The post-World War II U.S.-Japan alliance has long been an anchor of the U.S. security role in East Asia. The alliance facilitates the forward deployment of about 53,000 U.S. troops and other U.S. military assets in the Asia-Pacific, thereby undergirding U.S. national security strategy in the region. For Japan, the alliance and the U.S. nuclear umbrella provide maneuvering room in dealing with its neighbors, particularly China and North Korea.
During the Bush Administration, Tokyo and Washington initially made significant strides in broadening U.S.-Japan strategic cooperation and encouraging Japan to assume a more active international role. Following the September 11, 2001 terrorist attacks, Japan made its first-ever military deployments in non-combat support of U.S. and allied forces in Afghanistan. In 2004 Tokyo sent non-combat troops to Iraq, despite considerable domestic opposition. In 2005 the United States and Japan announced a sweeping new agreement to strengthen military cooperation. The plan calls for U.S. forces to be realigned and Japan to take on a more active (non-combat) role in maintaining regional and global security. Since mid-2007, political turmoil and divided government in Tokyo slowed or stalled some of this progress in security relations.
It remains to be seen to what extent U.S.-Japan relations will be affected by the Democratic Party of Japan’s (DPJ) landslide victory in August 30, 2009 elections for the Lower House of Japan’s legislature. The victory gave the DPJ, under party president Yukio Hatoyama, control of the government. While most members of the left-of-center DPJ are broadly supportive of the U.S.- Japan alliance and the general thrust of Japanese foreign policy, in the past the party has questioned and/or voted against several features of the alliance, including base realignment, Japan’s financial payments for U.S. forces stationed in Japan, and Japan’s naval deployments to support the war in Afghanistan. The DPJ’s victory appears to mark the end of an era in Japan; it was the first time Japan’s Liberal Democratic Party (LDP) was voted out of office. The LDP has ruled Japan virtually uninterrupted since 1955.
Japan is one of the United States’ most important economic partners. Outside of North America, it is the United States’ second-largest export market and second-largest source of imports. Japanese firms are the United States’ second-largest source of foreign direct investment, and Japanese investors are the second-largest foreign holders of U.S. treasuries, helping to finance the U.S. deficit and reduce upward pressure on U.S. interest rates. Bilateral trade friction has decreased in recent years, partly because U.S. concern about the trade deficit with Japan has been replaced by concern about a much larger deficit with China. The exception was U.S. criticism over Japan’s decision in 2003 to ban imports of U.S. beef, which have since resumed.
However, the economic problems in Japan and United States associated with the credit crisis and the related economic recession and how the two countries deal with those problems will likely dominate their bilateral economic agenda for the foreseeable future. Japan has been hit particularly hard by the financial crisis and subsequent recession. Japan’s gross domestic product (GDP) declined 0.7% in 2008 and is projected to decline by 6.2% by the end of 2009 with a modest rebound expected in 2010. At the same time, the United States is showing some signs of recovery, at least according to some indicators.