Japan Press Weekly

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2012 October 10 - 16 [ECONOMY]

Economy in subordination to US - III: Destruction of local economies

U.S. demands for Japan’s deregulation, such as the abolition of the Act for the Adjustment of Retail Business Operations in Large Scale Retail Stores, have heavily undermined Japan’s economy.

The abolition of the law, which regulates operations of large-scale chain stores, resulted in the destruction of local economies.

In 1974, the large-scale retail store act was established with the aim to protect local small shop owners from a market takeover by large department stores and supermarkets. The law, however, was watered down during the 1990s with the U.S. demands made on various occasions, including the so-called Japan-U.S. Structural Impediments Initiative (SII) in 1990, which was a series of bilateral talks regarding deregulation and administrative reform. In 1998, the law was finally abolished.

As a result, many small shop owners across Japan had to close their shops and many local shopping streets were abandoned and turned into the so-called “shuttered streets”.

The U.S. demands also destroyed Japan’s labor market.

In the 1996 Submission by the Government of the United States to the Government of Japan Regarding Deregulation, Administrative Reform and Competition Policy in Japan, the U.S. government claimed that Japan should change its labor policy to allow more flexible use of labor and enable employers to hire workers at low wages.

In the United States-Japan Investment Initiative 2006 Report, Washington requested Tokyo to abolish limitation on white-collar workers’ working hours and ease restrictions on the use of temporary agency workers.

In line with this U.S. request, the Koizumi government under its “structural reform” policies adversely revised labor laws and increased the number of non-regular workers by expanding the use of temporary workers to all industries.

In 2007, about 1.73 million people were employed as contingent workers, up more than 5 million from 10 years before and accounting for one-third of the total workforce, and the number of those who earn less than 2 million yen a year reached 10 million.

In the 1990s, Japan’s national budget for public works projects was inflated in accordance with the U.S. demands.

In the 1990 SII talks, Japan was forced to promise its counterpart to use 430 trillion yen in tax money for public works projects over the next 10 years. Later, the amount was increased to 630 trillion yen. The budget plan was compiled by then finance minister Hashimoto Ryutaro.

In a House of Representatives Budget Committee meeting on February 4, 1997, Hashimoto, who was the prime minister at that time, recalled, “During the talks, the U.S. urged us to drastically increase the total amount of the budget for public works projects and spend a large part of the budget in areas in which U.S. corporations may be able to enter easily.”

This clearly showed that the Japanese government decided to increase public investments based on the U.S. demand.

Due to the skyrocketing increase in the public investment budget, the total of long-term national and local debts is now at 180% of Japan’s GDP.

>Economy in subordination to US - I: Interfering in Japan’s affairs
>Economy in subordination to US - II: Pressure for postal service privatization
>Economy in subordination to US - IV: TPP, US final demand