Bill Mongelluzzo | Mar 29, 2011 9:22AM EDT
Japan's commerce with the U.S. is taking a short-term hit due to repercussions from the March 11 earthquake, tsunami and damaged nuclear reactor, but the world's third largest economy will remain one of the top U.S. trading partners when it works through the crisis.
"The economy is very big. They have the means to overcome this," said Patrick Santillo, regional director, East Asia/Pacific at the U.S. Department of Commerce.
Right now, freight movements within Japan are delayed because of power shortages and damage to roads, warehouses and other infrastructure. "It is not business as usual," Santillo told the Asia-Pacific Business Outlook conference Monday at the University of Southern California.
While it is difficult at this time to define precisely the magnitude of Japan's rebuilding efforts, they will most certainly be large. The U.S. government and people have been engaged in a massive relief effort to help Japan, and when the nation turns to rebuilding its damaged industrial and agricultural base, "they won't forget who their friends are," Santillo said.
The earthquake and tsunami occurred at a time when indicators such as economic growth and consumer sentiment were starting to pick up after the global economic recession of 2008-09.
In fact, even though Japan's economy in recent years had been growing much slower than that of China and other developing countries in Asia, it nevertheless was and still is a large and prosperous economy.
"In recent years, people had lost sight of Japan," Santillo said. Its population of more than 127 million is mostly well-to-do and educated. Japan spends 3.42 percent of its gross domestic product on research and development, more than the U.S. at 2.77 percent and Germany at 2.64 percent.
Japan's imports from the U.S. total about $60 billion a year, which, though less than China's imports of $92 billion, still makes Japan one of the largest overseas trading partners of the U.S.
Growth opportunities for U.S. exporters are especially robust in green industries associated with solar power, water and soil remediation and smart grid applications for delivering energy. Medical devices, pharmaceuticals and health care products for its aging population also offer good opportunities.
On the down side, Japan has a huge public service debt. Its population is actually shrinking, and could decline to 89.9 million in 2055 from 127.4 million today if the current trend line is not changed.
Nevertheless, the U.S. and Japan have a mechanism in place to quickly address trade barriers, and because of the advanced state of both countries' research and development efforts, companies from the U.S. and Japan often share information in order to bring new technology to the marketplace, Santillo said.
-- Contact Bill Mongelluzzo at bmongelluzzo@joc.com.