This report contains two main parts: a section describing recent events and a longer background section on key elements of the U.S.-Japan relationship.

Developments in 2022

U.S.-Japan Strategy Aligns, with Converging Views on China and Russia

In 2022, the U.S.-Japan relationship continued to expand, building on early indications by the Biden Administration and its Japanese counterparts that the U.S.-Japan alliance is a centerpiece of the two countries' Indo-Pacific strategies. Tokyo's and Washington's strategic priorities appear increasingly aligned in responding to China's rising military and economic power. Beyond the region, the two countries are working in tandem to respond to global challenges, including at the United Nations, where Japan will occupy a non-permanent seat on the Security Council in 2023 and 2024. Multiple high-level visits, including by President Biden in May 2022, have reinforced the tight bilateral ties.

Japan's reaction to Russia's invasion of Ukraine is emblematic of this trend toward alignment. Japan's sanctions against Russia for its annexation of Crimea in 2014 were arguably milder than those adopted by its Group of 7 (G-7) partners, a response that analysts attribute to Japan's pursuit of energy cooperation with Russia and then-Prime Minister Shinzo Abe's drive to forge a strategic partnership with Russia.¹ In contrast, Prime Minister Fumio Kishida's government responded to Russia's invasion of Ukraine with alacrity, arguing that Russia's war on Ukraine has implications for Japan's security because of the war's potential to usher in an international system where the "rule of force" replaces the "rule of law."² Japan has adopted most of the sanctions and other penalties against Russia employed by the United States and Europe, provided humanitarian and material support for Ukraine despite Russia's threats to curtail energy supplies, and worked to rally international support for Ukraine.³ Japan's membership in the G-7 has provided a venue for coordination with the United States and major European countries. Japan holds the presidency of the G-7 in 2023 and plans to host the leaders' summit in May 2023 in Kishida's hometown of Hiroshima.

Congress has debated expanding ties with Taiwan through legislation and, together with the executive branch, is focused on possible threats to the island from the People's Republic of China (China, or PRC). Japan's government shares the concern that China may attempt to take military action against Taiwan in the coming years. After then-Speaker of the House Nancy Pelosi visited Taiwan in August 2022, China's military, the People's Liberation Army (PLA), launched unprecedented large-scale military exercises near Taiwan.⁴ During one phase of the exercises, several short-range ballistic missiles China test-launched splashed down in Japan's exclusive economic zone. China's actions appeared to underscore for many Japanese the impression that Taiwan's security is linked to Japan's security.⁵ In response to China's actions, U.S. Secretary of Defense Lloyd Austin and his Japanese counterpart, Yasukazu Hamada, met in September 2022 and condemned China's "coercive actions," calling them "provocative, destabilizing and unprecedented."⁶

Japan Expands Its Defense Posture

As perceived threats from North Korea and China have grown more acute, Japan's government has reconsidered national security. With the LDP and its smaller coalition party Komeito in firm control of the Diet (Japan's parliament), Kishida theoretically has the power to loosen some of Japan's long-held restrictions on its military posture, particularly if he gains Komeito's support for these changes. (For background on the restrictions on Japan's offensive capabilities, see "Collective Self Defense" below.) After seeing the aggression of Russia's invasion of Ukraine—and possibly fearing that Chinese President Xi Jinping could attempt a similar attack on Taiwan—over half of the Japanese public appeared to shift in favor of spending more on Japan's defense.⁷ The U.S. government has long supported Japan investing more in its defense and reinforcing deterrence against Chinese threats.⁸

In addition, Japan has expanded its security cooperation with other countries, with the encouragement of the U.S. government. In early 2022, Japan concluded a Reciprocal Access Agreement with Australia, allowing the Australian military and the Japanese Self-Defense Forces (SDF) to conduct joint defense and humanitarian operations. In May, a similar agreement was signed with the United Kingdom, further expanding Japan's network of formal defense relationships. Japan has also continued outreach with India's military forces to encompass defense technology and equipment cooperation as well as regular naval exercises to improve interoperability.⁹ Although these relationships are not as developed or formalized as the treaty alliance with the United States, these burgeoning arrangements indicate efforts by Japan to diversify its defense partnerships and—potentially—lessen its dependence on the United States for its security.

Japan's Transformational Defense Documents

On December 16, 2022, the government of Japan released a trio of much-anticipated security documents: the National Security Strategy (NSS), the National Defense Strategy, and the Defense Buildup Program. Taken together, these documents provide a blueprint that could fundamentally reshape Japan's approach to defending itself and to its security relationship with the United States. The NSS describes China as an "unprecedented strategic challenge," a tougher characterization than the 2013 iteration of the NSS, which called China "an issue of concern to the international community."¹⁰ A top U.S. official hailed the documents as "bold and historic"¹¹ and praised Tokyo's pledged investments that would enhance deterrence in the region. A spokesperson for China's Ministry of Foreign Affairs commented on Japan's security documents, saying: "Hyping up the 'China threat' to find an excuse for its military build-up is doomed to fail."¹²

Japan's determination to develop a "counter-strike" capability is arguably among the most consequential of the policies unveiled in the documents. This capability would allow Japan to conduct missile strikes against missile-related sites within an adversary's territory under certain conditions. Japan currently does not possess the missiles necessary to carry out such strikes and therefore relies on U.S. strike capabilities or its ballistic missile defense system to deter or defeat adversary strikes. Due to Japan's constitutional limitation of acting only in self-defense, the government has stipulated that Japanese forces are not permitted to conducts pre-emptive attacks, though it has left vague what it defines as pre-emptive. Press reports indicate that Japan is considering acquiring the U.S.-made Tomahawk cruise missile as well as upgrading its own missiles to achieve this goal.¹³

Japan's Defense Buildup Program outlines plans to increase Japan's defense expenditures to 2% of its national gross domestic product (GDP), in line with NATO standards, by the latter part of the decade. Post-war Japan has generally limited defense spending to 1% of its GDP. If this increase were to take effect, Japan's defense budget would become the third-largest in the world after the United States and China. Questions remain about how Japan will reach this threshold, which may involve counting the Coast Guard and other costs not currently considered part of the defense budget as defense expenditures. Whether or not Japan's government meets the 2% goal, the country is poised to devote considerably more of its national budget to defense in a significant departure from its previous post-war practices.

These documents frame a number of strategic challenges facing Japan, and Japanese policymakers face a phalanx of decisions about how to address them. To increase the defense budget, the Japanese government must decide whether to raise taxes, cut other government spending, and/or go further into debt.¹⁴ Will public sentiment supporting Japan's more assertive security posture remain durable? Does Japan purchase U.S. military hardware or invest more heavily in its domestic industry? Defense experts question whether Japan's defense industry can produce cutting-edge technology yet caution that Japan may need to upgrade its information security in order to receive U.S. weapons systems.¹⁵ Key to all of these considerations is the extent to which Japan seeks to develop more self-sufficiency while simultaneously keeping the U.S. alliance strong.

