Pacific Rim Challenges

April 7, 1989

Report Outline
Special Focus


During the 1980s, the United States has imported billions of dollars more in goods and services than it has exported. This huge trade deficit means that Americans are getting relatively poorer while their trading partners are getting richer. As the Bush administration looks for ways to reverse this trade imbalance, it will be looking to the Far East; half the country's trade deficit comes from the Pacific Rim. And the places that are likely to be singled out for tough trade negotiations are Japan, South Korea and Taiwan—each of which poses different problems requiring different solutions.

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Ten years ago, American businessmen and politicians eagerly anticipated the opening of the “Pacific Century” and the markets presented by the newly booming economies of the Far East. The United States was enjoying robust growth in exports, and the country's balance sheets moved into surplus despite sharp rises in energy costs.

But instead of riding the Pacific boom to greater profits, the United States seems to have picked up the tab for the party. More than half of the nation's 1987 trade deficit of $174 billion—the last year for which complete figures are available—can be traced to just five Pacific Rim countries: Japan, South Korea, Taiwan, Hong Kong and Singapore. The U.S. deficit with Japan alone amounted to $60 billion in 1987, and preliminary 1988 figures show little improvement. In short, the Pacific Rim has become the arena for what economist Rudiger Dornbusch calls “a battle for our standard of living.”

ISSUE TRACKER for Related Reports
U.S. Policy in the Pacific
Apr. 20, 1990  Should the U.S. Reduce Its Pacific Forces?
Apr. 07, 1989  Pacific Rim Challenges
Apr. 25, 1986  The Strategic Pacific
Jul. 05, 1985  Dawn of the Pacific Era
Jun. 06, 1975  Changing Status of Micronesia
Aug. 17, 1966  Australia: Pacific Ally
Nov. 04, 1964  Indonesia vs. Malaysia
Jul. 24, 1963  Malaysian Federation: Union of Convenience
Jul. 05, 1962  West New Guinea: Pacific Trouble Spot
Jan. 28, 1953  Pacific Defense
Sep. 09, 1949  Pacific Dependencies
May 03, 1945  Trusteeship in the Pacific
Bilateral and Regional Trade
Regional Political Affairs: East Asia and the Pacific