This book could have been published in the form of two essays in scholarly journals--the first on the hostile trade environment that Japan faced in the early Showa period, the second on Japan's postwar efforts to become a full-fledged member of the GATT, first by joining the treaty organization, then by having other members remove article XXXV's discriminatory clause. Both essays are well-documented, based on patient archival work and reconstruction of time series, and they fill a gap in the existing literature. But they are of a rather technical nature, and should appeal only to a limited audience. In my opinion, they do not constitute a breakthrough in substance nor in method that would commend their publication in a bounded volume format.
Obviously, the book series editors and the author herself thought otherwise. Professor Michiko Ikeda has a way to praise her own work and to weave in her text personal judgments and anecdotes that is quite uncommon among economics scholars. Her fond memory of Professor Haberler's kindness towards Japan is praiseworthy, but should have been limited to the acknowledgment part, not the body of the text. She is convinced that she did the international research community a great service by asking for the declassification of interwar documents in several national archives--but the economics profession has less consideration for archival work than historians, who in turn take access to archives for granted. Professor Ikeda boasts that she is the first to apply modern economics tools to the issue of Japan's prewar trade isolation. But most of her economics is descriptive, and references to theory mostly revolves around Alexander Gerschenkron's Economic Backwardness in Historical Perspective--an insightful essay, but not particularly new. Maybe I am judging this book according to excessively high standards, but in my opinion all scholarly books should aspire to academic excellence.
As I have completed the reading of the book and scribbled some notes, below is a summary of Japan in Trade Isolation. The book concentrates on the facts: what were the factors that generated the severe protection and discrimination against Japanese foreign trade in the interwar period? Exactly when and where and in which international markets among Japan's main trading partners were these restrictions imposed? What were the nature, methods, and extent of protectionist and discriminatory policies? Which Japanese exports were mostly affected? What were the effects and long-term outcome of these policies on the levels, composition, and geographic patterns of Japanese trade?
After 1932, Western countries and their dominions imposed restrictive measures on Japanese exports, including prohibitive, antidumping, and compound tariffs; quotas; customs valuation systems; voluntary restraints on exports; and import licensing systems. These moves were initiated because Japan was said to be dumping products via currency undervaluation and, above all, through practicing "unfair competition". According to the author, the word dumping was often used as a covert refusal to recognize a decline in the price of Japanese products due to productivity gains and cost reduction on the Japanese side. This was indeed the conclusion of a dispatch from the British Embassy in Tokyo, which discarded the claim that Japanese competition was harming British trade through artificial methods such as subsidies and dumping: "If this were the case, we should have much less to fear than we have," the British diplomat concluded.
Regarding the claim of unfair trade competition through currency undervaluation, the author notes that the yen was significantly overvalued when Japan readopted the gold standard in January 1930, the last country to do so. The League of Nation's statistics used 1929 as a base year to assess the yen's undervaluation, but the rate of devaluation would have been less severe, though still significant, if compared to the 1925 level. The truth is that Japan faced a hostile trade environment, with boycott campaigns orchestrated by the Chinese and their supporters in the United States, and with trade restriction that fell heavier on this newcomer in the international trade arena. Facing prohibitive discriminatory measures in its main export markets, Japan actively sought to diversify its exports by developing competitive manufacturing activities and by prospecting new markets worldwide.
The Chinese boycotts had a measurable impact on Japanese trade, though decline of exports to the central and southern provinces was partly compensated by the rise of trade with Kwantung and Manchukuo, which fell under Japanese control and had no convertible currencies (trade with Taiwan and with Korea were not taken into account in international trade statistics). But the biggest trade shock was associated with the catastrophic collapse of silk exports to the US. The figures are very telling. At the beginning of the period, the United States annually absorbed 42 percent of total Japanese exports, mostly in the form of raw silk, which comprised 83 percent of total exports to the US. 98 percent of Japan's silk trade was geared towards the US. Silkworm raising by millions of Japanese farmers became the most important export staple, and the foreign currency gained through the silk trade nurtured Japan's rapid industrialization by allowing imports of machinery, technology, and raw materials. But the silk trade plummeted in the 1930s as a consequence of changes in tastes, decline in purchasing power, and the growth of rayon as a silk substitute. The economic, social, and political magnitude of this decline over interwar Japan cannot be overestimated. As the author writes, "the farmers' hunger and their desire to escape from this hopeless plight nourished the growing ambition of militarists and expansionists."
The rest of Japan's export to the US didn't expand enough to make up even partially for the fall in silk earnings, due to protectionist policies that selectively targeted Japanese manufactured products that competed against American industries. Japan's export push, mainly concentrated in cotton textile but also covering a wide range of products, from combs to electric lamps, also faced discriminatory measures in the British Commonwealth and in the Dutch East Indies. Facing trade contraction and badly needing raw materials and machines for its industry, Japan aggressively prospected new markets and found some outlets in far-away markets such as Latin America and Africa. But the general picture was one of increased trade isolation, eliciting the judgment that "there was no room for the newcomer" in world markets.
The author only partially addresses the issue of currency undervaluation, and doesn't mention the issue of infringement of intellectual property and copyright: accusations of "copied goods", "counterfeits" and "shoddy quality" were indeed some of the arguments raised against Japan's "unfair trade practices". She quotes in passing a report indicating that "Chilean importers sent samples to the Japanese mills for copying at a much lower price", and that "the Japanese had copied nearly all the US cotton textile products in the Chilean market", including American packing methods, tickets, and labels. She also notes that brushes exported to Mexico "were made with no indication as to the country of origin and had trade names similar to Mexican products". These are just passing notes, which would have deserved a more elaborate treatment.
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