Kishida's Public Approval Sinks after Abe Assassination

In the summer and early fall of 2022, Japan's political situation continued to be colored by the after-effects of the July 2022 assassination of former Prime Minister Abe. Abe, 67 at the time of his murder, was postwar Japan's longest serving prime minister and arguably continued to be Japan's most powerful politician. Since Abe's death, Kishida's public approval ratings have fallen significantly, dipping below his disapproval ratings for the first time since he assumed the premiership in October 2021.¹⁶ If this trend continues, it could destabilize Japanese politics and complicate Kishida's ability to wield influence within his LDP and with its smaller coalition partner, the Komeito party. Kishida may then have less political clout, willingness, and/or time to push through Japan's Diet the controversial policies on his agenda, such as significantly expanding Japan's defense spending, backing a return to more full-scale use of nuclear power, and implementing his "new capitalism" economic agenda.¹⁷ Kishida's term as LDP president runs until 2024, and parliamentary elections do not need to be held until 2025, potentially giving him time to recover his political standing.

Pollsters and political analysts identify three principal causes for Kishida's difficulties: discontent with the government's response to rising prices, significant public opposition to the government holding and financing a state funeral for Abe, and his response to revelations in the wake of Abe's assassination of the extent of the LDP's ties to the Unification Church (see the text box below).¹⁸ In an apparent effort to remove political appointees with the closest links to the church, Kishida reshuffled his cabinet in August. However, evidence subsequently surfaced that many of the newly appointed cabinet ministers and vice-ministers had ties to the church, and an internal LDP survey revealed that nearly half the LDP's Diet members have had dealings with the church, such as receiving political donations or attending church functions.¹⁹ In a four-week period in the fall of 2022, three members of Kishida's new cabinet resigned due to a variety of scandals.

A Thaw in Japan-South Korea Tensions

Japan–South Korea relations are perennially fraught because of a territorial dispute and sensitive historical issues stemming from Japan's colonization of the Korean Peninsula from 1910 to 1945. Beginning in 2018, a series of actions and retaliatory countermeasures by both governments involving trade, security, and history-related controversies caused South Korea–Japan relations to plummet, eroding U.S. –South Korea–Japan policy coordination. Relations have shown signs of improvement since the conservative Yoon Suk-yeol became president of South Korea in May 2022. Yoon, who has said he is seeking to increase alignment with the United States on many Indo-Pacific policies, has placed a priority on improving relations with Japan. With encouragement from the Biden Administration, Tokyo and Seoul have taken a number of steps to restore a positive relationship, including holding three trilateral heads-of-state meetings (the first since 2017) in 2022 in June, September, and November. Following North Korea's flurry of missile tests in 2022, the United States, Japan, and South Korea have resumed public trilateral military exercises, including a first-ever trilateral ballistic missile defense naval exercise in October 2022. In their November summit, Biden, Kishida, and Yoon issued a joint statement declaring their intent to "share DPRK missile warning data in real time."²³

While relations appear to be improving, it is unclear how the two governments might resolve the thorniest historical issues in order to deepen trust and whether Japan's leaders will reciprocate the efforts being made by the Yoon government. (See Japan–South Korea Relations section below for more details.) Since the mid-2010s, many public opinion polls have shown that over 40% of Japanese respondents and over half of South Korean respondents have poor impressions of the other country, though these negative ratings appear to have fallen between 2021 and 2022.²⁴ Making concessions to South Korea is reportedly particularly unpopular among many LDP conservatives, constraining Kishida's options.²⁵

Economic Recovery from COVID-19

Relative to other developed economies, Japan has lagged behind in its economic recovery from the COVID-19 pandemic.²⁶ Japan's GDP increased in 2021 by 1.7% after decreasing by 4.5% in 2020, but the economy contracted in the third quarter of 2022, raising some concerns over sustained recovery.²⁷ The government remains focused on economic recovery and is providing continued fiscal and monetary support. In late October 2022, the Kishida government announced a new package of economic measures worth ¥39 trillion ($264 billion), building on past stimulus for economic relief from rising food and energy prices in the fallout from Russia's invasion of Ukraine.²⁸ The Bank of Japan (BoJ), unlike other central banks, remains committed to maintaining a loose monetary policy, taking actions to prevent interest rate increases. Ultra-low interest rates—the BoJ's policy rate is set at minus 0.1%—have placed downward pressure on the yen, which fell to a historic low against the U.S. dollar in October 2022.²⁹ Japanese officials have historically lauded a weak yen (which makes Japan's exports cheaper and imports more expensive), but the effect on import costs is also of increasing concern to many observers given the already high costs of imported energy and other commodities and Japan's recent economic contraction.³⁰ The weak yen, which boosts spending power of foreigners, supports Kishida's pledge to revive Japan's tourism industry, with a goal of increasing foreign tourists' total spending to more than 5 trillion yen ($35 billion) annually.³¹ To this end, on October 11, 2022, the Japanese government ended pandemic-related visa and other border restrictions on international travelers. Some critics had described these measures as overly strict.³² Despite some signs of recovery since 2020, experts suggest the Japanese economy faces major headwinds in the near term due to a resurgence in COVID-19 cases, rising costs of imported goods, and the economic slowdown in the United States and other trading partners.³³

U.S.-Japan Renewal of Regional Economic Engagement

In May 2022, Japan joined 13 other countries as an inaugural negotiating partner in the U.S.-led Indo-Pacific Economic Framework for Prosperity (IPEF) initiative. IPEF appears to be the Biden Administration's response to urging—from policymakers, stakeholders, and U.S. allies such as Japan—for the United States to advance a trade agenda in what many consider the world's most dynamic economic region.³⁴ IPEF will not take the form of a traditional comprehensive U.S. Free Trade Agreement (FTA) but instead is focused on four separate "pillars" covering trade, supply chains, infrastructure and decarbonization, and tax and anti-corruption. At their ministerial in September 2022, IPEF members announced the negotiating objectives for each pillar. Japan and most countries (all except for India) opted to participate in all four pillars.³⁵ Unlike typical U.S. FTAs, IPEF will not cover tariffs and some other market access provisions. Japan and other IPEF partner countries have generally welcomed renewed U.S. engagement via the framework but also voiced various concerns and hopes for the agreement.³⁶

Many observers argue that since President Donald Trump withdrew the United States from the proposed Trans-Pacific Partnership (TPP) in 2017, the United States has failed to present a robust alternative economic strategy in the region.³⁷ Some Members of Congress and other stakeholders have expressed support for IPEF as an opportunity for the United States to take a leading role in establishing updated trade and economic rules in partnership with Japan and key partners in the region. At the same time, others have raised concerns over the initiative's potential lack of substantive commitments, including on market access, the binding nature (or lack thereof) of any commitments reached, and overall ambition to effectively deepen economic linkages.³⁸ The Biden Administration has suggested IPEF is to take the form of executive agreements, precluding a role for Congress in approving the future agreements.³⁹ Some Members have raised concerns over this approach and the perceived lack of consultation with Congress, emphasizing the need for a greater congressional role.⁴⁰ The leaders of Japan and some trading partners have urged the Biden Administration to consider joining the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which Japan helped form after U.S. withdrawal from the TPP. Previously, the Trump and Abe Administrations negotiated two limited bilateral trade deals, which took effect in 2020, liberalizing some agricultural and industrial goods trade and establishing rules on digital trade.

