition due to outmoded regulations 

that protect entrenched firms, a distribution and financial system that makes it 

hard for newcomers to displaced entrenched leaders, and weak antitrust enforcement. There can be no competitiveness without competition. The result is that overall output per worker in Japan is 30 percent lower than in the United States. That’s 

lower than almost any other OECD country than Korea and Greece. U.K. productivity is 20 percent lower than in the United States; Germany’s is 10 percent lower 

and France’s only 4 percent lower (see Figure 3). 

20 

Unfortunately, the Hatoyama administration, like its Liberal Democratic Party 

(LDP) predecessors seems unwilling and/or unable to undertake the necessary reforms. There are lots of smart, younger Diet members in the DPJ who have very 

good ideas about economic reform, but they are not running policy—at least not yet. 

The official ‘‘growth strategy’’ of the DPJ accepts low growth as a fait accompli. 

It offers little growth and no strategy. It says that its goal is 2 percent real growth 

per year through 2020. But its ‘‘fuzzy math’’ counts from the depths of the recession. 

If one takes their target for 2020 and compares it to the prerecession peak GDP 

of early 2008, the reality is that the DPJ target is a low 1 percent a year over the 

entire 2008 2020 period. 

THE POLITICAL OBSTACLES TO ECONOMIC REFORM AND REVITALIZATION

The DPJ, like its LDP predecessors, faces a big political dilemma regarding economic reform. 

On the one hand, there is great political pressure to undertake reform in order 

to raise the rate of growth. There are many political stresses that cannot be resolved 

without better growth. For example, how can Japan finance social security and 

health care for the growing ranks of the elderly without an increase in tax revenues 

and better returns to pension funds? In the absence of better growth, politicians will 

have to cut benefits, raise premiums, and/or let the government debt grow even bigger. The public wants reform, even if it cannot identify the content. In the last two 

elections for the Diet’s Lower House (the House that chooses the Prime Minister and 

Cabinet), the public overwhelmingly voted for change. The only difference was their 

view of who could best deliver that change. In 2005, it was Prime Minister Junichiro 

Koizumi of the LDP; in 2009, it was the DPJ. Transport Minister Seiji Maehara’s 

bold moves to downsize and rehabilitate the bankrupt Japan Air Lines are a good 

example of the reform spirit in parts of the DPJ. 

21 

On the other hand, there are great political costs in implementing reform since 

it would hurt many of the special interest groups that the DPJ either already sees 

as part of its political base, or would like to wrest away from their past support 

of the LDP. Consider just one example among many: the intersection of trade and 

farm policy. Without being willing to put farm issues on the table, Tokyo finds it 

hard to negotiate genuinely substantive Free Trade Agreements. While Japan is engaged in a number of talks on FTAs, trade experts have raised questions about the 

‘‘quality’’ of past agreements, and those being negotiated now, in terms of how much 

real liberalization will occur. Indeed, the European Union is balking at going ahead 

with Economic Partnership Agreement talks with Japan planned for this year. 

Whether this proves just a temporary setback or a lasting problem remains to be 

seen. And yet, increased trade is critical to hiking efficiency and the growth rate. Japanese companies increasingly import not just raw materials, but parts and machinery 

from the rest of Asia, often from their own subsidiaries there. So, they have a big 

interest in trade liberalization. Countries that trade more tend to grow faster as 

they benefit from the division of labor and increased competitive pressures. Japan 

has one of the lowest ratios of trade to GDP among rich countries, even adjusting 

for its population and distance from trading partners (see Figure 4). Due to 

malaportionment of election districts, the rural sector has a political influence way 

out of proportion of the number of farmers. A few years ago, many DPJ leaders supported in principle a very good policy on farm issues. Instead of old-style LDP price 

supports and import barriers to keep in place the dwindling ranks of aging inefficient farmers (more as voters than as farmers), the DPJ would give income support 

while opening up the import market. This would simultaneously lower the price of 

food to urban consumers/voters and enable Japan to negotiate substantial Free 

Trade Agreements. The income support part was put into the FY 2010 budget, but 

market-opening seems to be in limbo. Meanwhile, in its 2009 campaign manifesto, 

which set the goal of a United States-Japan FTA, the DPJ added an exclusion for 

farm products after the farm lobby protested. The DPJ got its reward when the powerful farm cooperative dropped its traditional nationwide endorsement of the LDP 

in this July’s Upper House elections. 

The DPJ faces another dilemma. While it has an overwhelming majority in the 

Lower House, it lacks a majority in the Upper House. This forces it into an alliance 

with two smaller antireform parties, the Peoples New party (PNP) and the Social 

Democratic Party (SDP). Reformers had hoped that the DPJ could remove this burden by winning a single-party majority in the Upper House this July. That would 

give the DPJ a better chance of moving decisively on key issues. This now looks very 

unlikely. DPJ poll ratings are dropping like a rock, partly due to the indecisiveness 

of Prime Minister on a host of issues and partly due to the financial scandals surrounding party Secretary General Ichiro Ozawa. Depending on the outcome of the 

22 

election, there could be internal DPJ pressure on PM Hatoyama and Ozawa to step 

down. There is even talk that Hatoyama may have to step down in May if he fails 

to reach agreement with the U.S. on the Futenma relocation dispute (see below). 

The DPJ could end even more divided and beholden to special interest groups and 

antireform coalition partners than it is already—at least for a while. 

The upshot is that, far from ending Japan’s long period of party realignment, the 

DPJ’s landslide victory in 2009 is just another milestone in what will prove to be 

a long process. The LDP could, like the Italian Christian Democrats, simply evaporate. There is no guarantee that the DPJ will exist in its current form by the end 

of the decade. 

This is not an atmosphere conducive to bold moves on either domestic reform or 

on Japanese activism on the global economic and security fronts. 

GOOD NEWS: POLITICAL PRESSURE FOR REFORM GROWS

While the short- and medium-term view may sound discouraging, the longer term 

view is far more optimistic. Yes, there are political obstacles to reform, but at the 

same time, there are also big and growing political pressures for reform. Without 

reform, the economy will continue to slide, raising popular discontent and frictions 

among the various political constituencies. There can be no political stability without a stronger economy and no stronger economy without deep and thorough structural reform. And so we will see continued efforts by reformers to find the right political combination to take control. 

For decades, the LDP had ruled in a one-party dominant democracy, the last one 

remaining among the rich countries. Its inability either to reform itself or to revive 

the economy brought its downfall, and perhaps its demise as well. That has broken 

a logjam, opening up new opportunities for institutional reform in the economy. 

This development both reflects and reinforces a big shift in voter preferences. In 

the old days of LDP dominance, voters tended to focus on their local Diet member 

rather than the national party. In recent elections, this has changed. Voters are putting higher priority on which party will run the country. Moreover, they are choosing the party based on expectations of performance. And finally, voters are more 

volatile than ever; they are willing to shift from party to party to get what they 

want. Formerly safe seats are safe no more. The LDP under Koizumi won in a landslide in 2005, and then, under his successors, lost in a landslide in 2009. 

As a result of this shift in voter attitudes, parties that want to win need to 

produce better economic performance on a national level. Individual Diet members 

who want to win want to be members of the party or coalition that can deliver that 

performance. 

Politics will be dominated by the effort to juggle the competing claims of assorted 

special interests (which is harder to do when there are not enough economic resources to please them all) as well as the balance between special interests and the 

national interest. In the absence of good growth, it is a very hard juggling act. That, 

too, produces pressure for politicians to deliver on economic performance, performance that can only be achieved through deep and thorough reform. But this is a long 

process. Japan is still in the midst of a political-economic transition that began with 

the collapse of the bubble in 1990–91. It has quite a ways to go. 

PARALYSIS ON MACROECONOMIC POLICY

It is not only on issues of long-term growth that the Hatoyama administration 

seems as paralyzed as its LDP predecessors; there is also much confusion on shortterm macroeconomic policies to bring about quicker recovery from the severe recession of 2008–09. 

The DPJ’s 2009 campaign manifesto seemed to have great potential. It marked 

the first time any Japanese Government recognized that the heart of Japan’s chronic problem of weak domestic demand was lack of sufficient consumer income. That’s 

why Japan was inordinately dependent on a rising trade surplus to fuel growth in 

this decade’s recovery: a rising trade surplus and business investment (itself often 

dependent on exports) accounted for two-thirds of all GDP growth during 2002–07. 

Consumption provided only another third (see Figure 5). The DPJ proposed a number of measures to increase household disposable income—so as to fuel more consumer spending. The first step was to shift government spending from pork to people. This included, among other things, a child allowance of ¥312,000 ($3,300) per 

year per child; free high school tuition at public schools and aid for students in private high schools (currently parents pay as much as $5,000 per year at public high 

schools for tuition, fees, books, and so forth); cuts in highway tolls adding up to 0.4 

percent of GDP (a few hundred mile car trip can cost as much as $250), and assorted tax reductions for individuals and small firms adding up to 0.5 percent of 

23 

GDP. The total spending on transfer payments and tax cuts was to amount to ¥21 

trillion ($225 billion), or 4 percent of annual GDP, over 2 years. 

However, due to excessive fear over the rising government debt (see below), the 

DPJ has waffled on these plans. It has passed free high school tuition. However, 

the child allowance was, as planned, introduced at only half the planned rate this 

year and there is a fight among party leaders on whether or not to fulfill the campaign promise to raise it to the full amount next year. Many highway tolls may end 

up being raised rather than cut. Finance Minister Naoto Kan is talking about raising the consumption tax, and the Minister for National Strategy has talked about 

raising the tax soon, in violation of Hatoyama’s campaign pledge not to raise it until 

at least 2013. This risks repeating the disastrous hike in the consumption tax in 

1997, the trigger for the 1997–98 recession. 

Having ruled out additional fiscal stimulus, and even raising the possibility of fiscal tightening, the Hatoyama administration is acting as if deflation were the primary cause of Japan’s stagnation and talking as if the Bank of Japan (BOJ) had 

a magic bullet called ‘‘inflation targeting,’’ that could solve the problem. Neither 

proposition is true. 

What is required is a fiscal-monetary one-two punch, but that does not seem in 

the offing. Once again, Tokyo seems to be hoping a cheaper yen and rising global 

growth will rescue Japan. 

NO CRISIS IN JAPAN GOVERNMENT BONDS

The risk for Japan is continued corrosion, not crisis. Just as in 2003, there is a 

lot of unwarranted alarmism over the state of Japanese Government debt. It has 

been amplified by the Greek crisis. This alarmism is not only wrong; it’s harmful. 

It inhibits the government from taking the aggressive action on fiscal stimulus that 

it needs to help break out of its stagnation. 

Japan’s budget hawks and the bond market vigilantes point out that Japan’s 

gross debt now equals more than 200 percent of GDP. However, the correct measure 

is not gross debt, which involves ‘‘double counting’’ of debts that one government 

agency owes to another; e.g., government bonds owned by the Bank of Japan (BOJ). 

The correct figure is net debt, which has now reached 100 percent of GDP. That’s 

certainly worrisome. But there is no particular reason to believe that this is a magic 

limit. No more than was the case back in 1997 when the government raised taxes 

and triggered a horrible recession because net debt had reached 35 percent of GDP. 

No more than in 2003 when financial markets panicked because net debt had 

reached 76 percent of GDP. Other countries have run net debt at around 100 percent of GDP for as much as two decades without provoking crisis, among them Italy 

and Belgium. What raises concern over the long haul is not today’s level, but the 

ever-rising trajectory. Structural problems in the economy, like weak household income, have made Japan a deficit addict. 

What distinguished Greece is not just its big government debt, but the fact that 

it ran a big current account deficit. When foreigners pulled out their money, that 

capital flight caused the crisis, as in the Asian crisis of 1997–98. But Japan’s debt 

24 

is almost entirely funded domestically. It need not fear an international capital 

flight. 

The key thing for sustainability in the medium term is not the level of debt, but 

the level of interest payments. In fiscal year 2010 (which began on April 1), net interest payments are expected to amount to less than 1.5 percent of GDP. That’s well 

below the level of the early 1990s (see Figure 6). The reason is that interest rates 

are so much lower today. Since the BOJ has the capacity to keep rates low for quite 

some time, Japan has plenty of breathing space to apply fiscal stimulus now and 

design a plan for debt reduction in the longer term. But there is no long-term solution to the mushrooming of government debt in the absence of better growth rates. 

