Historical Dictionary of United States-Japan ... - Bakumatsu Films

JAPAN–U.S. TEXTILE AGREEMENT • 139
created and managed by the Bank of Japan. The Japanese government
used approximately 70 percent of this fund for economic reconstruction,
such as development of a supply of electricity, while the
remainder was paid to the United States. In addition to the aid made
possible by this fund, the United States provided Japan with a gift of
free wheat, nonfat dry milk for school children, and other agricultural
products valued at the time at $15 million.
Because the Surplus Agricultural Commodities Agreement was
scheduled to expire in 1956, the Japanese government began negotiating
its renewal with the U.S. government in July 1955. As a result,
both countries formally agreed on a second surplus agreement in February
1956.
JAPAN–U.S. TEXTILE AGREEMENT. The Japan–U.S. Textile
Agreement reached in January 1972 contains a promise by Japan to
voluntarily self-restrict exports of 18 textile items to the United
States. From the late 1950s, the Japanese synthetic fiber industry began
to expand to and reached the point of becoming the world’s
largest exporting country of synthetic fiber by 1965. However, this
rapid expansion of exports precipitated trade frictions with the United
States. After a series of severe and emotional negotiations between
the two countries, including Washington raising the possibility of
linking the textile issue to the issue of the reversion of Okinawa to
Japan, a decision was finally made to work out a compromise. Under
the Japan–U.S. Textile Agreement, Japan’s acceptance of voluntary
restrictions on its textile exports to the United States did tremendous
damage to the country’s textile industry. The Japanese government
allocated 127 billion yen from the national budget to provide relief to
the textile industry, but, partly because of Japan’s voluntary restrictions,
in 1972 the industry suffered from declining production. Also,
because of the Agreement, Japan’s textile corporations were hurt by
a big increase in price-cutting competition among themselves in the
domestic market and cheap imports from developing countries. Steep
price-cutting competition undermined investment by textile companies
in capital investment and technical innovation, which retarded
technology and eventually led to the textile industry’s overall decline.
See also JAPAN–U.S. COTTON PRODUCTS TRADE AGREE-
MENT; U.S.–JAPAN TRADE CONFLICTS.