Congressional Role in U.S.-Japan Relations

Prior to the late 2010s, congressional engagement on Japan tended to focus on trade-related issues, concerns about the pace of base realignment on Okinawa, and Japan's treatment of history-related disputes with South Korea. (See "Comfort Women Issue" section below.) As China's rise re-shaped security outlooks, Congress focused more on the strength of U.S. defense partnerships in the Indo-Pacific as part of its oversight responsibility. In 2014, the bipartisan U.S.-Japan Congressional Caucus was formed, with over 100 Members joining the group. In 2015, Congress invited then-Prime Minister Abe to address a joint meeting of Congress—the first time a Japanese leader did so—and Abe outlined a more forceful role for Japan in the alliance. After Abe was assassinated in 2022, both chambers of Congress passed resolutions honoring his commitment to the alliance and praising his vision for a free and open Indo-Pacific.

When Congress grew concerned about the state of U.S. alliances in Asia under the Trump Administration—specifically with Japan and South Korea—it passed the Asia Reassurance Initiative Act (P.L. 115-409) in late 2018. The law asserted congressional prerogatives, authorized more spending, and directed the executive branch to develop a more strategic and long-term strategy in Asia. The act provides an example of how Congress conducts oversight of U.S. foreign policy.

More recently, congressional interest in U.S. relations with Japan has centered on the strength of the U.S.-Japan alliance and particularly on how Japan and the United States coordinate their China strategies. Members' concern about China's ability to forcefully seize Taiwan has led to the introduction of legislation that has the potential to re-shape U.S. policy with Taiwan, which in turn could create a policy gap between the United States and Japan. Japan has not committed to help Taiwan defend itself. (See "The Role of Taiwan" section below.) In the event of a military contingency that engages the United States, U.S. bases in Japan would likely be involved, and Japan could become a target for Chinese strikes. Congress may consider consulting with Japanese interlocutors as they chart a course for U.S. legislation relating to Taiwan.

Congressional interest in U.S. security policy in the Indo-Pacific has also led some Members to encourage greater coordination among U.S. allies in the region. In the past, Congress had passed resolutions that encourage greater trilateral cooperation among the United States, South Korea, and Japan, underscoring the value of the two allies working together.⁴¹ During official travel and other engagement with Japanese and South Korean officials, some Members have emphasized this importance to Japanese and South Korean officials. Some Members have engaged in trilateral legislative exchanges, which could be expanded in order to encourage more coordination.

Annual authorization and appropriations bills—including the National Defense Authorization Act (NDAA), State Department-Foreign Operations Appropriations bills, Military Construction-Veterans Affairs (VA) Appropriations bills, and any hearings surrounding these measures—provide opportunities for congressional involvement in and oversight of U.S.-Japan relations, particularly on issues related to the U.S.-Japan alliance. The FY2023 NDAA (P.L. 117-263, as amended), for example, included a sense of Congress provision (§1265) stating that the United States should "further the comparative advantage of the United States in strategic competition" with China in part by "enhancing cooperation with Japan … including by developing advanced military capabilities, fostering interoperability across all domains, and improving sharing of information and intelligence."

Overview of U.S.-Japan Relations

Forged in the wake of Japan's defeat in World War II, the U.S.-Japan relationship has transformed dramatically, with the two former adversaries becoming close allies over the course of seven decades. After the United States occupied the archipelago from 1945 to 1952, the U.S. Senate ratified the Treaty of Peace with Japan in March 1952.⁴² As the confrontation with the Soviet Union developed, the United States increasingly came to view Japan as a strategic bulwark in the Pacific. In the post–Cold War period, the relationship endured as Japan embraced international institutions and practices promoted by the United States. As North Korean threats emerged and China rose economically and militarily, both countries found an imperative to maintain and modernize the bilateral alliance.

The U.S.-Japan relationship is broad and deep-seated. Globally, the two countries cooperate on scores of non-traditional security issues through multilateral fora and international institutions, from nuclear nonproliferation to global health to disaster relief to climate change. The U.S.-Japan relationship has enjoyed broad support from Congress⁴³ as well as strong public support among both populations, according to opinion polls.⁴⁴ As challenges to the international rules-based order have developed, Japan and the United States have made efforts to strengthen their military cooperation. Under the Japanese constitution—drafted by U.S. officials during the American occupation—Japan has limitations on its ability to expand its military capability.⁴⁵ As threat perceptions have intensified, however, Japan has made significant changes to how it interprets legal constraints. U.S. and Japanese defense officials say that the two allies are working more closely together than ever before.⁴⁶

Despite these strengths, difficult issues remain. The challenges and threats from China and North Korea have grown sharper over the past several years: North Korea has accelerated its nuclear weapon and missile capabilities dramatically since 2016, and China's economic strength and military capabilities have grown significantly in the past decade. Japanese leaders expressed dismay when the United States withdrew from the TPP in 2017. Trump's apparent skepticism of the value of the alliance with Japan may have exacerbated the Japanese defense establishment's long-standing fears of U.S. abandonment. Many analysts in Japan have indicated worry that U.S. commitment to the alliance could be impermanent, dependent on who is elected to the U.S. presidency.⁴⁷ In addition, Japanese concerns about what Joseph Nye calls the "relative decline" of U.S. power and presence in the region have risen.⁴⁸ In the United States, voices have emerged calling on Japan to contribute more resources to its own defense.⁴⁹

Biden Administration Policy

The Biden Administration has sought to elevate the U.S.-Japan alliance as a centerpiece of the U.S. strategy in the Indo-Pacific and embraced an approach to the region that dovetails well with Japan's vision. Biden has emphasized the Quadrilateral Security Dialogue—known as the "Quad"—with Japan, India, and Australia. Biden, like Trump before him, has affirmed that Article 5 of the mutual defense treaty applies to the Senkaku Islands, a territory claimed by both Japan and China. The Biden Administration included this pledge in its National Security Strategy.⁵⁰ In December 2021, the two governments announced a new five-year cost-sharing agreement that raised Japanese contributions by around 7% to defray the costs of the U.S. military presence in Japan. During the Trump Administration, as the previous agreement approached its expiration, the United States reportedly requested that Japan pay $8 billion annually, compared to the roughly $2.5 billion it now pays.⁵¹ By concluding an agreement that continued Japan's approximate contribution from years past, the Biden Administration appeared to signal its support of long-standing U.S. alliances.