NO RETREAT FROM U.S. GOVERNMENT BONDS

Another fear in the market is that Japan and/or China might flee from U.S. Government debt, either due to fears about the U.S. budget deficit or as a political 

weapon in trade frictions. The fear is that this would cause U.S. interest rates to 

skyrocket. This fear, which has been around for years, is unfounded. Chinese and 

Japanese holdings of U.S. Treasuries in January 2010 were 20 percent higher than 

in January 2009 (see Figure 7). 

25 

Neither Beijing nor Tokyo would sell off U.S. Treasury bonds to make a political 

point. That would be shooting themselves in the foot. They don’t buy U.S. bonds as 

a favor to the United States but in their own interests. To undertake a big selloff 

would cause the dollar to sink and the Japanese and Chinese currencies to rise. 

That, in turn, would cause serious damage to the exports of these export-dependent 

countries. 

Even if Beijing and private Japanese investors panicked over the U.S. budget deficit, their holdings are not big enough to cause a financial problem that the Federal 

Reserve could not manage. China and Japan together hold about 14 percent of U.S. 

Treasury debt. Treasury debt, in turn, is about a third of all marketable debt in 

the United States. Hence, Japanese holdings of Treasury debt add up to only 2.1 

percent of all marketable debt; Chinese holdings add up to only 2.5 percent. 

NO DECOUPLING FROM UNITED STATES; NO SHIFT TO CHINA

A lot of ink has been spilled saying that the Hatoyama administration is seeking 

to shift the focus of Japan’s international economic relations away from the United 

States to Asia in general and China in particular. I disagree. First of all, conversations with DPJ leaders indicate that there is no such intention. Second, it is not 

something that Japan could do even if it wanted to. 

The talk of ‘‘decoupling’’ is fed by simplistic figures that simply look at the rise 

in China as the chief market for Japanese exports, displacing the United States. 

Over the past decade, the U.S. share of Japanese exports has halved from 31 percent in 1999 to only 16 percent in 2009. Conversely, the Chinese share rose from 

6 percent to 19 percent. 

Such figures ignore the fact that a majority of those Japanese exports to China 

serve as capital goods or inputs for China’s own exports to the United States. The 

same is true for other Asian countries. Many of the goods labeled ‘‘Made in China,’’ 

should instead be labeled ‘‘Assembled in China with parts from Japan and other 

Asia countries.’’ That’s why, as U.S. imports from China rose as a share of total U.S. 

imports, the share coming from the rest of Asia fell. The total Asian share of nonoil 

imports is actually a bit lower than a couple decades ago (see Figure 8). 

26 

The result of all this is that Japan’s ability to export to China and the rest of 

Asia depends on Asia’s ability to export to the United States. The ups and downs 

of Japanese exports to China correlate, not so much with the ups and downs of Chinese GDP, but of China’s exports to the United States (see Figure 9). The same is 

true of Japan’s exports to the rest of Asia; they depend on Asia’s exports to the 

United States. Most interesting of all, Japan’s exports to Asia ex-China hinge on 

China’s exports to the United States. So, there is a quadrilateral pattern of trade: 

Japan exports to Asia, which exports to China, which exports to the United States. 

While intra-Asian trade is enormous, two-thirds of Asia’s trade—including a third 

of intra-Asian trade—consists of capital goods and parts and materials used to meet 

final demand outside of Asia. The United States is the main engine in this locomotive. This is why Japan and the rest of Asia were hurt so badly by the U.S.- 

originated global recession. 

ENGAGEMENT IN ASIAN ECONOMIES: JAPAN LOSING OUT TO CHINA

Even though the United States and Europe are the final destinations for Asian 

trade, China is rapidly emerging as the organizing hub of the Asian supply chain. 

Dependence on China is growing and China has rapidly overtaken Japan in terms 

27 

of Asian trade and direct investment. This results from two factors: (1) China’s extremely rapid growth versus Japan’s low growth; and (2) the very high dependence 

of China on international trade and inward Foreign Direct Investment (FDI) compared to the low levels of both trade and inward FDI in Japan. 

Japan’s share of world GDP (measured in constant 2000 US $) hit its high point 

at the end of the bubble era in 1991 at 17.3 percent. As of 2000, it was down to 

12.8 percent and will undoubtedly be much lower by 2020. By contrast, China’ 

share, which was below 1 percent in the Mao era, hit 6.5 percent in 2008 and will 

be much, much higher 10 years from now. It is useful to use constant dollars to 

avoid the misleading distortions caused by gyrations in currency rates. But, just for 

the record, in current dollar measures, by 2008, China had almost caught up to 

Japan, with China at 7.1 percent of world GDP vs. 8.1 percent for Japan. By now, 

China has probably caught up. 

Of more direct importance to intra-Asia dependency relations, China is not just 

an export superpower, but an import superpower as well. Japan’s imports equal 15 

percent of GDP; this is less than half the 33 percent ratio for China. Japan’s manufacturing imports account for about 7 percent of Japan’s GDP, about one-third of 

the 20 percent level for China. Moreover, the nature of Japan’s trade is far more 

insular than that of China. For example, about 40 percent of Japan’s manufacturing 

imports are from Japanese companies’ own foreign subsidiaries, rather than from 

indigenous firms in foreign countries. By contrast, the majority of China’s imports 

and exports are conducted by multinationals working in China, some of which are 

Asian multinationals. 

As a result, by 2008, China accounted for 6.5 percent of global imports (up from 

2.3 percent a dozen years earlier). That beat out Japan, which bought only 4.6 percent of global imports (down from 6.8 percent a dozen years earlier). 

For years now, China has been importing more from Asia than does Japan. In 

fact, among the newly industrializing and developing countries in Asia, Japan imports less than China, the United States, the EU or developing Asia. In 2008, 

Japan’s share of total global imports from these countries was 8 percent, compared 

to 11 percent for the United States, 14 percent for the EU, 14 percent for China 

and 31 percent for Asian developing countries ex-China. Given the smaller role 

played in manufacturing imports in Japan, when it comes to a more developed country like Korea, Japan plays an even lesser role. In 2008, it bought just 7 percent 

of all global imports from Korea, compared to 11 percent for the United States, 13 

percent for the EU, 22 percent from developing Asia, and 25 percent for China. It 

is notable that China has now surpassed all the rest of Asia ex-Japan put together 

as Korea’s largest customer (see Figure 10, top and bottom panels). 

28 

When it comes to sheer numbers, China’s role is not dominant throughout Asia— 

most of Asia does more trade with itself than with China as seen in the top panel 

of Figure 10. However, because of its increasing role as the organizing hub of the 

intra-Asian production chain, other countries increasingly need to satisfy Chinese 

firms in order to participate in that chain. With that growing economic dependency 

come political ripple effects. 

Raising the level of trade to GDP could be a vital boost to Japan’s own growth. 

As noted above, countries with higher ratios of trade to GDP tend to grow faster. 

They get to specialize in what they do best, import what they do not make efficiently and expose both their exporters and import competing sectors to fiercer competition. Those sectors in Japan with the least exposure to international trade tend 

to have the least domestic competition and the lowest productivity. At the same 

time, increasing trade and FDI would enable Japan to play a more active role in 

the Asian scene, providing a counterbalance to China. 

29 

U.S. ASSET: ITS HUGE MARKET—CAN IT TAKE ADVANTAGE WITH FTAS?

One of the major assets that the United States has in dealing with Asia is its 

huge and open market. The United States is the engine of the trade locomotive, 

even if China appears to be the intermediary. As detailed above, the notion of an 

Asian economic bloc is unrealistic. Whether or not the United States is a formal 

member of this or that particular multilateral organization in East Asia, its indispensability to Asian economic growth is a reality that cannot be ignored by the nations of the area. 

However, at the present, the United States, like Japan, finds its ability to leverage its market hamstrung by domestic political difficulties. At a time when China 

and the European Union are moving ahead with assorted Free Trade Agreements 

(FTAs) with countries in Asia, the United States is unable to do so. Consider the 

Korea-United States FTA (KORUS). It was negotiated, and then to meet some objections on the part of U.S. automakers, renegotiated. If KORUS were submitted to the 

Congress today, it probably could not be ratified. And a rejection would have a 

worse political impact on United States-Korean relations than further delay until 

conditions are such that it can be ratified. If KORUS cannot be ratified, then the 

United States is in no position to negotiate the much more difficult issue of some 

sort of Economic Partnership Agreement with Japan, even if Tokyo were in position 

to do so (which it is not at the present time). 

The Obama administration has insisted quite strongly that, if any sort of East 

Asian Economic Community were to be formed, the United States would expect to 

be a member. It should be noted that the formation of any such community is years 

and years away. But the point remains: if the United States is not in position to 

negotiate on a fast track basis and if the United States cannot get already-signed 

FTA agreements ratified in Congress, then what does the United States bring to the 

table of any FTAs in Asia? What would be its leverage in shaping any such partnership to its liking? 

At present, in the face of a rising China, both the United States and Japan face 

big limitations in their ability to use their markets as leverage, either individually 

or in tandem. 

A FEW WORDS ON FUTENMA

I happened to be in Tokyo in December when the issue of relocating the U.S. 

Marine air base at Futenma, Okinawa, heated up. What struck me was the degree 

to which so many of my meetings with economic officials and business people, both 

Japanese and American, were dominated by concern about possible spillover effects 

from the Futenma dispute. 

I am no expert on security matters and not competent to discuss the pros and 

cons of the relocation argument per se. However, the first thing we are taught in 

economics is that there is no free lunch. Let us accept the administration argument 

that there is no viable alternative to the agreement that Washington hammered out 

with the LDP government (although this is disputed among some security experts). 

The question remains: are the benefits of that agreement worth the political cost 

of getting it implemented over the stiff opposition of a DPJ government which has 

campaign against it for years and against public opinion in Okinawa. The polls 

show that the Japanese public is very upset at Prime Minister Hatoyama’s mishandling of the issue; in one recent poll 49 percent of respondents said he should 

resign if he fails to secure an agreement with Washington by the end of May. But 

that does not mean that the public supports Washington’s position. On the contrary, 

in a poll taken a few months ago, half of voters wanted the bases moved out of Okinawa altogether. Some said out of Japan. 

What are some of the costs? 

For one thing, the new government in Japan represents the end of one-party democracy in Japan and the beginning of truly contested elections. Party competition 

is as important to a modern nation’s political health as competition in business is 

to economic health. The United States has an interest that Japan’s experiment in 

competitive democracy succeed. It does not serve the United States for Japan to 

have a government that is even more gridlocked by coalitions with small 

antireformist parties than it is today. After the DPJ took power last August, it had 

asked the United States to wait on Futenma until after this July’s Upper House 

elections. However, Washington calculated that delay could be fatal to the plan, 

which may be accurate. The upshot is this: while the DPJ is mostly responsible for 

its current dismal political position, U.S. pressure on this issue has added several 

straws to this overburdened camel’s back. 

Second, whether or not Prime Minister Hatoyama survives the crisis over 

Futenma or the July elections, Washington will be dealing with the DPJ for at least 

30 

a few years to come, perhaps several years depending on the outcome of the 2013 

Lower House elections. So, another cost is the resentment of Washington within a 

government whose cooperation on other fronts the United States will need to seek 

now and in the future. 

A third potential cost is a spillover of tensions around Futenma onto other issues. 

Various frictions on the economic side do come up from time to time, such as renewed discussion on Japan’s restrictions on been imports due to the ‘‘mad cow’’ 

issue. Others are multilateral, such as new rules on finance in the wake of the financial cataclysm. Then, as noted above, is the need to cooperate vis-a-vis China, 

and in concert with China, on energy issues for example. When atmospherics at the 

highest level are so strained, it cannot help but shape how working level officials 

react on these day-to-day issues. 

Is it really the case, as suggested by a few former U.S. foreign policy officials, that 

changing the 2006 agreement endangers the entire United States-Japan security relationship? Does it help to raise the temperature of discussions in this way? Or is 

it the case, as one former U.S. Foreign Service officer said to me, ‘‘One Marine base 

does not make an alliance?’’ If in the end, Tokyo does not agree, what is Washington’s plan B? 

In the days of LDP dominance, Washington often sacrificed economic interests to 

security interests. Was it worth selling a few more oranges to Japan if that caused 

the LDP to lose to the Socialists, thus endangering U.S. base rights in Japan? Once 

again, Washington faces a tradeoff between its preferences on security and economic 

issues vis-a-vis Japan. 

I am by no means claiming that the costs of the effort to implement the 2006 

Futenma agreement—or of failure to achieve it after applying so much pressure— 

are greater than the benefits. Not being a security expert, I am not equipped to 

make such a calculation. But it is a question that needs to be asked and answered. 

Senator WEBB. Thank you, Mr. Katz. 

