in 1970, reached $10 billion in 1980, and climbed to
$60 billion in 1987.
The increasing trade deficit alarmed the United
States. Japan agreed to voluntary export limits in
the automotive industry in the 1980’s. The 1985
Plaza Agreement was concluded among four lead-
ing Western nations, including the United States, as
well as Japan. The agreement sought to rectify the
trade imbalance by strengthening the Japanese yen
and weakening the U.S. dollar. When this revalua-
tion failed to achieve its desired result, the 1987 Lou-
vre Agreement was signed among the same nations:
Japan agreed to raise interest rates and open its mar-
kets, and the United States agreed to decrease its an-
nual budget deficits. These measures worked to
some extent, lowering the U.S. trade deficit with Ja-
pan to $38 billion by 1990.
Japanese foreign direct investment in the United
States soared throughout the 1980’s, reaching $83
billion by 1990. Japanese companies invested in the
U.S. commercial sector, particularly in manufactur-
ing and wholesale and distribution networks. Japa-
nese investments in U.S. real estate were worth $15
billion in 1988. Sony’s 1989 purchase of Columbia
Pictures caused some American cultural concern, as
it crystallized a developing anxiety over foreign own-
ership of nominally American corporations. Eco-
nomic friction crossed over into politics during the
1988 U.S. presidential campaign. Richard Gephardt
won the Iowa caucuses and the South Dakota pri-
mary in part because of a campaign advertisement
that discussed the high price of Chrysler’s K-car in
Japan, caused by protective tariffs. The U.S. Trade
Act of 1988, moreover, named Japan as an unfair
trading partner in three areas in 1989. The U.S.
Structural Impediments Initiative of 1989 launched
talks between the two governments to avoid an acute
crisis.
Japan and Canada Throughout the 1980’s, Japan
and Canada enjoyed warm relations. Japan was Can-
ada’s second-largest trading partner, and the Japa-
nese made substantial investments in Canada. The
two countries found common ground in their mu-
tual commitment to United Nations peacekeeping
missions and as significant donors to developing na-
tions. They also sat together in many multinational
economic organizations. On November 6-7, 1989, in
Canberra, Australia, Canada and Japan were among
the founding nations of the new Asia Pacific Eco-
nomic Cooperation forum (APEC). Japan had vig-
orously supported Canadian, U.S., and Australian
participation in the forum against initial Malaysian
opposition. Cultural exchanges also flourished be-
tween Canada and Japan in the 1980’s. The Cana-
dian embassy in Tokyo was designed by Japanese Ca-
nadian architect Raymond Moriyama in the late
1980’s and completed in 1991.Apologies for Internment Further strengthening
Japan’s relationship with North America was the
1988 decision by both the United States and Can-
ada to issue a formal apology for the internment of
Japanese Americans and Japanese Canadians dur-
ing World War II. Victims of the internment and
their families were given individual compensation of
twenty thousand American dollars or twenty-one
thousand Canadian dollars, as appropriate.Impact The firm U.S.-Japanese alliance added
strength to America’s opposition to the Soviet Union.
By 1989, with the Soviet Union’s new conciliatory at-
titude, some Americans wondered about redefining
U.S.-Japanese diplomatic relations. Bitter trade dis-
putes between the United States and Japan clouded
bilateral relations by the late 1980’s, with both sides
looking for a solution. Canada and Japan, however,
continued to enjoy friendly relations enriched by
their interest in each other’s culture and their com-
mon peaceful global commitments.Further Reading
Cohen, Stephen D.An Ocean Apart: Explaining Three
Decades of U.S.-Japanese Trade Friction.Westport,
Conn.: Praeger, 1998. Comprehensive analysis of
sources and of the mutual perception of issues af-
fecting U.S.-Japanese relations in the 1980’s, the
middle decade covered here.
LaFeber, Walter.The Clash: U.S.-Japanese Relations
Throughout Histor y.New York: W. W. Norton, 1997.
The final four sections of Chapter 12 cover the
history of Japan and the United States through-
out the 1980’s. Illustrated, notes, bibliography,
index.
Morris, Jonathan, ed.Japan and the Global Economy.
Reprint. London: Routledge, 1997. Focus on the
foreign direct investments of Japanese compa-
nies during the 1980’s, covering the U.S. manu-
facturing sector, the U.S. automotive industry,
and Canadian businesses.
Ota, Fumio.The US-Japan Alliance in the Twenty-First544 Japan and North America The Eighties in America