U.S. and Japanese Policy on China

Leaders of Japan and the United States share a fundamental and profound concern about China's role in the Indo-Pacific. Both governments have expressed distrust of Beijing's intentions and indicated that they see China's rising power and influence as detrimental to their national security. This shared strategic vision tethers the two countries and propels closer cooperation. Japan's proximity to China heightens its concern, particularly because of China's expansive maritime claims and regular military activities near Japan's southwestern islands. Apparently driven by its apprehension, Japan has developed stronger and more integrated defense relations with Australia and India—also U.S. partners—that facilitate military engagement through the Quad and other cooperative activities such as the annual Malabar naval exercises among the four countries. These multilateral efforts, which the Obama, Trump, and Biden Administrations encouraged, reinforce U.S.-Japan alliance cohesion and cement the focus on pushing back on China's increased power.

Differences remain, however, in how the U.S. and Japanese governments respond to threats posed by China. Most fundamentally, Japan and China are uniquely bound by their proximity, requiring the Japanese government to manage relations with its larger and more powerful neighbor in ways the United States need not. Japanese leaders have asserted that they seek to stabilize Japan's relationship with China as an important trading partner.⁵² Before the disruption of the pandemic, the Japanese government was preparing to welcome Chinese President Xi for an official state visit in the spring of 2020, an example of Japan's outreach to China before relations soured in the subsequent years.

The Role of Taiwan

Since 1972, Japan has had "unofficial" relations with Taiwan, the democratic and self-governed island east of mainland China over which the PRC claims sovereignty.⁵³ As with the United States, the lack of formal ties belies the depth and breadth of the Japan-Taiwan relationship. The two countries are each other's third-largest trading partners.⁵⁴ People-to-people ties are robust: Taiwan is a top tourism destination for Japanese visitors, and vice versa. The two sides maintain de facto embassies (the Taipei Economic and Cultural Representative Office in Japan, in Tokyo, and the Japan-Taiwan Exchange Association, in Taipei) and have found creative ways to conduct quasi-diplomacy, including through their respective ruling parties and groups such as the Japan-ROC Diet Members' Consultative Council.⁵⁵ In 2013, Taiwan and Japan concluded an agreement governing reciprocal fishing rights in disputed areas of the East China Sea and have explored possible future cooperation between their coast guards. Unlike those of the United States, Japan's unofficial ties with Taiwan do not extend to military cooperation.⁵⁶

Japan's 2021 defense white paper stated that "stabilizing the situation surrounding Taiwan is important … for Japan's security" and that "it is necessary that we pay close attention to the [cross-Strait] situation with a sense of crisis more than ever before."⁵⁷ Some observers caution that if China were to occupy Taiwan, it could project power deeper into the Western Pacific and more easily coerce Japan and other U.S. allies in the region.⁵⁸ Particularly since 2020, some Japanese politicians have drawn links between Taiwan's security and that of Japan. Former Prime Minister Abe cultivated closer ties with Taiwan throughout his career and, after stepping down in 2020, took an even more explicitly pro-Taiwan position, arguing that the United States should abandon its long-standing policy of "strategic ambiguity" and "make clear that it will defend Taiwan against any attempted Chinese invasion."⁵⁹

A cross-Strait military conflict—particularly if it involved the United States—would carry a range of implications for Japan. Beyond massive long-term economic and geopolitical ramifications, PRC operations against Taiwan would likely involve military combat operations close to Japan's southwest island chain. A PRC blockade of Taiwan could affect Japan's trade and sea lines of communication. The PRC could also launch strikes against U.S. (and/or Japanese) bases in Japan in an effort to cripple the U.S. military's ability to come to Taiwan's aid.

Should the United States come to Taiwan's defense in the event of a PRC attack, some experts argue that the U.S. military's prompt and effective response would hinge on access to U.S. troops, weapons systems, and materiel based in Japan, particularly in Okinawa.⁶⁰ The SDF has a range of capabilities—including but not limited to missile defense; intelligence, surveillance, and reconnaissance; anti-submarine warfare; logistics support; and humanitarian assistance and disaster relief—that could feasibly augment a U.S. response.⁶¹ Some experts have called for more vigorous alliance planning for potential cross-Strait conflict scenarios.⁶²

Fundamental to Japan's involvement in a potential cross-Strait conflict are domestic legal and political considerations. Although Japan over the past decade has enhanced its military capabilities and the legal powers to deploy them, legal and political barriers would confront a Japanese leader who seeks to work in tandem with U.S. military forces.⁶³ Navigating the constraining constitutional requirements for Japan to respond militarily could be particularly challenging in the absence of a direct PRC attack against Japan. Under Japanese law, crafted to abide by the constitution, such scenarios would require the alliance to conduct "prior consultation" whereby Japan grants the United States "the use of facilities and areas in Japan as bases for military combat operations to be undertaken from Japan." Further, whether the government of Japan deems such a scenario an "important influence situation" or "survival-threatening situation" would dictate Japan's legal options to respond.⁶⁴

U.S. World War II–Era Prisoners of War (POWs)

For decades, U.S. soldiers who were held captive by Imperial Japan during World War II have sought official apologies from the Japanese government for their treatment. A number of Members of Congress have supported these campaigns. The brutal conditions of Japanese POW camps have been widely documented.⁶⁵ In May 2009, the Japanese Ambassador to the United States attended the last convention of the American Defenders of Bataan and Corregidor to deliver a cabinet-approved apology for their suffering and abuse. In 2010, with the support and encouragement of the Obama Administration, the Japanese government financed a Japanese/American POW Friendship Program for former American POWs and their immediate family members to visit Japan, receive an apology from the sitting Foreign Minister and other Japanese Cabinet members, and travel to the sites of their POW camps. Annual trips were held from 2010 to 2018.⁶⁶

In 2011, Congress introduced several resolutions that thanked the government of Japan for its apology and for arranging the visitation program.⁶⁷ The resolutions also encouraged the Japanese government to do more for the U.S. POWs, including by continuing and expanding the visitation programs as well as its World War II education efforts. They also called for Japanese companies to apologize for their or their predecessor firms' use of un- or inadequately compensated forced laborers during the war. In July 2015, Mitsubishi Materials Corporation (a member of the Mitsubishi Group) became the first major Japanese company to apologize to U.S. POWs on behalf of its predecessor firm, which ran several POW camps that incarcerated over 1,000 Americans.⁶⁸

U.S.-Japan Alliance Issues

The U.S.-Japan alliance has long been an anchor of the U.S. security role in Asia. The alliance's foundational documents⁶⁹ give the U.S. military the right to base U.S. troops and other military assets on Japanese territory, undergirding the "forward deployment" of U.S. troops in East Asia. In return, the United States pledges to protect Japan's security. The U.S.-Japan alliance was originally constructed as a fundamentally asymmetric arrangement—in the 1950s and 1960s, the United States assumed most of the responsibility for Japan's defense. Over the decades, however, this partnership has shifted toward more equality as Japan's military capabilities and policies have evolved. About 54,000 U.S. troops are stationed in Japan and have the exclusive use of approximately 85 facilities (see Figure 2). The U.S. security guarantee to Japan includes extended deterrence, known colloquially as the U.S. "nuclear umbrella."

