Trade with Japan is hugely beneficial to the U.S. and Pennsylvania

By Dr. Satu Limaye and Adm. Dennis Blair
October 20, 2016

This commentary appeared in the Philadelphia Inquirer on October 20, 2016 in advance of the Japan Matters for America event in Philadelphia co-sponsored by Sasakawa USA, the East-West Center in Washington (EWCW), the World Affairs Council of Philadelphia, and the  Peterson Institute for International Economics (PIIE). Japan Matters is part of the larger Asia Matters for America initiative of the East-West Center. Click here to  learn more about why Japan Matters for America, with analysis broken down by state and congressional district.

 

japanmatterspennsylvaniaThe 2016 U.S. Presidential Election has ignited renewed interest from the American public in weighing the benefits and importance of U.S. engagement in Asia. At the first debate between presidential nominees Hillary Clinton and Donald Trump on September 26, the topic of Asia arose several times as the Republican nominee said jobs are being stolen and that nations are “using our country as a piggy bank” while not paying adequately for mutual defense arrangements.

America’s anxieties about the economic challenge from Asia are not new and are understandable. Some jobs in some sectors have been lost to Asia, beginning with textiles and clothing after World War II and continuing with inexpensive electronics, steel and shipbuilding. Outsourcing is occurring. It is worth keeping in mind, however, that more than four out of five job losses in American manufacturing are caused by capital investment in automation, not by trade.

The rapid economic growth of China, India, South Korea, Vietnam and other countries is seen as negatively affecting American job prospects, whether the issue is innovation, preferential visas for immigrants, artificially propped currency values or outsourcing.

Yet the facts tell a different story: Trade, foreign investment, Asian students at American universities, tourism and even immigration create hundreds of thousands of jobs for Americans.

Now focus on Japan. More than 710,000 jobs in the United States are supported by exports to Japan.  Japan’s foreign direct investment in the U.S. is estimated to account for 719,000 jobs — including 23,100 American workers at 74 Japanese-owned firms in Pennsylvania.

JapanMatters 00The U.S.-Japan relationship as a whole is one of the closest, most wide-ranging, and constructive bilateral partnerships in the world. The United States and Japan are global powers by the size of their economies, ranking first and third, respectively, as well as per capita wealth, investment and trade relations, quality of life, and military spending. Though home to less than 10% of the world’s population, together they account for about 30% of the global economy, 29% of outward foreign direct investment (FDI) stock, 21% of inward FDI stock, and 16% of world trade. And a significant portion of this economic impact can be seen directly in Pennsylvania.

Using largely U.S. government data, a project from the East-West Center and Sasakawa USA called Japan Matters for America shows remarkable economic and employment gains from America’s interactions with Japan — something that we’ll be exploring further October 20 when we join with the World Affairs Council of Philadelphia for a public event featuring expert panel discussions on Japan’s footprint in Pennsylvania.

Take trade: The United States exported to Asia $457.5 billion in goods in 2015, and $205.2 billion in services in 2014 — more than to the European Union or to Canada or to Mexico. Asia is, in fact, the leading destination for U.S. exports, with strong growth since the 2009 financial crisis. Japan alone is a key U.S. trading partner, at a combined total of goods and services of $109.1 billion in 2014-15, ranking fourth globally. In the same year, the U.S. was Japan’s top trading partner. In Pennsylvania alone, $2.7 billion in goods and services were exported to Japan in 2013. Those exports support 17,000 Pennsylvanian jobs and boost productivity, especially in the manufacturing, transportation and retail sectors.

Japan’s benefit to America and Pennsylvania is increasing in many other areas, as well. Japanese students studying abroad in the United States contribute $600 million to the U.S. economy, or $17 million in Pennsylvania alone. More American students are interested in studying about Japan. Pennsylvania has 30 Japan studies programs – the third-most of any state, including programs in Philadelphia and the surrounding area at Haverford College, the University of Pennsylvania, La Salle University, Temple University and Saint Joseph’s University. And several sister city partnerships promote people-to-people ties.

Japan also increasingly contributes to U.S. tourism, ranking fourth globally as a source of more than 9.4 million visitors who spent $17 billion in the U.S. in 2014. In 2013, Pennsylvania’s share of those tourism dollars was $429 million.

Such interaction between the United States and Japan will continue to grow in the years ahead, improving the American economic and employment outlook.

 

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Dr. Satu Limaye is Director of the East-West Center in Washington. He is also a Senior Advisor at the CNA Corporation, a non-profit research and analysis organization located in Arlington, VA. He is the creator and director of the Asia Matters for America initiative, an interactive resource for credible, non-partisan information, graphics, analysis and news on US-Asia Pacific relations and the national, state and local levels; Founding Editor of the Asia-Pacific Bulletin series, an editor of the journal Global Asia and on the international advisory council of the journal Contemporary Southeast Asia.

 

JB040715-776A blairAdmiral Dennis C. Blair is the Chairman of the Board and CEO at Sasakawa USA and a renowned expert on Asia Pacific policy and issues, having served as Director of National Intelligence and Commander in Chief of the U.S. Pacific Command. He also serves as a member of the Energy Security Leadership Council and the Aspen Homeland Security Council; and he is on the boards of Freedom House, the National Bureau of Asian Research and the National Committee on US-China Relations. Read his Chairman’s Message column here or his commentary and analysis here.

 

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