Mad Jap Disease. Japan has once again blocked beef imports from the United States with the excuses (a) that portions of backbone had been included in some shipments and (b) Japan is scared to death of "mad cow disease". The Japanese must be out of their minds if they think Americans buy that load of bull.
+
In reality, Japan is doing now what it has been doing for decades: discriminating against U.S. imports while racking up huge surpluses in its U.S. trade, at our substantial expense. Tho the U.S. trade deficit with China is the one now attracting the greatest attention — to the extent the trade deficit, with its potential for economic disaster for this country, gets any attention at all — there is still a great big deficit with Japan.
+
American labor unions are concerned, rightly, about the export of American jobs of many types. Strictly speaking, export of jobs refers to the movement of manufacturing operations by U.S. companies from the U.S. to offshore locales. But there is a negative impact upon our economy from simple inability to compete in trade with low-wage or unfair-trade nations.

The growth in the trade deficit over the past two decades has destroyed millions of high-wage, high skilled manufacturing jobs in the U.S., and pushed workers into other sectors where wages are lower, such as restaurants and health service industries. When I appeared before this committee last spring, I summarized EPI forecasts that the Asia Crisis would lead to the elimination of one million jobs in the U.S., with most of the losses concentrated in the manufacturing sectors of the economy (Scott and Rothstein 1998). These job losses have begun to materialize, despite the continuing boom in the rest of the economy. The U.S. has lost nearly 500,000 manufacturing jobs since March of 1998, due to the impact of the rising trade deficit.

That paragraph comes from an Economic Policy Institute ("EPI") statement before Congress in July 1999, so the 500,000 manufacturing jobs lost referred to a loss in 16 months, at a time when our trade deficit was relatively modest.
+
Now, the trade deficit is immense. The EPI reported February 10, 2005 that:

The U.S. Department of Commerce today reported that the merchandise trade deficit reached a record level of $666.2 billion in [ ] 2004, a 21.7% increase since 2003. The aggregate U.S. trade deficit, which includes both goods and services, was $617.7 billion, a 24% increase over 2003. The real goods and services deficit as a share of U.S. gross domestic product (GDP) increased to an unprecedented 5.8% in the fourth quarter of 2004. Growth in the deficit reflects surging imports and a continued, rapid decline in the competitiveness of U.S. manufacturing industries. The U.S. had a $37 billion trade deficit in advanced technology products (ATPs) in 2004, an increase of 38% since 2003. * * *

The deficit in trade with China in 2004 was $162 billion, up 30.6% in one year; with Japan, $75 billion, up 13.9%. The U.S. economy stays afloat in part by a vast inflow of capital from abroad, but part of that is in the form of purchase of U.S. treasury securities, on which we have to pay interest to foreigners.

[Our] current-account deficit continues — to the tune of $1.1 million a minute. The cumulative deficit since 1990 in the US current account adds up to $3.1 trillion, Mr. McMillion calculates.

To finance the deficits, the US must borrow an equivalent amount, one way or another. These new debts are added to the nation's already massive foreign debts. It means more of the federal taxes Americans pay are being sent to central bankers in China, Japan, Taiwan, and to other foreign entities and individuals — now owning about 40 percent of Uncle Sam's debt.

That was from an article in the Christian Science Monitor of July 29, 2004 speculating that the world may be losing patience with the "unsustainable" U.S. trade deficit. All the numbers are, presumably, worse now, but what exactly those numbers are for the year 2005 is hard to find this early in 2006. For the 11 months thru November 2005, the deficit with Japan was $75.9 billion, which suggests that for the full year it will be up 8-10% from the year before.
+
For all the harm the trade deficit is doing us, what good is it doing the people of Japan? Little or none. In fact,

the protectionist measures that created the positive balance of trade also caused the price of goods in Japan to be much higher than they would have been had imports been freely allowed.

How much more do things cost in Japan than they would if Japan did not discriminate against U.S. imports? Let's take rice, a staple of the Japanese diet.