Since the early 2000s, the United States and Japan have improved the operational capability of the alliance as a combined force, despite political and legal constraints. Even before the Kishida government announced plans to raise defense spending close to 2% of GDP, the Abe administration's record-high 2019 defense budget had exceeded Japan's decades-long unofficial cap on defense spending of 1% of GDP. Further, Japan's major strategic documents reflect a new attention to operational readiness and flexibility. In 2014, the Diet passed a law permitting the SDF to engage in collective self-defense. (See the "Collective Self-Defense" section below.) Unlike 25 years ago, the SDF is now active in overseas missions, including efforts in the 2000s to support U.S.-led coalition operations in Afghanistan and the reconstruction of Iraq. Japanese military contributions to global operations like counter-piracy patrols relieve some of the burden on the U.S. military to manage security challenges. Due to the increased co-location of U.S. and Japanese command facilities, coordination and communication have become more integrated in the past 15 years. The joint response to the 2011 tsunami and earthquake in Japan demonstrated the interoperability—and limitations—of the two militaries. The United States and Japan have steadily enhanced bilateral cooperation in many other aspects of the alliance, such as ballistic missile defense, cybersecurity, and military use of space.

Figure 1. Map of Japan

Source: Map Resources. Adapted by CRS.

Figure 2. Map of Major U.S. Military Facilities in Japan

Source: Map Resources. Adapted by CRS. Notes: MCAS is the abbreviation for Marine Corps Air Station. NAF is Naval Air Facility.

Mutual Defense Guidelines

In April 2015, the United States and Japan announced the revision of their bilateral defense guidelines. First codified in 1978 and later updated in 1997, the guidelines outline how the U.S. and Japanese militaries will interact in peacetime and in war, as the basic framework for defense cooperation based on a division of labor. The revised guidelines account for developments in military technology, improvements in interoperability of the U.S. and Japanese militaries, and the complex nature of security threats in the 21^st century. For example, the 2015 revision addressed bilateral cooperation on cybersecurity, the use of space for defense purposes, and ballistic missile defense, none of which were mentioned in the 1997 guidelines. The revised guidelines also laid out a framework for bilateral, whole-of-government cooperation in defending Japan's outlying islands and expanded the scope of U.S.-Japan security cooperation to include defense of sea lanes and, potentially, Japanese contributions to U.S. military operations outside East Asia.

The revised bilateral defense guidelines also sought to improve alliance coordination. The guidelines established a standing Alliance Coordination Mechanism (ACM), which involves participants from all relevant agencies in the U.S. and Japanese governments, as the main body for coordinating a bilateral response to any contingency. The ACM provides a platform for peacetime planning as well as for contingency and crisis situations. This mechanism removed obstacles that had inhibited alliance coordination in the past, though one study in 2016 questioned whether it is capable of effectively coordinating alliance actions in a military conflict.⁷⁰

Collective Self-Defense

Perhaps the most symbolically significant—and controversial—security reform Japan has undertaken over the past 30 years was a set of moves in 2014-2015 allowing Japan's potential participation in collective self-defense. Under the U.N. Charter, collective self-defense is the right to defend another country that has been attacked by an aggressor.⁷¹ Former Prime Minister Abe pushed to adjust a highly asymmetric aspect of the alliance: the inability of Japan to defend U.S. forces or territory under attack. Article 9 of the Japanese constitution renounces the use of force as a means of settling international disputes. However, Japan has interpreted Article 9 to mean that it can maintain a military for national defense purposes and, since 1991, has allowed the SDF to participate in noncombat roles overseas in a number of U.N. peacekeeping missions and in the U.S.-led coalition in Iraq. The Abe government expanded that interpretation and in 2015 passed a security legislation package that provides a legal framework for new SDF missions. The removal of the blanket prohibition on collective self-defense enables Japan to engage more in cooperative security activities, like noncombat logistical operations and defense of distant sea lanes, and to be more effective in other areas, like U.N. peacekeeping operations.

Realignment of the U.S. Military Presence on Okinawa

Due to the legacy of the U.S. occupation and the island's key strategic location, Okinawa hosts a disproportionate share of the U.S. military presence in Japan. (The westernmost point of the Ryukyu Island Chain, of which Okinawa is a part, is less than 70 miles from the coast of Taiwan.) About 25% of all facilities used by U.S. Forces Japan (USFJ) and over half of USFJ military personnel are located in the prefecture, which comprises less than 1% of Japan's total land area. Many native Okinawans reportedly resent the large U.S. military presence, reflecting in part the island's tumultuous history and complex relationships with "mainland" Japan and with the United States. Although Okinawans' views are far from monolithic, many Okinawans—including those who largely support the U.S.-Japan alliance—express concerns about the burden of hosting foreign troops, particularly about issues like crime, safety, environmental degradation, and noise.⁷² As a result, the sustainability of the U.S. military presence in Okinawa remains a critical challenge for the alliance.⁷³

In 1996, the alliance established a Special Action Committee on Okinawa, which mandated the return to Okinawa of thousands of acres of land used by the U.S. military since World War II. Subsequent bilateral negotiations aimed at addressing local resistance culminated in the 2006 U.S.-Japan Roadmap for Realignment, in which United States agreed to remove roughly 8,000 marines from Okinawa to Guam by 2014. Congressional concerns over the scope and cost of the Guam realignment, as well as broader U.S. government concerns about Guam's preparedness, led to later revisions that adjusted the number of personnel and dependents to be relocated.

The central—and most controversial—task of the realignment on Okinawa is to move Marine Corps Air Station (MCAS) Futenma from crowded Ginowan City to Camp Schwab in Nago City's less congested Henoko area. The encroachment of residential areas around the Futenma base over the decades has raised the risks of a fatal aircraft accident. Most Okinawans oppose the construction of a new U.S. base for a mix of political, environmental, and quality-of-life reasons, and demand the Futenma Replacement Facility be moved outside Okinawa.⁷⁴ In February 2019, Okinawa held a nonbinding referendum on the relocation of the U.S. base. About 72% of those who voted opposed the construction of the new base.⁷⁵

The relocation of MCAS Futenma is frequently challenged by local politicians and activists and is also beset by construction delays.⁷⁶ In three successive elections, most recently in September 2022, Okinawan citizens have elected governors who ran on platforms opposed to the relocation plan and who employed a variety of political and legal strategies to prevent or delay construction of the base. In the months before the 2022 gubernatorial election, however, LDP-backed candidates who were more friendly to the relocation scored upset victories, raising the prospect that politics could be shifting in the prefecture. In the October 2021 parliamentary elections, two ruling LDP candidates for Okinawa's seats defeated the anti-base All Okinawa party, and two more LDP candidates secured proportional representation seats. In January and February 2022 mayoral races on Okinawa—including in the city adjacent to Camp Schwab—incumbent candidates backed by the central government also won reelection over the All Okinawa candidates.⁷⁷ Some commentators attribute the results to rising concern about China's threat among younger Okinawan voters.⁷⁸

Burden-Sharing Issues

Calculating how much Tokyo pays to defray the cost of hosting the U.S. military presence in Japan is difficult and depends heavily on how the contributions are counted. Further, the two governments present estimates based on different data depending on the political aims of the mathematical exercise. Because of the skepticism among some Japanese about paying the U.S. military, for example, the Japanese government may use different baselines in justifying its contributions to the alliance when arguing for its budget in the Diet. Other questions make it challenging to assess the value and costs of the U.S. military presence in Japan. Is the value to the United States determined strictly on activities that provide for the defense of Japan, in a narrow sense? Or is the system of American bases in Japan valuable because it enables the United States to more quickly, easily, and cheaply disperse U.S. power in the Western Pacific? U.S. defense officials often cite the strategic advantage of forward-deploying the most advanced American military capabilities in the Asia-Pacific at a far lower cost than stationing troops on U.S. soil.