Dr. Auslin, welcome. 

STATEMENT OF MICHAEL AUSLIN, DIRECTOR OF JAPANESE 

STUDIES, AMERICAN ENTERPRISE INSTITUTE, WASHINGTON, DC 

Dr. AUSLIN. Mr. Chairman, thank you for the opportunity to testify today on the current state of United States-Japan relations, 

and to look ahead at the role the relationship will play in future 

economic and security developments for both countries. 

Despite current difficulties in the relationship, close ties with 

Japan are essential for the United States to retain a credible strategic position in East Asia and for future economic prosperity in 

both Asia and America. Yet, we must also recognize that relations 

between the United States and Japan will be more tenuous over 

the next several years, requiring close communication and a frank 

assessment of how the relationship benefits each partner. 

The past 7 months of the United States-Japan relationship have 

been consumed, as we’ve discussed this morning, with the dispute 

over whether Japan will fulfill the provisions of the 2006 agreement to relocate Marine Corps Air Station Futenma to a more remote setting on the northern part of the island of Okinawa. Given 

that the state of United States-Japan relations directly influences 

the larger strategic position of the United States in the Asia-Pacific 

region, any substantive changes in the United States-Japan alliance, or in the political relationship that undergirds it, could have 

unanticipated effects that might increase uncertainty and potentially engender instability in this most dynamic region. 

Last August, as we’ve noted, voters ended the rule of the Liberal 

Democratic Party, after 54 years of near-continuous power. The 

electoral victory of the Democratic Party of Japan was due equally 

to voter anger of the inability of the LDP to end Japan’s nearly 

31 

two-decade-long economic slump as it was the reflection of trends 

that have been reshaping Japanese society for decades. These 

trends include worries over demographic decline, the end of permanent employment, and a pervasive sense of isolation from its neighbors. Japan’s stagnation, at the very time that China has burst 

onto the world scene, has added to the frustration of Japanese officials and citizens, alike. 

Many in Japan worry that the country is turning inward, and 

some statistics support this interpretation. Dr. Packard mentioned 

that the number of Japanese students studying in the United 

States has dropped by half in the last decade, to just 29,000; this 

at a time when Chinese students in the United States have increased by 164 percent. It should also be noted that, today, Japan 

has just 38 members of the self-defense forces distributed around 

the world on peacekeeping operation missions sponsored by the 

U.N. versus over 2,150 for China at the same time. 

The DPJ, the Democratic Party of Japan, capitalized on these 

dissatisfactions and fears to win a resounding electoral victory. Yet, 

they have found governing more difficult than electioneering. And 

given its troubles, many of which Mr. Katz just talked about, 

Washington must be prepared for continued debates within the 

DPJ, in coming months, over foreign and domestic policy, as well 

as the high likelihood of leadership changes at the top of the party. 

These DPJ debates will occur at the same time that new political 

parties are forming and dissolving, many breaking off from the 

LDP. Rather than entering a period of two-party electoral democracy in Japan, we are entering one of multiparty electoral democracy, and Japanese domestic politics will become even more fluid 

and chaotic over the next half-decade or more. 

While I believe that Prime Minister Yukio Hatoyama is committed to United States-Japan relations, he does have a different 

vision of the future of our relationship than did his predecessors; 

hence the attempts here to understand whether his repeated calls 

for a more equal alliance with Washington mean more independent, and what such policies might lead to. 

We should take at face value his desire for Japan to play a more 

expansive global role, craft a closer relationship with the nations 

of East Asia, and take a lead in issues from nuclear disarmament 

to climate change, no matter how vague the specifics of his plans. 

Ironically, perhaps, our relations are further influenced by the 

continued worry in Japan over long-term trends in America’s Asia 

policy. The main concerns are, first, that the United States will, 

over time, decrease its military presence in the Asia-Pacific, thereby weakening the credibility of its extended deterrence guarantee; 

and second, that Washington will itself consider China in coming 

decades as the indispensable partner for solving regional and 

global problems, alike. 

Despite this litany of problems, both real and perceived, the 

United States-Japan alliance, and the broader relationship it embodies, remains the keystone of United States policy in the AsiaPacific region. America and Japan share certain core values, including a belief in democracy, the rule of law, civil and individual 

rights, among others. Our commitment to these values has translated into policies to support other nations and around the world— 

32 

in Asia and around the world, that are trying to democratize and 

liberalize their societies. 

Today, Asia remains in the midst of a struggle over liberalization, as witnessed by the current tragic unrest in Thailand, and the 

willingness of both Tokyo and Washington to support democratic 

movements will remain important in the coming decades. 

To that end, Japan and the United States should take the lead 

in hosting democracy summits in Asia designed to bring together 

liberal politicians, grassroots activists, and other civil society leaders to discuss the democratic experiment and provide support for 

those nations bravely moving along the path of greater freedom 

and openness. 

Political development in Asia has benefited not only from the 

United States-Japan diplomatic engagement I’ve just mentioned, 

but also from the security burdens both countries have shouldered 

to maintain stability in the western Pacific, throughout the cold 

war and after. As has been noted, there are over 35,000 U.S. military personnel stationed in Japan, and another 11,000 afloat as 

part of the 7th Fleet, and three-quarters of our military facilities 

are located in Okinawa. 

Yet, without the continued Japanese hosting of United States 

forces, this forward-based posture is untenable, and the role of the 

U.S. Navy in maintaining freedom of the seas, and the U.S. Air 

Force in ensuring quick and credible United States reach anywhere 

in the region, will become even more important as other nations in 

the Asia-Pacific continue to build up their national military capabilities. 

Beyond such traditional security concerns, Japan and the United 

States continue to be among the handful of countries that can act 

as significant first responders to humanitarian disasters as we did 

in Haiti this year and in the tsunami back in 2004. For any such 

actions in the Asia-Pacific region, our bases in Japan are indispensable to timely, effective intervention. 

It is clear that the presence of U.S. military forces is welcomed 

by nearly all nations in the Asia-Pacific and sends a signal of 

American commitment to the region. Today, for all its dynamism, 

the Asia-Pacific remains peppered with territorial disputes and 

longstanding grievances, with few effective multilateral mechanisms, such as exist in Europe, for solving interstate conflicts. 

Our friends and allies in the area are keenly attuned to our continued forward-based posture, and any indications that the United 

States was reducing its presence might be interpreted, by both 

friends and competitors alike, as a weakening of our longstanding 

commitment to maintain stability in the Pacific. 

Yet, when our alliance was signed in 1960, it was titled the 

‘‘Treaty of Mutual Cooperation and Security.’’ Cooperation took 

precedence in the eyes of Americans and Japanese, and that should 

serve as our guidepost for the future as we contemplate how Japan 

and America can work together in economic and social spheres. 

Our common activities are undertaken to promote not just stability, but also well-being, as delineated in Article II of the treaty. 

Economically, of course, we are increasingly intertwined, with over 

132 billion dollars’ worth of trade last year, and with Japanese 

33 

companies in 49 States, employing approximately 600,000 Americans in high-paying, skilled jobs. 

America’s continuing economic recovery is dependent, in part, on 

Japan’s willingness to continue to employ Americans and buy our 

debt, and as both countries seek to balance their export and import 

sectors, openness to trade is of vital importance, as are trade policies designed to reduce barriers. Here, both countries need to focus 

more attention on job growth and trade opportunities, helping with 

retraining programs, and promoting entrepreneurship by reducing 

bureaucratic impediments. 

Both our countries are leaders in scientific research and development and bred multinational corporations that continue to change 

the nature of global commerce. Current Ambassador to Japan, 

John Roos, has made it a priority to expand United States-Japan 

economic cooperation, particularly in the high-tech areas with 

which he is so familiar. Joint research and development in energyefficient and clean energy technologies, such as smart grids and 

nuclear power, will benefit not merely our two economies, but can 

bolster our export industries and promote better practices and 

higher growth in developing nations, thereby promoting stability in 

Asia and around the globe. 

With all of these suggestions, however, we must maintain our realism. The heady days of the 1980s are long over for Japan, when 

pundits breathlessly proclaimed it the next superpower. And today, 

while the Hatoyama administration is long on ideas, it is short on 

specific policies. Officials on both sides of the Pacific must seek to 

avoid mismatched expectations that will only lead to disappointment and more hand-wringing over the future of our relationship. 

For the foreseeable future, American policymakers must accept 

that Japan will be most focused on its internal politics and problems, even as we attempt to create new initiatives to leverage 

Japan’s strengths and weaknesses—I’m sorry—Japan’s strengths 

and interests. 

Japan will continue to play a major role in Asia over the next 

decades; and, as it does so, the role of a democratic Japan should 

become increasingly important in Asia as democracies young and 

old continue to evolve, and as authoritarian and totalitarian regimes oppress their own people and threaten others. Japan cannot, 

of course, play this role by itself, and the United States must fully 

embrace its role as a Pacific nation; one inextricably tied to Asia, 

but, most importantly, one with a vision for an Asia that is increasingly freer, more stable, and more prosperous. This means a renewed commitment to expending the human and material capital 

required to maintain our position in the Asia-Pacific region. 

In conclusion, as we look to the kind of Asia that we hope develops in the future, there is much that continues to commend Japan 

to the region’s planners and peoples, much in the same way the 

United States-Japan relationship plays an indispensable role in 

ensuring our country’s commitment to the Asia-Pacific and in providing a necessary stabilizing force to powerful tides of nationalism, competition, and distrust in that region. 

Our relationship with Japan is, indeed, a cornerstone of the liberal international order that has marked the six decades since the 

end of the World War as among the most prosperous and generally 

34 

peaceful in world history. For that reason, among others, we should 

look forward to maintaining this relationship for years to come. 

Thank you, and I look forward to your questions. 

[The prepared statement of Dr. Auslin follows:] 

PREPARED STATEMENT OF MICHAEL R. AUSLIN, PH.D., DIRECTOR OF JAPAN STUDIES

AND RESIDENT SCHOLAR IN FOREIGN AND DEFENSE POLICY STUDIES, AMERICAN

ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH, WASHINGTON, DC 

Mr. Chairman, Senator Inhofe, and members of the committee, thank you for the 

opportunity to testify today on the current state of United States-Japan relations, 

and to look ahead at the role the relationship will play in future economic and security developments for both countries. Despite current difficulties in the relationship, 

I believe that close ties with Japan are essential for the United States to retain a 

credible strategic position in East Asia and for future economic prosperity in both 

Asia and America. Yet we must also recognize that relations between the United 

States and Japan will be more tenuous over the next several years, requiring close 

communication and a frank assessment of how the relationship benefits each 

partner. 

This past January, Washington and Tokyo observed the 50th anniversary of the 

United States-Japan Alliance, one of the most successful bilateral agreements in recent history. Yet the past 7 months of the United States-Japan relationship have 

been consumed with a growing disagreement over whether Japan will fulfill the provisions of a 2006 agreement to relocate Marine Corps Air Station Futenma from its 

current crowded urban location to a more remote setting on the northern part of 

the island. Given that the state of United States-Japan relations concerns not only 

the economic relations between the world’s two largest economies, but directly influences the larger strategic position of the United States in the Asia-Pacific region, 

any substantive change in the United States-Japan alliance or in the political relationship that undergirds it could have unanticipated effects that might increase uncertainty and potentially engender instability in this most dynamic region. 

All political relationships change, and that between Japan and the United States 

is no exception. Policymakers on both sides of the Pacific have continually adjusted 

the alliance to reflect national interests, capabilities, and perceptions of the 

strengths of each other. The strategic realities of maintaining a forward-based U.S. 

presence in the western Pacific have been intimately tied to the domestic political 

policies of administrations in Tokyo and Washington for the past half-century. Yet 

today, new governments in both countries have policies that seem, on the surface, 

to indicate goals different from their predecessors, thus raising anxieties in both 

capitals. 

Last August, Japanese voters ended the rule of the Liberal Democratic Party after 

54 years of near-continuous power. For Japan, Asia’s oldest and most stable democracy, this was a change of epochal proportions. The proximate cause of anger voter 

was the inability of the Liberal Democrats to end Japan’s nearly two-decade long 

economic slump, which has seen the country’s once unstoppable business sector 

stagnate, develop unevenly, and lose ground to emerging exporters such as China 

and South Korea. Numerous scandals and being out of touch with the voters also 

doomed the LDP and encouraged Japanese to cast their ballots for change. 