In 2000, the selling price of rice in the Japanese domestic market was approximately four times higher than FOB prices in California. Private firms are allowed to sell rice, but the state trading enterprises are responsible for most of the sales. According to WTO rules, Japan has to import at least 8 percent of its annual consumption. Normally the imported rice is not distributed to the Japanese domestic market (see the paragraph below), which contributes to keeping domestic prices much higher than those elsewhere. * * *

The rice that enters Japan, in accordance with WTO imposed policy to open up borders, is not immediately traded. It is warehoused for about one year before being distributed, in the majority of cases, as food aid. Some of the imported rice, however, is destined for industrial use (e.g., sake, beer). Thus the Japanese domestic market remains isolated from the world market.

So the Japanese housewife has to pay four times as much for rice as her American counterpart. How about beef, the takeoff of this piece? The average price of a pound of beef in the U.S. in the first quarter of 2005 was $4.00. To get the Japanese price, we have to do some conversions:

According to the Ministry of Agriculture Forestry and Fisheries' weekly retail price survey (for August 15-19; announced August 22[, 2005]), the price of Japanese beef rose 6 yen from last week to 706 yen per 100g of roasting-quality meat, in line with its level of early June this year. This is the highest price since imports of US beef were stopped due to BSE incidence in the US.

The Yahoo currency convert says that 706 yen = $6.12. The Metric Conversions website says that one pound = 453.5924 grams. So a pound contains a bit more than 4.53 units of 100g each, which yields a U.S. equivalent price for a pound of beef of $27.76! I'm astounded. Divide that by 4 to find the ratio to U.S. beef prices: a Japanese has to pay 6.94 times the cost of beef to the U.S. consumer. No wonder Japanese cuisine uses small quantities of meat and large proportions of rice and vegetables!
+
Why on Earth do the Japanese tolerate such an outrage? If people want to eat less meat, they can certainly opt to do so. But to be precluded from eating meat by outrageous prices derived solely from protectionism is incomprehensible.
+
It gets worse. Some Japanese simply can't afford beef often, even as thinly as it might be sliced. The U.S. Department of Agriculture reports that:

[Japanese beef] Consumption is forecast to decline by about 20 percent due to shortages of imported high quality beef. Japan continues to demand that all beef exported to Japan from BSE [mad cow] countries come from animals that have been tested for BSE and that have had specified risk materials (SRMs) removed regardless of age.

So if they can't, or won't, pay the higher prices, they just do without. What a bunch of sheep. Maybe that's why they don't eat much meat. Sheep are herbivores.
+
Interestingly, while the U.S. wants to export beef to Japan, the WTO says the U.S. is importing a lot of beef from other countries!

The United States is projected to increase its beef imports by 10 per cent this year to 1.03 million tons, and overtake Japan as the world's biggest importer of beef.

That, presumably helps keep U.S. beef prices low.
+
Exactly why are Japanese denying themselves the benefits of inexpensive American beef? Because, you see, there is no end to Japanese credulity. ONE cow in the United States was found to have had mad cow disease. One. For that, Japan banned all U.S. beef for two years! Never mind that hundreds of millions of Americans eat beef several times a week with no ill effects. And never mind that it hasn't even really been established that consuming the meat (muscle tissue, not brain tissue) of cattle infected with mad cow disease causes any health problems in human beings. The total number of cases, worldwide, of human disease linked to mad cow disease was, at the beginning of 2004, "about 140 ..., almost all in the UK." 140. Out of 6.5 billion people on Earth. 140. Almost all in Britain.
+
Moreover, the thesis that eating beef caused the 130+ cases in Britain is dubious at best.

[T]he infected beef theory [of causation of a disease in humans] has mutated into an orthodoxy in the medical and public health community that few have been brave enough to challenge.

