Japan has amassed large trade surpluses since the early 1980s because of 2 factors. Its diversified manufacturing sector has produced high-quality products such as electronics and cars, which are much in demand in many international markets. Also, the post-war Japanese economy was largely closed to foreign competition through restrictive regulations and high tariffs aimed at protecting domestic industries. Under heavy pressure of its trading partners and competitors such as the United States, Japan began to open its economy to foreign competition late in the 1980s. That resulted in a higher rate of imports, which lowered trade surpluses until early in the 1990s. The economic decline following the bubble economy era significantly reduced demands for imports, resulting in the return of large trade surpluses in the 1990s, which reached $144.2 billion in 1994 before falling to $131.8 billion in 1995 and $83.6 billion in 1996. By 1998, with the economic slowdown, the trade surplus had risen to $122.4 billion, but it declined again to $95 billion in 2000.
The return of large trade surpluses in the 1990s has restarted trade disputes between Japan and its main trading partners, including the United States and the European Union (EU). Two major trading partners of Japan— the United States and the EU—have negotiated with Japan since the 1980s to remove barriers preventing their extensive access to the Japanese market. These negotiations have resulted in relaxed regulations on the imports of foreign consumer goods, like foodstuffs, by Japan, but
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