ip based on democratic values and interests in world stability and development. The Japan/United States relationship improved enormously in the 1970s and 1980s, as the two societies and economies became increasingly intertwined. In 1990 their combined gross national product totaled about one third of the world's GNP. Japan received about 11 percent of United States exports (a larger share than any other country except Canada), and the United States bought about 34 percent of Japan's exports. Japan had $148 billion in direct investment in the United States in 1991, while the United States had more than $17 billion invested in Japan. Some $100 billion in United States government securities held by institutions in Japan helped finance much of the United States budget deficit. Economic exchanges were reinforced by a variety of scientific, technical, tourist, and other exchanges. Each society continued to see the other as its main ally in Asia and the Pacific. Certain developments in the late 1980s damaged bilateral relations. Nevertheless, public opinion surveys continued to reveal that substantial majorities of Japanese and Americans believed that the bilateral relationship was vital to both countries. Three sets of factors stand out as the most important in explaining the challenges facing Japan-United States relations. They are economic, political-military, and domestic in nature. The economic issues tended to stem from the ever-widening United States trade and payments deficits with Japan, which began in 1965 when Japan reversed its imbalance in trade with the United States and, for the first time, achieved an export surplus.Pharmaceuticals and Medical DevicesThe close government-industry relationship in Japan often works to the disadvantage of foreign firms trying to participate in the Japanese market because the relationship favors domestic companies. Several aspects of the relationship are of particular concern.The United States con...