Determining the percentage of overall U.S. costs that Japan pays is even more complicated. According to DOD's 2004 Statistical Compendium on Allied Contributions to the Common Defense (the last year for which the report was required), Japan provided 74.5% of the U.S. stationing cost.⁷⁹ In January 2017, Japan's Defense Minister provided data that set the Japanese portion of the total cost for U.S. forces stationed in Japan at over 86%.⁸⁰ Other estimates from various media reports are in the 40-50% range. Many analysts concur that there is no authoritative, widely shared view on an accurate figure that captures the percentage that Japan shoulders.

Host Nation Support

One component of Japan's contribution is the Japanese government's payment of $1.7 billion-$2.1 billion per year (depending on the yen-to-dollar exchange rate) to offset the direct cost of stationing U.S. forces in Japan. These contributions are provided both in-kind and in cash.⁸¹ For at least the past decade, the United States has spent $1.9 billion-$2.5 billion per year on non-personnel costs on top of the Japanese contribution, according to the DOD comptroller.⁸²

Japanese host nation support is composed of two funding sources: Special Measures Agreements (SMAs) and the Facilities Improvement Program (FIP). Each SMA is a bilateral agreement, generally covering five years, which obligates Japan to pay a certain amount for utility and labor costs of U.S. bases and for relocating training exercises away from populated areas. Although negotiations for the SMAs are always contentious, tensions surrounding burden-sharing talks during the Trump Administration spiked. As the deal neared expiration in late 2020, the Trump Administration reportedly requested a multifold increase. According to former National Security Advisor John Bolton, President Trump demanded that Japan increase its contribution to $8 billion per year.⁸³ Shortly after Biden assumed the presidency, the two sides agreed to extend the existing agreement for an additional year. In December 2021, a new agreement committed Japan to pay roughly 7% more than it had in the past: The average annual expenditures for host nation support over 2022-2026 is approximately ¥211.0 billion (roughly $1.5 billion in current exchange rates).⁸⁴

Additional Japanese Contributions

In addition to host nation support, which offsets costs that the U.S. government would otherwise have to pay, Japan subsidizes or compensates base-hosting communities. These are not costs that would be necessarily passed on to the United States, but U.S. and Japanese alliance managers argue that the U.S. bases would not be sustainable without these payments to areas affected by the U.S. military presence. Based on its obligations defined in the U.S.-Japan Mutual Security Treaty, Japan also pays the cost of relocating U.S. bases within Japan and rent to any landowners of U.S. military facilities in Japan. Japan pays for the majority of the costs associated with three of the largest international military base construction projects since World War II: the Futenma Replacement Facility in Okinawa (Japan provides $12.1 billion), construction at the Marine Corps Air Station Iwakuni (Japan pays 94% of the $4.8 billion), and construction of facilities on Guam to support the move of 4,800 marines from Okinawa (Japan pays $3.1 billion, about a third of the cost of construction).⁸⁵

Japan is also a major purchaser of U.S. defense equipment. Japan is the third-largest recipient of overall U.S. Foreign Military Sales delivered in the past five decades.⁸⁶ The United States accounted for 94% of Japan's arms imports from 2010 to 2020, according to estimates from the Stockholm International Peace Research Institute.⁸⁷ Recent major acquisitions include Lockheed Martin F-35 Joint Strike Fighters, Boeing KC-46 Tankers, Lockheed Martin and General Dynamics Aegis weapons systems, Northrup Grumman E-2D Hawkeye airborne early warning aircraft, General Dynamics Advanced Amphibious Assault Vehicles, and Boeing/Bell MV-22 Ospreys.

Extended Deterrence

The growing concerns in Tokyo about North Korean nuclear weapons development and China's modernization of its nuclear arsenal in the 2000s garnered renewed attention to the U.S. policy of extended deterrence, commonly known as the "nuclear umbrella." The United States and Japan initiated the bilateral Extended Deterrence Dialogue in 2010, perhaps recognizing that Japanese confidence in the credibility of U.S. extended deterrence was critical to its effectiveness, as some analysts have argued.⁸⁸ The dialogue is a forum for the United States to assure its ally and for both sides to exchange assessments of the strategic environment. The Japanese government welcomed the 2018 and 2022 Nuclear Posture Reviews.⁸⁹

Japanese leaders have repeatedly rejected the idea of developing their own nuclear weapons arsenal. Although Japan is a ratified signatory to the Treaty on the Non-Proliferation of Nuclear Weapons, and Japanese public opinion is largely antinuclear, a lack of confidence in the U.S. security guarantee could lead Tokyo to reconsider its own status as a nonnuclear weapons state. Then-candidate Trump in 2016 stated that he was open to Japan (and South Korea) developing its own nuclear arsenal to counter the North Korean nuclear threat.⁹⁰ Proponents of Japan developing nuclear weapons argue that this would deter Chinese aggression and allow the United States to use its own capabilities elsewhere, essentially freeing up U.S. assets.⁹¹ Other analysts have argued that Japan would face negative consequences if it were to develop its own nuclear weapons, including significant budgetary costs, reduced international standing in the campaign to denuclearize North Korea, and the possible imposition of economic sanctions that would be triggered by leaving the global nonproliferation regime.⁹² Some commentators also warn about potentially encouraging South Korea and/or Taiwan to develop nuclear weapons capability and triggering a counterreaction by China, which might create instability that could lessen Japan's economic and diplomatic influence in the region.⁹³ For the United States, analysts have noted that encouraging Japan to develop nuclear weapons could mean diminished U.S. influence in Asia, the unraveling of the U.S. alliance system, and the possibility of creating a destabilizing nuclear arms race in Asia.⁹⁴

Ballistic Missile Defense and Strike Capabilities

Japan also plays an active role in extended deterrence through its ballistic missile defense (BMD) capabilities, which it began to pursue in 2003, largely in response to the growing ballistic missile threat from North Korea. Whereas prior to the introduction of BMD Japan was entirely reliant on the U.S. nuclear deterrent, it now actively contributes to extended deterrence,⁹⁵ and many analysts see U.S.-Japan efforts on BMD as the most robust aspect of bilateral security cooperation. DOD's 2019 Missile Defense Review stated that "Japan is one of our strongest missile defense partners."⁹⁶ Japan and the United States both deploy land- and sea-based missile defense systems in Japan.⁹⁷

