THE WORLD FROM... Chicago

Trade with Japan grows stronger and Tokyo's opposition leader talks of ethics in diplomacy

"A JAPAN That Can Apologize" might have been the title for a recent speech here by Takako Doi, the leader of Japan's opposition Social Democratic Party. Called by some "the conscience of Japan," Ms. Doi talked of needing to build ethics into her country's diplomacy. Only then will Japan deal with the chemical weapons it buried in China, fully account for citizens of other Asian countries interned during World War II, and admit to the 1937 Nanking massacre.

Perpetuating a coverup is no way for Japan to assume the larger international role being urged upon it, Doi told the Japan-America Society of Chicago.

Her presence here highlights the growing financial and trade links between the Midwest and Japan. Concerning trade with the United States, though, Doi found little to regret.

Japan, she said, is America's premier customer for agricultural products, taking 20 percent of those US exports. The 4.68 million tons of soybeans it imported from the US in 1988 was 17 times larger than Japan's domestic production, Doi noted.

Her country's beef and citrus markets were opened completely to the US on April 1. "Japan will continue to be a promising market for the United States," Doi said.

That trend is reflected in Chicago. The Midwest is the main supplier of soybeans to Japan, and Chicago is the agricultural exports hub of the Midwest.

Agriculture gave rise to Chicago's financial markets as well. The Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (CME) are, respectively, the largest and second-largest commodity futures exchanges in the world. The two got their start before 1900, trading futures contracts in things like wheat, corn, soybeans, live cattle and hogs, and frozen pork bellies.

Those markets have been overtaken in significance by non-agricultural futures contracts introduced in the last two decades, like the CBOT's for US Treasury bonds, the most highly traded futures contract in the world, or to the CME's contract based on the Standard & Poor 500 index, the largest stock index futures contract traded. Financial products are 90 percent of the CME's volume.

Japanese companies are active at both exchanges - understandable given the size of their holdings of US T-bonds, real estate, and stock.

In 1989, when Japan liberalized a law on participation of its citizens in other countries' financial markets, the cost of trading seats at the CME hit an all-time high.

"They have stocked our floors with their people," notes the CBOT's Michael Oakes. "They're learning the business."

The two exchanges have reached out to Japan as well. The CBOT has markets in Japanese government bonds. The CME trades a yen contract. Both trade contracts based on the performance of Tokyo's Nikkei stock market.

Sometime in the next year the two exchanges will move to the Globex computerized trading system. One purpose of Globex, Mr. Oakes says, is to facilitate trading for Japan, which faces a 14-hour time difference with Chicago. Both exchanges have development offices in Japan.

Meanwhile, the number of Japanese citizens living in the Chicago area has grown fourfold in 20 years, now numbering around 8,000. The number of Japanese companies operating in Illinois has doubled since 1982; the Chicago area alone has more than 500.

Doi put the future of US-Japanese trade in simple terms: "Self-sufficiency will decline."

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