One public health expert in Britain, George A. Venters, did manage to publish an article in the British Medical Journal in October 2001 titled "New variant Creutzfeldt-Jakob disease: The epidemic that never was." Venters maintains that the infected beef theory is simply wrong. He challenges the biological plausibility of BSE causing variant CJD because there is no direct evidence that the supposed vehicle of BSE infection — a special protein called a prion — is infectious. Nor is there direct evidence that BSE prions survive cooking, digestion and the human immune system.

After discussing the numerous deficiencies in the BSE-Creutzfeldt-Jakob hypothesis, Venters observed: "The evidence that has been amassed is directed toward confirming the [BSE-CJD] hypothesis rather than testing it. Salient contrary information has either been played down or ignored."

Panic about mad cow disease is a cynical manipulation of fear by the Japanese Government to rationalize away simple protectionism. Period. But it has worked to scare the credulous Japanese:

So far, the reaction [in Japan] to the first shipments of American beef has been mixed. While some restaurants and grocery stores have rushed to put it on sale, others have flatly refused to serve it. At the same time, most Japanese say they remain concerned about safety. In a poll last month by the Kyodo news agency, 75.2 percent of respondents said they were unwilling to eat American beef.

What a bunch of morons. Now the Japanese Government has again banned U.S. beef, so prices to Japanese consumers, which were starting to come down, will go up again.

Surveys rate Tokyo as the world's costliest city, a reputation perpetuated by perfectly shaped hundred-dollar cantaloupes and tender wagyu beef steaks that cost as much as shoppers elsewhere might pay for a whole cow.

But analysts and travellers say Tokyo is not really as expensive as its image, especially after seven years of falling prices and an influx of cheap imports from China. * * *

A key symbol of Japan's seven-year deflation, fast-food chain Yoshinoya's ... 300-yen beef bowl [presumably that means noodles with beef], is due to make a comeback next year after the recent resumption of U.S. beef imports, banned for two years on fears of mad cow disease.

But now the imports that were to bring down the costs have been banned again.
+
Still, there is some hope for Japanese consumers.

While rice and other food prices are still relatively high due to heavy subsidies and high labour costs, imports from China are lowering the average cost of groceries overall.

Trade pacts with countries like the Mexico and the Philippines are also expected to make tropical fruits and vegetables more affordable in the years ahead. Avocados can already be found as cheap as 100 yen apiece — less than in most supermarkets in New York or London.

So imports are bringing down prices for Japanese consumers. Why, then, does the Japanese Government play these stupid games with U.S. beef?
+
Put these things together.

• The U.S. trade deficit is immense and dangerous.
  
• The U.S. is under increasing foreign and domestic pressure to reduce its
  trade deficit.
  
• We have a large deficit with Japan.
  
• Japan is willfully and maliciously discriminating against U.S. imports, and
  Americans have reason to be mad about that.
  
• Liberalized trade benefits the Japanese consumer.
  
• A trade war whereby the United States shuts Japan out of our market would
  be catastrophic for Japan.
  

You might come to the conclusion I long ago did: that Japan should join the United States as several States of the Union.
+
On August 6, 1987, the English-language Asahi Evening News of Tokyo printed a letter from me that advocated this. That letter says in part:

There is no replacement for the U.S. market. ... So if Japan is to continue to prosper, it must continue to have access to the U.S. market. That access is revokable as long as Japan remains a "foreign country," vulnerable to charges of unfair competition and appeals to xenophobia. * * *

Only statehood can guarantee perpetual access to the market that alone keeps Japan prosperous. Only prosperity guarantees Japan's democracy. And just think of how huge, dynamic, and fabulous a country Japan and the United States together would be! At last the people of Japan would have room to grow, room to breathe, free of the confines of crowded islands and a semi-feudal tradition.

For its part, the U.S. would secure a rich, well-educated population strategically well placed to restrain Communist China from its ambitions to displace the United States as the world's sole superpower, by war if need be.
+
(The current U.S. military death toll in Iraq, according to the website "Iraq Coalition Casualties", is 2,223.)
- posted by L. Craig Schoonmaker @ 7:54 PM