Yet the electoral victory of the Democratic Party of Japan equally was the reflection of trends that have been reshaping Japanese society for decades and leading 

to deep currents of unease. These include worries over Japan’s falling population 

rate and demographic decline, the supplanting of permanent employment by temporary jobs, the shrinking number of married couples and families, and a pervasive 

sense of isolation from its neighbors and indeed the world. A two-decade period of 

stagnation, at the very time that China has burst on to the world scene economically, politically, and militarily has added to the frustration of Japanese officials and 

citizens alike. Many in Japan worry that the country is turning inward, leaving behind the goal of ‘‘internationalization’’ that was the vogue two decades ago. Some 

statistics support this interpretation, as the number of Japanese students studying 

in the United States has dropped by half in the last decade, to just 29,000; this at 

a time when Chinese students in the U.S. have increased by 164 percent since 2000. 

In certain ways, these broad concerns have highlighted the importance of the relationship with the United States even as some have questioned the wisdom of continuing to tie Japan so closely to America. 

The Democratic Party of Japan capitalized on these dissatisfactions and fears to 

win a resounding electoral victory. Their election ‘‘manifesto’’ spoke directly to Japanese voters, promising a new era of politics, in which business interests would be 

35 

supplanted by citizen interests, in which creating an equitable economy would 

supercede a focus on corporate balance sheets, and in which Japan would privilege 

promoting global peace over unreflectively maintaining its status-quo relationship 

with the United States. Yet the DPJ has found governing more difficult than electioneering. Given that the DPJ itself is an uneasy coalition of ideological opposites, 

from former Socialists to pro-alliance realists, Washington must be prepared for continued debates within the DPJ in coming months over foreign and domestic policy, 

and for the likelihood of leadership changes at the top of the party that may push 

it in different directions and potentially create further instability in Japanese politics. These DPJ debates will occur at the same time that new political parties form 

and dissolve, many breaking off from the LDP, the former ruling party. Far from 

entering an era of stability last August, Japanese domestic politics are likely to become even more fluid and chaotic over the next half-decade or more. 

For the United States, Prime Minister Yukio Hatoyama’s desire to consider a different location for the Futenma base has raised questions about his administration’s 

overall commitment to United States-Japan relations. Such concern is overstated, 

I believe, but Prime Minister Hatoyama does have a different vision of the future 

of the United States-Japan relationship than did his predecessors. His repeated 

assertions that the alliance remains at the core of Japan’s security policy is to be 

taken at face value, but so should his desire for Japan to play a more expansive 

global role, craft a closer relationship with the nations of East Asia, and take a lead 

in birthing a new East Asian Community, no matter how vague the specifics of his 

plan. With respect to the narrower issue of the Futenma relocation, the current Japanese administration has until now been equally influenced by the necessity to 

maintain its coalition with the Social Democratic Party in the Upper House of the 

Japanese Diet as it has been by a desire to listen to the voices of the people of Okinawa and reduce the Marine Corps burden on that island, which, ironically, the 

2006 agreement was crafted to do. 

Unfortunately, however, the Futenma issue has been folded into larger questions 

about Mr. Hatoyama’s foreign policy, thus raising doubts about the DPJ’s commitment to maintaining the United States-Japan relationship as the most important 

one for both countries in the Pacific region. Hence the attempts here to understand 

whether Prime Minister Hatoyama’s repeated calls for a more ‘‘equal’’ alliance with 

Washington mean more ‘‘independent,’’ and what such policies might lead to. Much 

of the worry in the U.S. Government comes from the newness of the DPJ and the 

inherent uncertainties in dealing with any government that does not have a track 

record we can interpret and use for predictions. Such, I may add, is a constant 

source of concern among Japanese at our Presidential transitions, so we are, 

perhaps, now finding ourselves in Japan’s shoes for the first time in over half a 

century. 

Our relations are further influenced, despite the laudable efforts of U.S. officials 

here and in Tokyo, by the continued worry of Japanese opinion leaders and policymakers over long-term trends in America’s Asia policy, thereby fueling part of their 

interest in China. I will mention perhaps the two main concerns: first, that the 

United States will, over time, decrease its military presence in the Asia-Pacific, 

thereby weakening the credibility of its extended deterrence guarantee, and second, 

that Washington will itself consider China in coming decades as the indispensable 

partner for solving problems both regional and global. Both these concerns exist 

despite repeated U.S. assurances that our military presence will not shrink, and 

despite the very public problems cropping up in Sino-U.S. relations in recent years. 

Ironically, perhaps, these Japanese concerns almost exactly mirror U.S. worries, 

from frustrations over Japan’s continued reluctance to increase its security activities 

abroad to our casting a wary eye on exchanges between Beijing and Tokyo. 

Despite this litany of problems both real and perceived, the United States-Japan 

alliance, and the broader relationship it embodies, remains the keystone of U.S. policy in the Asia-Pacific region. There is little doubt that America and Japan share 

certain core values that tie us together, including a belief in democracy, the rule 

of law, and civil and individual rights, among others, which should properly inform 

and inspire our policies abroad. Our commitment to these values has translated into 

policies to support other nations in Asia and around the world that are trying to 

democratize and liberalize their societies. Today, Asia remains in the midst of a 

struggle over liberalization, as witnessed by the current tragic unrest in Thailand, 

and the willingness of both Tokyo and Washington to support democratic movements will remain important in the coming decades. Indeed, I believe a political goal 

of our alliance with Japan must be a further promotion of ‘‘fundamental values such 

as basic human rights, democracy, and the rule of law in the international community,’’ as expressed in the 2005 United States-Japan Security Consultative Committee Joint Statement. To that end, Japan and the United States should take the 

36 

lead in hosting democracy summits in Asia, designed to bring together liberal politicians, grassroots activists, and other civil society leaders, to discuss the democratic 

experiment and provide support for those nations bravely moving along the path of 

greater freedom and openness. 

Political development in Asia has benefited not only from United States-Japan 

diplomatic engagement, but also from the security burdens both countries have 

shouldered to maintain stability in the western Pacific, throughout the cold war and 

after. There are over 35,000 U.S. military personnel stationed in Japan, and another 

11,000 are afloat as part of the 7th Fleet; three-quarters of our military facilities 

are in Okinawa. Without the continued Japanese hosting of U.S. forces, this forward-based posture is untenable, particularly in a period of growing Chinese naval 

and air power in which the acquisition of advanced weapons systems indicates increased vulnerability of U.S. forces over time. Similarly, options for dealing with any 

number of North Korean contingencies would be significantly limited without access 

to bases in Japan. The role of the U.S. Navy in maintaining freedom of the seas, 

and the U.S. Air Force in ensuring quick and credible U.S. reach anywhere in the 

region will become even more important as other nations in the Asia-Pacific continue to build up their national military capabilities. 

Beyond such traditional security concerns, Japan and the United States continue 

to be among the handful of countries that can act as significant first responders to 

humanitarian disasters. We did so jointly during the Boxing Day tsunami of 2004 

and earlier this year in Haiti, and will remain the leading providers of such public 

goods well into the future. For any such actions in the Asia-Pacific region, our bases 

in Japan are indispensable to timely, effective intervention. 

Maintaining this presence is a full-time job for officials on both sides of the 

Pacific. Both Washington and Tokyo have revised the Status of Forces Agreement 

(SOFA) governing the U.S. military in Japan to respond to local concerns over judicial access to U.S. service members, and domestic pressures to reduce Japan’s $4 

billion annual Host Nation Support (HNS) are a continuing feature of bilateral discussions. The new Japanese Government has indicated its desire to consider further 

revision of SOFA and HNS, which portends continued, sometimes difficult negotiations between both sides, though I would be surprised by any significant changes 

in either. 

It is clear, however, that the presence of U.S. military forces is welcomed by 

nearly all nations in the Asia-Pacific and sends a signal of American commitment 

to the region. From a historical standpoint, the post-war American presence in the 

Asia-Pacific has been one of the key enablers of growth and development in that 

maritime realm. And today, for all its dynamism, the Asia-Pacific remains peppered 

with territorial disputes and longstanding grievances, with few effective multilateral 

mechanisms such as exist in Europe for solving interstate conflicts. Our friends and 

allies in the area are keenly attuned to our continued forward-based posture, and 

any indications that the United States was reducing its presence might be interpreted by both friends and competitors as a weakening of our longstanding commitment to maintain stability in the Pacific. The shape of Asian regional politics will 

continue to evolve, and while I am skeptical of what can realistically be achieved 

by proposed United States-Japan-China trilateral talks, it seems evident that we 

must approach our alliance with Japan from a more regionally oriented perspective, 

taking into account how our alliance affects the plans and perceptions of other nations in the region. 

Yet when our alliance was signed in 1960, it was titled the ‘‘Treaty of Mutual 

Cooperation and Security.’’ Cooperation took precedence in the eyes of American and 

Japanese, and that should serve as our guidepost for the future as we contemplate 

how Japan and America can work together in economic and social spheres. Our common activities are undertaken to promote not just stability, but also well-being, as 

delineated in Article II of the treaty. Economically, of course, we are increasingly 

intertwined. Our bilateral trade last year was worth over $132 billion, making 

Japan our fourth-largest trading partner even despite a fall of nearly $80 billion in 

trade from 2008. Japanese companies in 49 States employ approximately 600,000 

Americans in high-paying, skilled jobs. Japan is also the world’s largest purchaser 

of U.S. Treasuries, currently holding over 768 billion dollars’ worth, more than 

China’s official portfolio of $755 billion in American securities. America’s continuing 

economic recovery is dependent in part on Japan’s willingness to continue to employ 

Americans and buy our debt, and as both countries seek to balance their export and 

import sectors, openness to trade is of vital importance, as are trade policies designed to reduce barriers. Here, both countries need to focus more attention on job 

growth and trade opportunities, helping with retraining programs and promoting 

entrepreneurship by reducing bureaucratic impediments. 

37 

Both our countries are leaders in scientific research and development, and bred 

multinational corporations that continue to change the nature of global commerce. 

Current Ambassador to Japan John Roos has made expanding United States-Japan 

economic cooperation, particularly in the high-tech areas he is so familiar with, a 

priority of his tenure. Joint research and development in energy efficient and clean 

energy technologies, such as smart grids and nuclear power, will benefit not merely 

our two economies, but can bolster our export industries and promote better practices and higher growth in developing nations. This, too, will help promote stability 

in Asia and around the globe, thus feeding directly into the security responsibilities 

of the United States-Japan alliance. 

With all of these suggestions, however, we must maintain our realism. The heady 

days of the 1980s are long over for Japan, when pundits breathlessly proclaimed it 

the next superpower. And today, while the Hatoyama administration is long on 

ideas, it is short on specific policies. Officials on both sides of the Pacific must seek 

to avoid mismatched expectations that will only lead to disappointment and more 

hand-wringing over the future of our relationship. For the foreseeable future, American policymakers must accept that Japan will be most focused on its internal politics and problems, even as we attempt to create new initiatives to leverage Japan’s 

strengths and interests. 

Japan will continue to play a major role in Asia over the next decades, as that 

region continues to be the engine of global economic growth. As it does so, the role 

of a democratic Japan should become increasingly important in Asia as democracies 

young and old continue to evolve, and as authoritarian and totalitarian regimes oppress their own people and threaten others. Japan cannot, of course, play this role 

by itself, and the United States must fully embrace its role as a Pacific nation, one 

inextricably tied to Asia, but most importantly, one with a vision for an Asia that 

is increasingly freer, more stable, and more prosperous. That means a renewed commitment to expending the human and materiel capital required to maintain our position in the Asia-Pacific region. 

As we look to the kind of Asia that we hope develops in the future, there is much 

that continues to commend Japan to the region’s planners and peoples. Much in the 

same way, the United States-Japan relationship, plays a currently indispensable 

role in ensuring our country’s commitment to the Asia-Pacific and in providing a 

necessary stabilizing force to powerful tides of nationalism, competition, and distrust in that region. Our relationship with Japan is indeed a cornerstone of the liberal international order that has marked the six decades since the end of the Second 

World War as among the most prosperous and generally peaceful in world history. 

For that reason, among others, we should look forward to maintaining it for years 

to come. 

Senator WEBB. Thank you very much, Dr. Auslin. 

And again, my appreciation to all three of you for the insights 

that you’ve brought. 

I would like to put, sort of, two or three general questions before 

the panel, and get your insights, in terms of how we can best 

address our future relations with Japan. 

Let me start by saying—I say this many times; I say it with my 

Japanese friends, as well—that the United States has bilateral relations around the world. Japan has its own set. We don’t expect 

each country to have the same sorts of relationships with each 

other country. But, there is a vast difference that needs to be emphasized from time to time between a relationship and an alliance. 