In an about-face that was reportedly unanticipated by U.S. and Japanese observers, Japan announced in June 2020 that it would suspend a high-profile plan to purchase from the United States two Aegis Ashore ballistic missile defense batteries. The plan had been announced in 2017 as North Korea ramped up nuclear and ballistic missile testing, and alliance officials had touted the move as a central component of Japan's defense against North Korea.⁹⁸ Aegis Ashore would have provided a new layer of defense against incoming North Korean ballistic missiles for Japan and U.S. forces stationed there and could have afforded the U.S. military the flexibility to deploy its own Aegis ships now defending Japan to other parts of the region, including the South China Sea, Philippine Sea, and Indian Ocean.⁹⁹

The 2020 Aegis Ashore reversal intensified a decades-long debate over whether Japan should acquire strike capabilities. Although Japan is pursuing other missile systems for defensive purposes, it currently does not have the ability to conduct missile strikes on enemy territory. In August 2020, shortly before Abe announced his resignation, the LDP called on the Japanese government to consider acquiring this capability.¹⁰⁰ Kishida has reportedly said that it is an "option," and many observers expect this provision to be included in the upcoming defense policy documents.¹⁰¹ Movement toward adopting a strike mission reflects aspirations by some Japanese to achieve greater strategic autonomy and could mark a departure from the long-standing division of labor in the alliance with the United States as the "spear" and Japan as the "shield."¹⁰²

Japan's Foreign Policy

Japan's foreign policy is broadly shaped by its security alliance with the United States and by its concern about China's military and economic power. Abe and his two successors have moved to diversify Japan's international network of relations to pursue its interests.

Japan-China Sovereignty Dispute over the Senkaku Islands in the East China Sea

Japan, China, and Taiwan claim a group of uninhabited land features¹⁰³ in the East China Sea known as the Senkaku Islands in Japan, Diaoyu in China, and Diaoyutai in Taiwan. The eight small, uninhabited land features are administered by Japan but also claimed by China and Taiwan. The Senkakus dispute has simmered for decades and first became a major source of discord in China-Japan relations in 2010. Tensions have spiked multiple times since then, and although Beijing and Tokyo have renewed efforts to deescalate tensions and avoid clashes, the dispute has remained potential kindling for a major flare-up in an increasingly uneasy bilateral relationship.

Starting in the fall of 2012, in the wake of another intensification of the dispute, China began regularly deploying maritime law enforcement ships near the islands and stepped up what it called "routine" patrols to assert jurisdiction in "China's territorial waters."¹⁰⁴ The number of Chinese vessels entering the territorial seas¹⁰⁵ surrounding the islands from 2013 through August 2022 ranged from zero to 24 per month (and averaged 8.3 per month). While the average number of Chinese vessels entering the territorial sea was fairly consistent during that time frame, the average number of vessels entering the contiguous zone—a zone extending an additional 12 nautical miles out from the outer edge of the territorial sea—increased markedly beginning in mid-2019.¹⁰⁶ Most of these patrols appear to be conducted by the China Coast Guard, which has been instrumental in advancing China's interests in disputed waters in the East and South China Seas.¹⁰⁷

China-Japan tensions have played out in the air domain near the Senkakus as well. The government of Japan reported that scrambles by Japan Air Self Defense Force aircraft against "Chinese aircraft" increased eightfold between FY2010 (96 scrambles) and FY2016 (851 scrambles). The average number of scrambles from FY2017 to FY2020 was 568.¹⁰⁸

These patrols exemplify how the dispute over the Senkakus has played out primarily in the "gray zone," defined by some as the ambiguous space between peace and conflict, with nonmilitary actors such as coast guards, fishermen, and China's maritime militia on the front lines.¹⁰⁹ China's approach to the dispute (as well as its disputes in the South China Sea) appears to be aimed at exploiting the gray zone to gradually consolidate its control and influence over contested space without escalating to armed conflict.¹¹⁰ Japan has prioritized enhancing its ability to counter gray zone activities in addition to strengthening its traditional military capabilities.¹¹¹

Japan's administration of the Senkakus is the basis of the U.S. treaty commitment to defend that territory. U.S. administrations going back at least to the Nixon Administration have stated that the United States takes no position on the territorial disputes. However, it has also been U.S. policy since 1972 that the 1960 U.S.-Japan Security Treaty covers the Senkakus, because Article 5 of the treaty stipulates that the United States is bound to protect "the territories under the Administration of Japan," and Japan administers the Senkakus.¹¹² In its own attempt to address this perceived gap between U.S. official neutrality on the sovereignty question and its support for Japan against China's attempts to change the status quo, Congress inserted in the FY2013 (P.L. 112-239) and FY2018 National Defense Authorization Acts (H.R. 4310, P.L. 112-239) a resolution stating, among other items, that "the unilateral action of a third party will not affect the United States' acknowledgment of the administration of Japan over the Senkaku Islands."¹¹³

China and Japan also dispute maritime rights in the East China Sea more broadly, with Japan arguing for a "median line" equidistant from each country's claimed territorial border dividing the two countries' exclusive economic zones in the East China Sea. China rejects Japan's claimed median line, arguing that it has maritime rights beyond this line.¹¹⁴

The Quad Signals Broader Approach

In 2017, the Trump Administration renewed an effort to develop the Quadrilateral Security Dialogue, also known as "the Quad," a coalition of Australia, India, Japan, and the United States that has adopted a common platform of protecting freedom of navigation and promoting democratic values in the region. Abe was an early champion of the Quad during his first stint at prime minister from 2006 to 2007. The Biden Administration has adopted the initiative, convening a virtual leader-level meeting in March 2021. At this summit the leaders announced a promise to jointly expand availability of COVID-19 vaccines and deliver up to a billion doses to Southeast Asia and the broader Indo-Pacific by the end of 2022.¹¹⁵ This step, along with a plan to reduce dependence on China's near-monopoly on rare earth materials used in high-technology products and to work together to strengthen the Paris Agreement, could usher in a new chapter in cooperation.

