ELIMINATING US-JAPAN TRADE DEFICIT

Is it possible to reduce the United States trade deficit with Japan within a few years?

The answer is yes, according to Alison Butler, an economist with the Federal Reserve Bank of St. Louis.

Even though there was a slight increase in 1991, the bilateral deficit has been shrinking since it peaked at $57 billion in 1987, Mr. Butler says.

Over the same period, US exports to Japan have grown, on average, eight times as fast as Japanese exports to the US (15.8 percent versus 2 percent). If these growth rates continue, the trade deficit will be eliminated within five years without any government intervention, he says.

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