You can be at peace with another country, and that country isn’t 

necessarily your friend; you can be friends with a country, and that 

doesn’t necessarily mean that country is your ally. 

And the alliance that we have with Japan, I think, is the essential tool for us to remain properly involved in this emerging 

dynamic in Asia. And it cannot be said often enough as we look at 

this. 

And with respect to this, we have a challenge. And all of you 

have mentioned it in different ways. Dr. Packard, you mentioned 

‘‘public opinion counts,’’ and there are questions from all of you 

about this—and comments about the situation with the basing on 

38 

Okinawa, and how we explain it, how we ourselves understand it 

in the United States, and also in Japan. 

I go back to a comment that was made years ago about, 

‘‘National strategy is kind of like birth control. You know, if you 

cease taking the proper precautions, the possibility of an incident 

is elevated.’’ 

And so, we tend to take for granted the stability that comes from 

a relationship like this, when it’s gone on for a very long period of 

time. And we don’t properly educate our own people, or the Japanese people, about how important it is. 

When we’re talking about public opinion—I was reminded, when 

I was in Japan, Dr. Packard, that 85 percent of the Japanese people have a positive opinion about the United States. That doesn’t 

mean that they support the basing system or these other areas. 

And here, one of the worries that I have—and, Dr. Auslin, you 

mentioned it, and, Mr. Katz, you alluded to it, and the flip side of 

it—my worry, as an American, is not so much that Japan might 

decouple from the United States in favor of China; it’s that, with 

so much attention on the relationship with China, we tend to forget 

the importance of the relationship with Japan. There are only so 

many issues you can talk about in any given day up here in the 

Congress, for instance. 

So, really, the first question I’d like to lay before the panel, 

really, is, How do we address, fairly, the importance of this relationship as it impacts the future of both countries’ innovation? 

Dr. Packard, you did mention some of this in your testimony. I 

would appreciate it if you would begin. 

Dr. PACKARD. Yes, sir. I want to underscore your point. Japanese 

public opinion at the elite leaders or a Yakitori bar—— 

Senator WEBB. Is your mic on, Doctor? 

Dr. PACKARD. Japanese public opinion toward the United States 

is very strong and very enduring, and I want to emphasize your 

point. Whether it’s A-league leaders or whether it’s in a Yakitori 

bar in Kojimachi, you will hear the same thing, ‘‘We cannot do 

without America.’’ 

And by the same token, the Chicago World Affairs Council’s polls 

have shown that 80-some percent of ordinary Americans, and 

almost 92 percent, I think, of so-called ‘‘elites,’’ believe that Japan 

is a reliable ally. So, I’m not so much worried about that condition. 

But, the—there is, in the press today—and as an old news man, 

I’m embarrassed by this—there’s a kind of a narrative that, ‘‘Japan 

is a failed state, it’s going downhill. We don’t need to pay attention 

to it. It cannot recover.’’ Richard Katz has mentioned some of those 

kinds of things. That is—all of it—is untrue, and there needs to be 

a counternarrative today. 

In the 1985 to 1990 period, we had so-called revisionists, who 

said, ‘‘Japan is out to kill us, they’re out to destroy our industry.’’ 

You don’t hear much from those guys today. And—but, unfortunately, not many people challenged their assumptions. 

So, first of all, in the media, people who know Japan need to 

stand up and tell it like it is. 

Second, I think we need to concentrate on the younger generation. I mentioned there is a United States-Japan leadership program today which has sent 240 Americans and Japanese to intenVerDate Nov 24 2008 13:27 Dec 13, 2010 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 S:\HEARING FILES\2010 ISSUE HEARINGS TO PREPARE FOR PRINTING\ISSUE HEARIN
39 

sive 1-week conferences, both in Kyoto and Seattle. And that 

continues now. And that results in lifelong friendships and continuous Internet communications and reunions, and so forth. And I 

could mention a number of these young leaders who are advancing 

into positions of real leadership. 

And finally, I would say I’m very optimistic, maybe even a little 

bit more optimistic than Dr. Auslin, about the coming generation 

of young politicians in their, say, early forties. A number of them 

have been my students or colleagues, and I see a situation where— 

there will be reshuffling of the parties—and I see a situation where 

the internationally minded younger politicians will create a new 

party at some point, not too far away, and will be firm, reliable 

allies of the United States. So, I remain optimistic on that score. 

Senator WEBB. Thank you. 

Mr. Katz. 

Mr. KATZ. Yes. First of all, I agree with the tenor of your remarks. I think it’s very, very important. And I think one of the 

issues is that sometimes the alliance, at least the security side of 

the alliance, is often viewed in terms of Japan being an unsinkable 

aircraft carrier and a checkbook. And I think that is outmoded. 

What we need to think now, I think—given the fact, as I say, 

we’re addressing global issues, some of which are political, some of 

which are security, some of which are intertwined—is the extent to 

which both countries can cooperate in a very active way to deal 

with all sorts of issues. 

I attended a conference where people in Southeast Asia were 

worried about being able to get water for fish. Fish were dying 

because of dams being built in China, across the border. Water has 

become a security issue. It’s a new world. Not to mention the fights 

over energy. 

So, the two countries actively engage on the world stage? We 

need something much more than just an unsinkable aircraft carrier 

as part of the alliance. 

And, I think, therefore, what concerns me about the Futenma is 

sort of that it’s viewed in one dimension. And I think we need to 

view it in a larger way. And I do think we need to recognize that 

the political change which has just occurred in Japan, this idea of 

actually having contested elections, is going to result in changes 

that make Japan—it’s going to be a rough road getting there, but 

the end of the road will make it more responsive to its internal 

needs, and more able to play a role on the world stage; will make 

it a much more dynamic economy. 

And I share this optimism, actually, about this younger generation. You talk to politicians or people in the business world or the 

bureaucracy, in their 40s, who have grown up in a different atmosphere; they do have a different mindset. And I think that 

generational change is all to the good. But, I think as we focus on 

this or that issue, our stake in some of these larger changes sometimes gets lost in the shuffle. 

Senator WEBB. Thank you. 

Dr. Auslin. 

Dr. AUSLIN. Mr. Chairman, I know you’re a student of history. 

And as a historian, I can’t help but think of the issues in a historVerDate Nov 24 2008 13:27 Dec 13, 2010 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 S:\HEARING FILES\2010 ISSUE HEARINGS TO PREPARE FOR PRINTING\ISSUE HEARIN
40 

ical framework. And we face a couple of unique, I think, historical 

conditions right now. 

The first—and, I think, goes directly to the beginning of your 

question—is that, certainly for the United States—and, honestly, 

for Asia, as well—there’s never been a time in history where 

there’s been a strong Japan and a strong China at the same time. 

They’ve always alternated. 

And so, the pattern of international relations, either within the 

region or as the rest of the world dealt with the region, reflected 

that—those rises and falls. And that’s been the rule for our engagement with the region since the 1840s. 

Today, we don’t have that. We have two strong countries, one of 

which, as you note, is an ally, and the other one we have—with 

which we have an increasingly integrated relationship. And I don’t 

think we’ve yet figured out how you manage that balance. 

I would actually argue, even though I’m a Japan person, you 

know, professionally, I think it’s entirely natural that we, in the 

United States, are focusing on China. I don’t think it’s abnormal, 

in any way, that my former colleagues in the universities are focusing on China, or the think tanks are focusing on China. It is, economically and politically, a country that is evolving into a new role, 

and new roles that we need to take account of. 

So, the idea that there is some type of shift that is unnatural, 

away from Japan and toward China, I think is, itself, just not reflective of how we approach and think about the world. 

The other historical anomaly that I would mention here is the 

nature of the alliance itself. Historically, obviously, if you look at 

alliances, they are short-term political arrangements. They come 

about because of a political exigency, a military crisis, whatever 

you have. And when that situation is resolved, they break up and 

they reform in different ways. 

The type of alliance we have with Japan, as much as we celebrate the 50-year alliance, it is historically abnormal. 

We are in a multigenerational, open-ended relationship and political set of responsibilities and commitments to each other that I 

fully support, and yet, I think we need to recognize, is not the norm 

for how two states interact over the long term with each other. So, 

we are, in a sense, making it up as we go along every day. 

At one level, I think part of the problem is the broken-windows 

theory. We are simply trying to take care of current problems in 

the relationship, which just means you’re running ever harder to 

keep up. On the other end, all of the calls—and I’m certainly one 

who has made calls like this—for a new start to the alliance, a new 

vision for the alliance, I’m not sure is necessarily as politically realistic as we think it is, when you take into account all of the responsibilities that come with it. 

So, I don’t know if there’s necessarily an answer to your question. I agree that we need to educate our peoples better. I agree 

that without this alliance our position in East Asia is far more tenuous. And yet, the historical uniqueness of where we stand today 

means that there are no clear answers, and we will continue to 

muddle through for the foreseeable future. 

Senator WEBB. Thank you. 

41 

Let me offer two quick reactions to what you just said, and then 

I have a couple of other questions. I think we have a vote that’s 

going to be called at 12:10, which means I can stay a bit longer 

than that, and I will. 

First of all, with respect to the amount of attention that’s being 

given to China, I agree with you, that that is natural. It’s an evolving relationship. 

There are a tremendous number of unknowns in that relationship. My concern is that, with the attention span of the Congress 

and of most people in the country, and the media, as Dr. Packard 

points out, we risk losing our appreciation of the essential nature 

of our relationship with Japan. It’s not an either/or situation, here. 

In foreign policy, since I’ve been in the Senate, you’re either talking 

about Iraq, Afghanistan, or China. And it’s one of the reasons I put 

so much emphasis on Southeast Asia, where I spend a good bit of 

my time, the ASEAN countries—650 million. 

With respect to alliances, let’s be careful with history, here. If 

you examine Japan’s foreign relations since they opened up again, 

and with the 1854 time period, they either have developed an alliance with the dominant naval power of the region or they have attempted to become the dominant naval power of the region. They 

started with an alliance with Great Britain. And I would venture 

that this is not only an essential strategic axis for the United 

States in the region, but also a perfect fit between two countries, 

particularly with the evolution of China and the unknowns that 

face it. That’s just a big parentheses to clarify my own reaction to 

what you said. 

I would like to get all of your views on another matter, and that 

is—another piece of this, anyway—and that is the prospect for our 

two countries becoming more interdependent, economically. 

Let me start by saying, Mr. Katz, your comment about water is 

one of my two great concerns when I look at Southeast Asia as they 

impact the unknowns with China, quite frankly. One is the issues 

of sovereignty in the South China Sea. We held a hearing on this. 

And it actually goes all of the way to the Ryukyus, in terms of, you 

know, unresolved sovereignty issues. 

The second one is inside the mainland of Southeast Asia with respect to the Mekong River. I just participated in a conference, last 

week at the Stinson Center, where they are raising issues of riparian rights—if you can call them riparian rights when you’re talking 

other countries—where there’s so much hydroelectric being put in 

China, and now Chinese companies moving into Laos and Cambodia; and the Mekong River is in danger of losing its vitality, 

when you get down into Vietnam and the southern end of it. And 

only the United States—and perhaps the United States with 

Japan, on the economics of financing dams—can create the multilateral environment in which to address—and I don’t mean to use 

the environment as a—it’s not supposed to be a pun—but the multilateral situation where that issue can be addressed. You can’t address that issue bilaterally. I don’t think these smaller countries 

can. So, these are real issues. 

And that goes to the question of the two areas where we might 

become more interdependent and, as a result, stronger as allies. 

One is working together. And that has an economic underpinning 

42 

to it, if you’re looking at financing for dams outside of China. But, 

the other is just the basic economies. 

And, Dr. Packard, I’d like to start with you on this. The Japanese, traditionally, have been very inward-looking, in terms of their 

economic systems. I believe it would be to their advantage and economic benefit, as well as our own, if there were areas where—and 

I think, Ambassador Roos, as you pointed out, Dr. Auslin, mentioned certain high-tech areas he’s worked in. But, there were certain areas that were not directly in competition with existing bureaucratic structures, that we could have a more interdependent 

economy that would benefit both countries. 

Dr. PACKARD. At risk of stepping on Mr. Katz’s territory, here, 

I will venture just a couple of thoughts. 

Japan’s historical desire has been to maintain its own autonomy 

at home, control of the territory of the main four islands, since 

1854, as you pointed out. And when you noted that they have made 

alliances with distant—with powers—the strongest power, they 

have always been distant powers; first, Great Britain, then Germany, tragically, and then—now the United States. With none of 

those powers did they have territorial disputes. So, I do not imagine a time when Japan could either make an alliance that is 

against our interest with China, because of the territorial disputes, 

or with Korea, because of history. 

So—but, I do think there is some need for independence. Perhaps 

it’s a question, but I do not know why Japan cannot stimulate its 

own domestic demand and get its economy out of the doldrums. 

And maybe Richard Katz can talk about this. There is a tremendous need for housing. Anyone who’s gone on a train and seen the 

apartment buildings, the so-called ‘‘danchi,’’ knows that there’s a 

huge demand. There is a large supply of capital, in Japan, saved, 

due to a high saving rate by the older generation, and there is 

plenty of land if they take some of those rice fields out of cultivation. I know this is heresy in Japan, but I believe it’s going to 

come, just because of economic necessity. And if you had a strong 

Japanese economy with high demand, it would, as Richard Katz 

said, release the nation from dwelling on its own economic problems and being—making it willing to step forward and engage in 

diplomacy and economics abroad. 

Senator WEBB. Thank you. 

Mr. Katz. 

Mr. KATZ. On this river thing, which was, again, new to me—I 

learned about it last year—and it really is a geopolitical, as well 

as an economic, issue, when you’re losing your ability to fish because of some dam across the border. 

And yet, you know, Japan has got a lot of technology. Japan has 

got one of the best records, for example, learning how to save 

energy, how to make steel with, I don’t know, much, much less 

energy than, say, China does. 

And so, if you think about the role the United States and Japan, 

both as technology superpowers, trying to address this issue; yes, 

there’s diplomatic answers to this issue, but, ultimately, people do 

need energy, and they do need the water, and you have—the more 

that resources are scarce, the more the countries are likely to take 

each-country-for-itself attitude. The more that you can apply to 

43 

technology to lessen that sort of tradeoff, then you have the context 

of both peace but also cooperation and prosperity. 

And the technology assets of the United States and Japan, and 

their ability to work together, I think, is a perfect example of what 

I was talking about, is a mission for the alliance, beyond the 

unsinkable aircraft carrier. It’s, how do we work together to solve 

these problems which could become huge problems? 

Now, on the openness issue, you know, Japan is—people talk 

about this Japan/Asian model of growth. 

Well, it’s not exactly true. Most of Asia is growing so fast because 

they are incredibly open countries. You look at the ration of trade 

to GDP in Korea, China, and Malaysia, and Thailand, and all over 

the place—huge, huge ratios of trade to GDP. In Japan, it’s about 

30 percent; in Korea, it’s 110 percent. 

If you look at the role of foreign-directed investment inward; in 

Japan, it’s minuscule. In China, two-thirds of their exports and imports are handled by multinationals. Globalization created prosperity throughout the region. 

One of the reasons Japan is growing so slowly is because it’s not 

availing itself of the opportunities of openness the way that it 

could. It’s better than it was 10 years ago; its got a long way to 

go. And here’s an area we’re bringing in foreign companies, bringing in imports, further integration in the region would help Japan. 

Some of the younger reformers see it that way; the special interests 

don’t. That’s one of the political dilemmas that the DPJ faces. 

Senator WEBB. Agree. Do you have any thoughts as to where— 

what would be your thoughts? Yes. 

Mr. KATZ. You know what? The best successes that we’ve made 

is—you know, they have this term in Japan, called ‘‘gyatzu,’’ foreign pressure. And internal pressure is ‘‘nyatzu.’’ Well, the best 

things have worked when it’s called ‘‘ny-gyatzu,’’ which is the combination of internal and external. 

For example, Toys ‘‘R’’ Us wanted to get into Japan. They had 

this large-scale retail-store law, which really meant small shopkeepers could keep out the really efficient, large stores, whether 

they’re foreign or domestic. So, there was an alliance between Toys 

‘‘R’’ Us and the large Japanese stores to get that law changed. That 

served the consumers. That’s helped the economy grow. Motorola 

had some things in cell phones, which has made the cell phone industry huge in Japan, technologically advanced. Richard Fisher did 

some things as USTR, again, an alliance between United States interests and Japanese interests that want to reform. 

We’ve got to find Japanese interests who want to push, for their 

own reasons—they say in Japan, ‘‘Sleep in the same bed, but 

dream different dreams’’—who want the same thing, maybe for different reason, work together. So, ‘‘ny-gyatzu’’ is, I think, the way 

we get those kinds of changes. 

Senator WEBB. Thank you. 

Dr. Auslin. 

Dr. AUSLIN. Mr. Chairman, I’ll be brief. I fully second what Rick 

has just said. And I’m not an economist. I think that the issue is 

creating, or trying to figure out how we, together, can create, the 

political and social conditions that allow for that. But, anyone 

whose been in Japan knows that there really are two economies. 

44 

And I’ll—you know, won’t want to get into areas that Rick knows 

better than I do, but you—the leader of the exports, the world-beating Toyotas and Sonys and the like. And then the domestic economy, which is sheltered from competition, which is not very competitive, and which is the economy that most Japanese, themselves, 

deal with on a daily basis. 

So, there certainly is a wide gap to work with, in terms of what 

would benefit Japan’s consumers, what would benefit companies 

that are domestically oriented in Japan. 

But, I think the answer is really, to wrap up, just what Rick 

mentioned, which is two things: the issue of global integration and 

this issue of competitiveness. I think that’s why Japanese are worried, in part, about their growing sense of isolation from the world. 

If you don’t have students going out and engaging, if you start 

shutting down your news bureaus abroad, and you start shutting 

down your offices abroad—last year, in Washington, Kadonrin, 

which is the equivalent of the Chamber of Commerce, more or less, 

closed down its Washington office, its only America office. If you 

don’t have that type of engagement, let alone representation, not 

only will you feel more isolated, you will, in fact, be more isolated. 

And I think that that is a feedback in to the issues of where 

Japan does not necessarily seek to become competitive at the world 

level. And I think Rick’s absolutely right, you have to find areas 

where it is in Japan’s interests to do that. And there, they have 

taken leads in efficiency and the rest. 

As to the specifics, I can’t speak to that, but I think it is the conditions that will lead, ultimately, to the end state that you so 

rightly point out is necessary. 

Senator WEBB. Thank you. 

My thought on this, really, is that there are sectors where the 

Japanese don’t do well, where we do well, where they would not 

view, you know, large-scale American involvement as directly competitive, in the same sense as they would if we were going to go 

and try to sell a car or some of these other things. And if there 

were a way for that to happen, the American people also would feel 

more invested in the future of their country. You know, there’s a 

tremendous independent streak in the Japanese culture. We know 

that. It’s a possible reason, when you’re—Dr. Packard, when you 

were reading from the Washington Post article—I saw that article, 

too, and I immediately thought, ‘‘This is a historic trend.’’ You were 

talking about the trends. You know, we become insular again. 

And people in the United States don’t feel the same risk with the 

success of the Japanese economy as they do in other places. And 

if there were sectors where the two countries could become economically interdependent—and that’s probably not a word that the 

Japanese like to hear—but I think it would be healthy for the relationship, but also for the strategic bond that I believe is so essential to what we’re doing in Asia. 

You’ve been a great panel. This has been a lot of fun. 

And I very much appreciate the time that all three of you have 

taken. 

And there are many people in offices, all throughout the Senate, 

who have watched good pieces of this, and I think you’ve really 

45 

assisted in raising a level of understanding on these issues. Thank 

you very much. 

This hearing is closed. 

[Whereupon, at 12:20 p.m. the hearing was adjourned.] 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF PAUL TOLAND, COMMANDER, U.S. NAVY

Chairman Webb, Ranking Member Inhofe, and other Senators, thank you for calling this hearing and bringing attention to a hidden aspect of Japan that is gaining 

more traction daily within Congress and among the American people, International 

Child Abduction. 

My name is Paul Toland. I am a Commander in the United States Navy with over 

20 years of active service, and I am the only living parent of Erika Toland, abducted 

nearly 7 years ago and wrongfully retained in Japan by her grandmother. 

My daughter Erika was abducted by my now deceased wife Etsuko on July 13, 

2003, from our home at Negishi Navy Family housing in Yokohama, Japan. Etsuko 

and I were married for over 7 years before Erika was born. For the majority of our 

marriage, we were assigned to duty stations in the United States. Etsuko was a naturalized United States Citizen, and Erika is also a U.S. Citizen. Soon after Erika’s 

birth, Etsuko sunk into a severe postpartum depression. She refused treatment in 

a military hospital and her untreated condition rapidly deteriorated. Our marriage, 

too, soon followed suit. Etsuko’s mother lived alone in Japan, and did not want to 

move to the United States with us. Instead, she wanted Etsuko to stay behind in 

Japan. I was unaware of this and caught completely by surprise when I received 

a call from my neighbor in summer 2003, asking me if I was moving, because there 

was a moving truck outside our house. When I returned home, Etsuko, Erika, and 

our household goods were all gone. 

Soon after this I began my journey into the surreal world of Japanese family law. 

Japan is a haven for international child abduction. In the past 58 years, no child 

has ever been returned from Japan to ANY foreign country. Japan stands alone as 

more than just a haven for abduction, and is instead, quite literally, a black hole 

for abduction, from which no child ever returns. 

I first sought advice from the Navy Legal Services Office in Yokosuka, Japan. I 

was distraught and looking for help. My daughter had disappeared into the foreign 

country in which I was assigned, and I needed the Navy’s help. Any attorney with 

a rudimentary knowledge of the dysfunctional Japanese family law system would 

have told me to avoid entering the Japanese legal system at all costs, and instead 

hire an attorney in my home state, contact the U.S. State Department and National 

Center for Missing and Exploited Children. Instead, the advice I was given by the 

young inexperienced Navy attorney was ‘‘this is a private matter, I suggest you hire 

a Japanese attorney.’’ That advice doomed me to years of unnecessary legal battles. 

Two years after that experience, Washington State family court did rule that they 

had jurisdiction over our marriage, but also ruled that since I had initially entered 

the Japanese family law system, I had forfeit my right to any U.S. jurisdiction over 

my case. 

I entered Japanese mediation in late 2003 in an attempt to maintain contact with 

Erika. The Japanese version of mediation is unlike anything you could possibly 

imagine. My wife and I never saw each other or met to discuss issues. Instead, we 

both waited behind frosted glass in separate waiting rooms, each spoke to a ‘‘judge’’ 

separately, and never discussed any issues of substance. Most importantly, the court 

completely avoided any discussion regarding visitation with Erika. When I said I 

wanted to see Erika on weekends, the judge and the attorneys in the room laughed. 

When I asked to see Erika to give her gifts on her birthday, I was advised to mail 

the gifts to my wife’s attorney. This same advice was again repeated at Christmas. 

After 8 months of repeatedly asking to see Erika, I was finally granted 20 minutes 

of visitation in a small courthouse playroom while having both a court supervisor 

and Erika’s grandmother present in the playroom with me. Meanwhile my wife, her 

attorneys and my attorneys all watched the visitation from behind one way glass, 

and the entire ‘‘event’’ was recorded on videotape. This is the type of visitation 

afforded to felon criminals in the United States, yet there I was, the victim of a 

crime and a highly respected military officer, subjected to this humiliating spectacle. 

My own Japanese attorney apologized for actions taken by the Japanese court, 

asking me in an e-mail to ‘‘Please understand your case is not a piece of cake beVerDate Nov 24 2008 13:27 Dec 13, 2010 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6621 S:\HEARING FILES\2010 ISSUE HEARINGS TO PREPARE FOR PRINTING\ISSUE HEARIN
46 

cause of the racism and irrationalism of Japan. It might be something like defending Taliban in the U.S.’’ 

In summer 2004, I was transferred back to the United States, and spent the next 

3 years trying in vain to maintain contact with Erika, spending approximately 

$200,000 in attorney fees in the process. Then, in late 2007, I received the tragic 

news that Etsuko had committed suicide, having never received proper treatment 

for her depression. Although devastated by her death, I had renewed hope to be able 

to see Erika. Our own U.S. Supreme Court has found that the rights of a parent 

supersede the rights of any third party nonparent, and I naively thought that other 

societies, such as Japan, would also respect the rights of a parent over a nonparent. 

However, I was wrong. 

Erika is today held by her grandmother Akiko Futagi in Japan, and I have absolutely no access to her. The U.S. State Department has asked to visit Erika, but 

the abductor Grandmother has said ‘‘No.’’ The Japanese Ministry of Foreign Affairs 

has asked to see Erika, but again, the abducting Grandmother said ‘‘No.’’ In the 

Japanese system, where no enforcement mechanisms exist and compliance is completely voluntary, all any government agency can say to me is ‘‘We’re sorry, we 

tried.’’ Nobody can offer any remedies or solutions, because none exist. 

I flew back to Japan this past October to wait on a street corner and greet Erika 

on her way home from school and bring her birthday presents, because this is the 

only possible contact with dignity that is possible. I am left with no other choices. 

I knew if I tried to take Erika to the Embassy to attempt to get a passport, I would 

likely meet the same fate as Christopher Savoie met when he attempted to retrieve 

his children from Japan. I would likely be blocked at the gates of Embassy by a 

U.S. State Department more interested in preserving relations with Japan over the 

welfare of U.S. citizen children, and I would likely wind up in Japanese jail as 

Christopher Savoie did, for simply trying to bring Erika home. 

Nothing is more important and deep-seated in this world than a parent’s love for 

his or her child . . . we all love our children. Equally important is a society’s responsibility to ensure that their most vulnerable citizens, their children, have the 

opportunity to know and love their parents. This is where Japan and many other 

nations have failed, and this is why we are here today. 

I am left without any remaining options. Erika is essentially held captive in 

Japan, separated from her only living parent in a country that has never returned 

a child. I never dreamed that serving my country overseas in one of our allied nations would result in the loss of my only child. Japan is supposedly an ally of the 

United States, so why does the United States continue to tolerate this behavior from 

Japan? How can a nation that we call an ally be guilty of such despicable human 

rights violations and get away with it? 

I humbly ask that you take any and all actions within your power to make a difference for Erika and for all children wrongfully abducted and withheld in Japan 

from loving parents. I also ask that you act expeditiously. My own parents are ill 

and in their eighties. They hang on to life in the hope of meeting the granddaughter 

they have never met. Please act now, before it is too late. Thank you. 

The views expressed in this testimony are not the views of the Department of the 

Navy or the Department of Defense. 

LETTER FROM MOISES GARCIA

To: Senate Foreign Relation Subcommittee on East Asian and Pacific Affairs 

KARINA GARCIA ABDUCTION TO JAPAN

I am writing this report to represent the facts and problems that I have been facing after the abduction to Japan of my daughter Karina Garcia on February 27, 

2008, by her estrange Japanese mother Emiko Inoue. I have been represented since 

the moment my daughter was abducted by GLOBAL FUTURE whom has supported 

me emotionally and logistically. 

BACKGROUND

Karina was born in Milwaukee, WI, on August 27, 2002. She lived her whole life 

here and went to school at a suburb public school in Fox Point, WI, at the time of 

her abduction. She was a very happy and caring child. She enjoyed her multiple national cultural heritage as she liked eating Japanese food and dancing Hispanic 

music. In addition, she was getting fluent in all three languages Japanese, English, 

and Spanish. 

47 

MARRIAGE BACKGROUND

I met my wife during my studies at the University of Oslo in 1998. She was working for Scandinavian Airlines and studying Norwegian, while I was taking a course 

on ‘‘International Health System Development.’’ Our relationship continued after I 

got a scholarship to study Gastroenterology in Japan from 1998–2001. Later, I returned to work as physician in 2001 in Milwaukee. During a vacation trip in Japan 

on December 2001, Emiko got pregnant. We married at the Milwaukee Court House 

in February 2002, and Karina was born in August. Our marital problems started 

after the baby was born when Emiko became very depressed. She went without 

treatment for many years and later in spite of psychological therapy things didn’t 

improve. She filed for divorce in 2006, and temporary orders were in placed that 

included prohibition for my daughter Karina for traveling outside of U.S., and prohibition to obtain a passport either Japanese or Nicaragua for the risk of abduction. 

At that time, I was granted generous visitation with my daughter. In July 2006, 

we started a process of reconciliation initiated by Emiko and finally we closed this 

divorce action in December 2006. However, things went wrong again as soon as the 

divorce action was closed. In February 2008, I decided to file divorce and honestly 

notified Emiko. Because of the risk of abduction, I had been granted an ex-parte 

order of sole custody. A few days later, Emiko and Karina disappeared from my 

home, and later I find out that she had taken our daughter to Japan with a Japanese passport that apparently was illegally obtained. However, the local police 

didn’t intervene properly and Amber Alert was not activated in spite of my insistence. The divorce action continued and the ex-parte orders became temporary orders. Emiko hired a U.S. attorney to represent her in U.S. to try to get property 

division and child support. However, she was ordered to return to the original jurisdiction with the child. At the end, she tried to delay the divorce trial by firing her 

own lawyer, however, the court proceeded with the final trial on June 2009, where 

I was granted sole custody and physical placement for my daughter and Emiko was 

ordered to return to U.S. She was also found in contempt and she is ordered to pay 

500 USD daily for every day my daughter is out of country. 

JAPANESE COURT EXPERIENCE

After obtaining my final U.S. divorce judgment, I was one of the few U.S. parents 

that could request a validation of such judgment in Japan, since my case is strong 

even in Japan. My judgment fulfilled the requirement requested by the Japanese 

civil code, which are: 

1. Judgment is Final (I had to wait 3 months to prevent any appeal from my 

former spouse). 

2. The Japanese part was properly served, or appear voluntarily in court. (My 

former wife had a U.S. attorney supporting her all the way to the end of the trial.) 

Please note that Japanese courts don’t recognized service by publication and the 

service using the Hague convention could last up to 6–9 months. However, when 

Japanese courts decide to use such service in the U.S., the delay usually last only 

4–6 weeks. 

3. There is comity, meaning that a Japanese judgment should also be accepted 

in U.S. courts. 

4. U.S. judgment doesn’t go against public policy, this is a big one that many 

failed to pass considering that U.S. laws are totally different than Japanese laws. 

For example, some parts of my judgment (especially the contempt and the fact that 

parental abduction is a crime in U.S.) are not recognized by the Japanese courts. 

I currently have also sole legal custody under Japanese law. However, I am still 

being denied access to my daughter. I opened a case for ‘‘habeas corpus’’ in Japan 

at the Osaka Supreme Court in October 2009 and they ruled accepting U.S. jurisdiction and the previous U.S. custody orders. However, the return of my daughter has 

not been enforced. I found that Japanese courts don’t work cohesive like American 

courts do. For example, I found out that my former wife filed for divorce action in 

March 2009 in spite of me never being served any summons and having an open 

process in U.S. She also filed for change of custody in the family court in June 30, 

2009, in spite of U.S. judgment was not final contradicting one of the requirements 

for recognition and again without me being served any summons. Unfortunately, 

most of the divorce cases are handled by family courts where hearsay is allowed, 

there is not a professional evaluation in spite of using the standard ‘‘The best interest of the children,’’ and favor the part possessing the child since they lack enforcement power. 

District and High courts, in the other hand, work more like normal U.S. courts. 

However, they handle very few cases per year, for example, my ‘‘habeas corpus’’ case 

is just the 9th case to be handled in Osaka. They still allow hearsay, however, evalVerDate Nov 24 2008 13:27 Dec 13, 2010 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6621 S:\HEARING FILES\2010 ISSUE HEARINGS TO PREPARE FOR PRINTING\ISSUE HEARIN
48 

uation includes an attorney at litem and pretrials. However, there is significant and 

well-documented biases and discrimination against foreigners and there is not enforcement power. 

My case for return of my child is still open at the Tokyo Supreme Court under 

two separate appeals: (1) Constitutional violation of Human rights and discrimination. (2) Violation of law procedures and review of evidence. 

HUMAN RIGHT VIOLATIONS

Karina and I have been prevented from seeing each other since February 21, 

2008, when she was still in Milwaukee, in spite of outstanding U.S. court orders 

issued multiple times in U.S. I was able to secure a 90-minute visit in Japan after 

continued pressure from my U.S. and Japanese attorney. I saw my daughter in a 

yard of a local hotel surrounded with security. I had to give my passport to hold 

during the visit, to my wife. To my knowledge, only criminals have a supervised visitation like that. 

After the U.S. judgment became final in June 10, 2009, all communication has 

been cut by my former Japanese wife and her family. I have been even abused over 

the phone by her family saying that in Japan I don’t have any rights. 

Karina is also being also brainwashed and alienated against me, my family and 

even her country of birth, the U.S. This represents another violation of her basic 

children rights to have contact with her parents and to keep her background. 

In addition, in March 26, 2010, while attending a hearing at the Kobe Family 

Court, I was allowed to see my daughter for only 20 minutes in a so-called ‘‘trial 

visitation’’ where the objective was to assess the degree of attachment of my daughter and me. At that time, I was not allowed to bring old pictures of my family member and friends in U.S., and a court officer opened and read all my letter and presents. Fortunately, my daughter Karina and I rebounded very quickly to the Japanese court officer and the abductors surprise, and they could not take away my bond 

with Karina, or my sole legal custody ruling. 

CONCLUSION

In this report, I want to state clearly that I and my daughter have had stolen, 

our basic human right to stay together and have significant contact with her Japanese family and supported by the Japanese Government. In addition, I have found 

many difficulties in the U.S. legal system to address my needs. I have been fighting 

an unfair war against a strong law state as U.S. and a weak and racist system as 

the Japanese. I have found some support from the U.S. Government specifically 

from the Department of State; however, to achieve my goal to have my daughter 

back home the Department of State will need stronger tools. In the other hand, my 

former spouse has all of the support of her government to legalize the abduction of 

our daughter, while violating her human rights, and child abuse ongoing. 

MOISES GARCIA, M.D. 

Fox Point, WI 

LETTER FROM SHOKO MATSUDA

APRIL 16, 2010. 

To: The Honorable Members of Senate Foreign Relations Sub-Committee. 

I am submitting this letter for the record of East Asian and Pacific Affairs subcommittee hearing on U.S.-Japan relations on April 15, 2010. 

My name is Shoko Matsuda. I am the mother of two children age 15 and 11 years 

old today. My children were abducted by their father from their habitual residence 

in VA to Mexico immediately after I filed divorce and custody at Fairfax court in 

March 2003. I spent almost one year searching for them in Mexico. Then I learned 

my ex-husband had covertly abducted our children to Japan. In March 2003, our 

children were 8 and 4 years old. I am Japanese citizen with a permanent resident. 

Both children have dual citizenship of Japan and U.S. Their father is dual citizen 

of Mexico and U.S. 

I was granted temporary custody of both children from Arlington court in VA in 

November 2003. I was able to locate my children in Tokyo in April 2004 with help 

from the U.S. State Department. In order to locate my children, and to pursue custody of them, I have been to the FBI, NCMEC and U.S. State Department seeking 

assistance. I hired private investigators in Mexico and Japan. I also have been to 

Tokyo children’s welfare center, Tokyo government and consulted with Japanese atVerDate Nov 24 2008 13:27 Dec 13, 2010 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6621 S:\HEARING FILES\2010 ISSUE HEARINGS TO PREPARE FOR PRINTING\ISSUE HEARIN
49 

torneys seeking assistance. I have hired attorneys in U.S. and Japan to seek a resolution through the courts in Arlington VA and Tokyo. 

It took four years to reach final divorce and custody in the Arlington court. My 

ex-husband did not respond to the U.S. court for two and a half years and the 

Arlington court imposed a $500 per day fine for my husband’s non-compliance and 

non-response. He then challenged jurisdiction in VA trying to move jurisdiction to 

Japan for the purpose of denying my VA ordered temporary custody, and in an 

effort to dismiss VA court ordered fines. His challenge was made in November 2005. 

At the same time he filed for divorce and custody in Tokyo family court. This attempt ended as a failure for him, but the long delayed court process clearly worked 

for advantage in his favor, as our children remained with him in Japan the whole 

time. In January 2007, the judge in Arlington court suspended the court’s fines 

against him, on the condition that he complies with the court orders and future orders, part of which is our visitation schedule. (The fines totaled $255,500 against 

him, for 511 days of non-compliance) The judge granted me visitation every summer 

in U.S., every other winter and spring in Japan. I trusted in the rulings of the court, 

I had every reasonable expectation that I would finally be able to see my children 

again on frequent and meaningful basis. 

This is a quote from our final divorce decree: ‘‘The return of the children for the 

travel to the United States defined below is the final step in ending a cross continent dispute about which Court, or courts, had jurisdiction. The Father has accepted the continuing jurisdiction of the Virginia Courts over the parties’ divorce and 

all issues raised in it, including child custody, visitation, support, and property division, by his appearances, Answer and cross complaint.’’ 

That first visitation was held for 10 days in the backyard of my ex-husband’s parents’ home in VA in May 2007. (I was not allowed inside the house, and my husband’s brother guarded the gate the whole time.) It became very clear that my exhusband was only intent on using this one visitation to dismiss the FBI’s criminal 

charge against him. During the entire visitation, my children refused to talk to me 

and did not leave the premises. I requested Arlington court to keep my children in 

VA to address the alienation. The judge ordered for the children to go to psychological counseling. But my ex-husband ignored the court order and my children have 

never had a chance to receive proper psychological intervention or evaluation. My 

children went back to Japan after that one VA visitation only, and I have not been 

able to see them ever since. Unfortunately, it was the FBI’s agreement to have the 

FBI arrest warrant dropped, if my ex-husband complied with that visitation. I 

requested to the FBI to postpone the agreement to help and enforce compliance of 

future visitation orders. However the FBI dropped his criminal charge after one 

visitation. 

Despite all of the U.S. court agreements, my ex-husband filed a motion to change 

the VA court order regarding visitation in the Tokyo family court in December 2007. 

He told the Tokyo family court that I had abandoned my children when they were 

very little, and children have been traumatized from that experience. I explained 

to the Japanese Judge that it was an abduction case, and my ex-husband was doing 

his best to alienate my children. However Tokyo family court paid no respect for 

my parental right and completely ignored the VA court order. In April 2009, Tokyo 

family court sent me their order stating that not only I couldn’t have visitation in 

Japan, but also I was not allowed to contact my children at all . . . no written letters, no email, and no phone calls. It is very easy to manipulate the Japanese court 

system because they make no effort to investigate claims and allegations by a moving party, change status of custody, and they turn a blind eye toward abduction 

cases. Because there is no court order that they will enforce, there will never be a 

solution which includes shared parenting or joint custody. 

I am court ordered in VA to pay child support on a monthly basis. I have continued to send them child support every single month. I am sending international 

money order addressed to my children with a letter to tell them I miss them so 

much and I am praying every day and night hoping to see them soon. I am hoping 

my children will respond to me sometime soon. But I have not been able to see 

either of my children and I have not heard anything from them for more than 2 

and a half years. 

This has been a terrible injustice. I haven’t been able to be with my children simply because I wanted to protect my children through the divorce. Because I didn’t 

want my children to lose either of their parents. Because I respected father’s parental right and I had never prevented from my children from seeing their father. Because I believed in equal parenting, I wanted my children to grow up in the environment that they could see both parents anytime they wanted. Because I believed that 

the law would protect the people who would follow the law. 

50 

In May 2007, the Arlington Judge could have kept my children here to provide 

proper psychological intervention for them that would have stopped all of this. In 

December 2007, the Japanese court could have made the decision to enforce U.S. 

visitation order. That would have maintained a relationship between my children 

and me, so they can grow up with knowing how much their mother loves them. 

I am asking the honorable members of the subcommittee to enforce the previously 

established U.S. court orders and to help U.S. government to establish the system 

between Japan and U.S., which leads to immediate resolution of these inhuman 

crimes. 

Sincerely, 

SHOKO MATSUDA. 

LETTER FROM SCOTT SAWYER, GENERAL SECRETARY OF GLOBAL FUTURE: THE

PARENTS COUNCIL ON INTERNATIONAL CHILDREN’S POLICY

Re (1) Wayne Sawyer and all other U.S. citizen children kidnapped to Japan; (2) 

rethinking Japan. 

DEAR SENATOR WEBB: The following testimony is respectfully submitted for inclusion in the record of the EAP Subcommittee hearings on Japan. 

The story of my son Wayne’s criminal kidnapping to Japan by his mother on 

December 15, 2008, includes transgressions and intrigue by Japanese diplomats on 

U.S. soil, passport fraud, the violation of Los Angeles Superior Court custody, travel 

ban and passport surrender orders, extortion, the failure of U.S. authorities to effectively support a parent’s extensive efforts to prevent the crime, and Japanese governmental policies, which are ultimately responsible for inflicting cruelty and lifelong damage on my innocent child, who turns four years old on August 5 and remains captive in Yokohama, Japan. 

Besides the human tragedy such kidnappings represent, they also serve as case 

studies in the larger context of Japan’s behavior within the overall U.S.-Japan relationship. Prior to the kidnapping, I followed the instructions of the Superior Court 

and the State Department’s website and requested that the Japanese Consulate in 

Los Angeles withhold issuing a Japanese passport to Wayne. Aware of the Superior 

Court’s custody and travel ban orders, Vice Consul Yamamoto of the Los Angeles 

Japanese Consulate and his assistant Suzuki, in 2007 and 2008, gave my attorney 

and I (with a translator present) multiple verbal assurances that the Japanese Ministry of Foreign Affairs had placed a restriction on issuing Wayne a Japanese passport. Yamamoto refused our repeated requests to put this commitment in writing. 

I went even beyond the U.S. court system, but still could not prevent the kidnapping. Our case is the only one I know of in which Japanese diplomats, prior to the 

kidnapping, directly promised a U.S. parent that Japan would not issue a Japanese 

passport for a U.S. citizen child, but did so anyway. I have recently obtained written 

confirmation that the Japanese Consulate in San Francisco issued the passport, 

which identified Wayne with a false Japanese name. Wayne’s mother had surrendered a duplicate Japanese passport to the Superior Court. It contained a different 

identification number than the one on her uncanceled original, which she used to 

leave the country with Wayne. 

That a U.S. parent must petition a foreign government to not aid and abet a 

criminal kidnapping is a Kafkaesque absurdity, yet this is exactly the procedure the 

US DOS recommends. At no point did any Japanese diplomats offer the courtesy 

of allowing U.S. officials to participate in the interfaces. At no point does the U.S. 

government help prepare ordinary Americans to interface with professional and wily 

foreign diplomats, who conduct those encounters under foreign rules of engagement. 

For example, one half hour after informing me of the MOFA passport restriction, 

Mr. Suzuki called me again and asked a series of questions about my commitment 

to raising Wayne with Japanese culture. At the time, I felt that the call was inappropriate, suspicious, tinged with ulterior motives and probably recorded without 

my permission. 

The objective of any diplomatic mission is to foster good relations with the host 

country. Japan’s hustling and injury of ordinary citizens and innocent children of 

the host country are diplomatic incidents that should invite high scrutiny. Below we 

have written proof that instead of directing its nationals (especially its U.S. green 

card holders) to obey the laws of the host country, Japan’s policy is to counsel its 

nationals to circumvent the laws of the United States. Had Japan chosen the more 

civilized former course, my son and our family would not be living this nightmare. 

Japanese Consulates in the U.S. posted the following instructions for Japanese 

nationals in the U.S. on their websites on March 17, 2010: 

51 

In the United States, taking a child abroad without consent of his/her 

spouse who has custody may be accounted to criminal liability (Please see 

the National District Attorneys Association). In fact, there are cases in 

which parent taking a child was arrested of child abduction when he/she 

reentered the United States, or that parent was placed on the international 

wanted list of International Criminal Police Organization (ICPO). To prevent Japanese citizens from such disadvantages, (italics added) the Embassy 

of Japan and the Consulates General are checking verbally to confirm the 

existence of agreement of both parents on the application for child’s passport, even if there is no declaration of disagreement from one parent. 

Japan’s insincerity, meaningless gestures and defiance regarding international 

kidnapping is a matter of longstanding record. Cleverly warning kidnappers against 

returning to the United States is just another example. It is instructive that the 

Consular posting does not read, ‘‘The government of Japan urges all Japanese in 

America to obey the laws of the United States, especially regarding the kidnapping 

of children.’’ 

The facts of all the kidnappings worldwide prove that observance of other countries’ laws is not a priority concern for Japan. Many of the U.S.-based kidnapping 

cases share similar facts and the emboldening of kidnappers by Japanese policy. 

Upon landing in Japan on December 16, 2008, Wayne’s mother emailed me to announce the kidnapping, using uncharacteristic prose which indicated she received 

coaching from experts. She claimed to have hired a criminal attorney to check for 

arrest warrants and threatened to cut off all contact forever if I contacted police. 

She demanded a $3,000 monthly extortion payment in exchange for allowing me to 

only see images of Wayne over an internet camera. 

As described above, Japanese policies foist real costs and injuries upon American 

citizens in the United States. Wayne has a speech delay problem, a lazy eye and 

red hair. In Japan, he is an especially easy target for intense bullying, a phenomenon in Japan that is well-researched and documented. He is being subjected 

to classic parental alienation and psychological manipulation tactics. Kidnapping is 

a serious form of child abuse. The government of Japan has put him in this dangerous position. 

RETHINKING JAPAN: WITH A FRIEND LIKE THIS . . . 

As the United States and Australia, Canada, France, Italy, New Zealand, Spain, 

the United Kingdom continue to jointly issue official demarches and call on Japan 

to resolve its outstanding cases of international child abduction, Japanese Prime 

Minister Yukio Hatoyama and other officials have stated an intention to reconsider 

various aspects of the U.S. alliance. Likewise, the Unites States other countries each 

have a responsibility to rethink their relationship with Japan. 

Japan’s exhibition of little commitment to genuine reciprocity in bilateral matters, 

including trade, defense, human trafficking and kidnapping, among other issues, is 

turning Japan into a pariah state. International leaders are taking notice. 

Belgium’s Deputy Prime Minister and Foreign Minister Steven Vanackere recently urged Japan to ease non-tariff trade barriers with the European Union. 

‘‘As far as barriers, especially the non-tariff barriers are concerned, in fact Europe 

is becoming wary, a little bit impatient,’’ Vanackere said. 

U.S policy makers should also be concerned with addressing Japan’s non-tariff 

barriers to exports of automobiles, machinery, beef and rice, among other products. 

The United States runs a dangerously high trade deficit with Japan due in large 

part to Japanese government policies, such as non-tariff barriers, then borrows 

heavily from the same foreign government to make up in part for the loss of export 

revenue. The same joint demarche group has an opportunity to convene and invite others, 

including Belgium and the EU, for a summit to comprehensively review and rethink 

the West’s relationship with Japan. Each possesses some legitimate complaint or 

other with Japan. Each can ably assess the aggregate damage done by 60 years of 

LDP policies and work towards a new and improved partnership with Japan, which 

stands to benefit handsomely from embracing real, unqualified, unparsed partnership with the West. Labor and business markets worldwide, along with Japanese 

consumers and businesses, will also benefit. The alternative—the status quo—is not 

working well by comparison. 

Japanese government officials, especially the strongly anti-American element 

among them, assertively and routinely complain about the behavior of U.S. service 

personnel in Okinawa. It is long past time that the U.S. reciprocates by complaining 

about the behavior of Japanese diplomats on U.S. soil, who encourage their nationals to evade U.S. law, while knowingly issuing Japanese passports to U.S. citizen 

children in violation of U.S. sovereignty, jurisdiction and court orders. 

52 

In April 2010, Japan announced the extension of trade sanctions against North 

Korea, due to the latter’s nuclear weapons policies and the kidnappings of Japanese 

citizens to North Korea in the 1970s and 1980s. Likewise, the United States should 

consider appropriate sanctions for Japan’s policies regarding the kidnapping of 

American citizen children from the United States. 

Over the last 20 years, Japan has ranked in the top three countries each year 

to which the U.S. issues student, work and diplomatic visas. However, Japan ranks 

37th amongst countries whose nationals receive education on student visas in the 

U.S. and then remain in the country to establish careers or businesses in American 

communities. 

The protection of children is a fundamental issue for the world’s advanced industrialized civilized democracies. If Japan cannot deal in good faith on the issue of innocent children it has kidnapped from the soil of the U.S. and other countries, on 

what other issues can its international partners trust it? Japan’s longstanding resistance to enter into direct and meaningful bilateral treaties on child kidnapping 

demonstrates a general unwillingness to work sincerely with other nations for mutual benefit. 

A country that steals children from another’s own streets and never returns any, 

while also showing consistent bad faith in so many bilateral matters, behaves more 

like a belligerent than a trusted ally and friend. Such a country invites reevaluation 

of its relationship with others. The global civil society must immediately and relentlessly press Japan to deal bilaterally and in good faith with each nation whose children Japan presently and unlawfully holds. The children and their parents have 

only one childhood to share together. It slips further away each day Japan fails to 

rectify these tragedies. The world must no longer tolerate the painful separation, 

stolen childhoods and broken lives that Japan has imposed on them. I hope you can 

assist us parents in the goal of elevating our kidnapped children in Japan to emergency, first-priority status. Quick success in this area will provide simultaneously 

provide a real and symbolic template for other Japan issues, from which the eintire 

world will benefit. 

Thank you for your time and review of this submission. 

Sincerely, 

SCOTT SAWYER, 

Lawful U.S. parent of Wayne Sawyer. 

Æ