Japan hosted the second-ever in-person Quad summit in May 2022 at which the four countries, among other steps, announced a new Indo-Pacific Partnership for Maritime Domain Awareness. The White House says the partnership aims to offer "a near-real-time, integrated, and cost-effective maritime domain awareness picture" that will "transform the ability of partners in the Pacific Islands, Southeast Asia, and the Indian Ocean region to fully monitor the waters on their shores."¹¹⁶ Questions remain about the durability of the arrangement if leadership shifts in member countries, whether other countries will be brought into the Quad's initiatives, and particularly about India's inconsistent enthusiasm for the grouping. Many Members of Congress have been enthusiastic about the Quad.¹¹⁷

Japan has also worked steadily to build closer bilateral security ties with both Australia and India.¹¹⁸ For the past decade Japan has deepened defense relations with Australia, and in 2020 the two agreed to a Reciprocal Access Agreement (similar to a Status of Forces Agreement) to define rules and procedures when troops are stationed temporarily in the other's country for joint exercises or disaster-relief activities. As another U.S. treaty ally, Australia uses similar practices and equipment, which may make cooperation with Japan more accessible. Japan has inked an Acquisition and Cross-servicing Agreement (the formal mechanism that allows a country to acquire or provide logistic support, supplies, and services directly from/to another country) with India, along with agreements concerning the protection of classified military information and transfer of defense equipment and technology. Bilateral exercises with both countries have grown in number and sophistication.

Japan and the Korean Peninsula

Japan-South Korea Relations

In the 21^st century, Japan's relationship with South Korea has fluctuated between troubled and tentatively cooperative, depending on external circumstances and the leaders in power. The state of relations is framed by the legacy of history, with current events causing the spike in tension. Many Koreans hold strong grievances about Japan's colonial rule over the peninsula (1910-1945), especially on the issue of Korean "comfort women" who were forced to provide sex to Japanese soldiers in the World War II era.¹¹⁹ Relations often became bitter with Abe in power, driven by South Korean criticism of Abe's past statements on the two countries' contentious history and his affiliations with nationalist organizations, as well by Japanese frustration that South Korean governments were abandoning previously negotiated agreements intended to address bilateral conflicts.

In addition to the comfort women issue (see below), the perennial issues of how Japan's behavior before and during World War II is depicted in Japanese school textbooks, and a territorial dispute between Japan and South Korea, continue to periodically rile relations. Seoul has expressed disapproval of some of the history textbooks approved by Japan's Ministry of Education, which South Koreans claim diminish or whitewash Japan's colonial-era atrocities. A group of small islands in the Sea of Japan, known as Dokdo in Korean and Takeshima in Japanese (the U.S. government refers to them as the Liancourt Rocks), are administered by South Korea but claimed by Japan. Japanese assertions of their claim in defense documents or by local prefectures routinely spark official criticism and public outcry in South Korea.

Currently, one of the most salient bilateral issue is whether the South Korean Supreme Court decides to liquidate the seized assets of Japanese companies that the court in 2018 ruled must compensate South Koreans for forced labor during Japan's occupation. Japan argues that the 1965 Japan–South Korea normalization agreement resolved situations such as compensating forced laborers. According to press reports, the Yoon administration has established a consultative body to seek ways to avoid the liquidation of the seized Mitsubishi Heavy and Nippon Steel Corporation assets and has reportedly offered a proposal that involves compensating the victims through an existing South Korean government fund plus statements of regret and voluntary contributions from the Japanese corporations. However, it is unclear whether Yoon, who is confronting relatively low public approval ratings, can manage the anticipated negative response from South Korea's opposition parties, which have a majority in South Korea's parliament.¹²⁰

Bitter relations between Japan and South Korea dim prospects for effective trilateral cooperation with the United States, particularly in responding to North Korean threats. This became clear in 2019 when South Korea—in the midst of a trade dispute with Japan—threatened to withdraw from a bilateral military intelligence sharing agreement with Japan, spurring U.S. officials to intervene and convince Seoul to remain in the pact.¹²¹ From its initial weeks in office, the Biden Administration has sought to "reinvigorate and modernize" both alliances, and senior Administration officials have expressed hope that this effort will include more trilateral cooperation.¹²² Washington, including Congress through various resolutions, has generally encouraged closer ties between Tokyo and Seoul as two of its most important alliance partners. The two countries have shared security concerns; developed economies; and a commitment to open markets, international rules and norms, and regional stability. A poor relationship between Seoul and Tokyo jeopardizes U.S. interests by complicating trilateral cooperation on North Korea policy and on responding to China's rise. In 2021 and 2022, the three countries convened a number of trilateral meetings ranging from the working level to the heads-of-state level. In a further sign that relations were beginning to normalize, in the fall of 2022, Kishida and Yoon held two bilateral meetings, the first such meetings since 2019.

Comfort Women Issue

A perennial stumbling block to better Japan–South Korean relations involves the "comfort women," a literal translation of the Japanese euphemism referring to women who were forced to provide sexual services for Japanese soldiers during the imperial military's conquest and colonization of several Asian countries in the 1930s and 1940s. In 2015, then-Prime Minister Abe and then-President Park Geun-hye of South Korea concluded an agreement that included Abe issuing a new apology from a Japanese premier and the provision of 1 billion yen (about $8.3 million) from the Japanese government to a new Korean foundation that supports surviving victims.¹²³ The two governments' foreign ministers agreed that this long-standing bilateral rift would be "finally and irreversibly resolved" pending the Japanese government's implementation of the agreement.¹²⁴ Although the main elements of the agreement appeared to have been implemented in 2016, the deal remained deeply unpopular with the South Korean public, and former President Moon Jae-in disbanded the foundation established by the agreement in 2018.¹²⁵

The comfort women issue has had visibility in the United States due in part to Korean-American activist groups. These groups have pressed successfully for the erection of monuments in California and New Jersey commemorating the victims, passage of a resolution on the issue by the New York State Senate, the naming of a city street in the New York City borough of Queens in honor of the victims, and approval to erect a memorial to the comfort women in San Francisco. In 2007, the U.S. House of Representatives passed H.Res. 121 (110^th Congress), calling on the Japanese government to "formally acknowledge, apologize, and accept historical responsibility in … an unequivocal manner" for forcing young women into military prostitution. The resolution passed by voice vote and attracted 167 co-sponsors, driven in part by a June 2007 Washington Post advertisement signed by several Japanese legislators—some of whom Kishida included in his August 2022 cabinet—and academics rejecting the historical basis of the resolution.¹²⁶

Japan's North Korea Policy

Japan has employed a hardline policy toward North Korea, including a virtual embargo on all bilateral trade, and has been a vocal proponent of efforts by United Nations to punish Pyongyang for its human rights abuses and military provocations. Japan is directly threatened by North Korea given the demonstrated capability of Pyongyang's medium-range missiles. In October 2022, North Korea test-launched a long-range ballistic missile that flew over northern Japan, the first test to fly over Japanese territory in five years. North Korea has long-standing animosity toward Japan for its colonialism of the Korean peninsula in the early 20^th century. When multilateral diplomacy with North Korea was more active, one of the potential elements of a broad deal was a Japanese assistance package in recognition of the suffering caused during this period—along the lines of the aid Japan negotiated when it normalized relations with South Korea in 1965—that could be worth several billions of dollars.¹²⁷ North Korea may also target U.S. bases in Japan in the event of a conflict.

In addition to direct security concerns, Japan has prioritized addressing the long-standing issue of Japanese citizens kidnapped in the 1970s and 1980s by North Korean agents. In 2002, then-North Korean leader Kim Jong-il admitted to the abductions and returned five survivors, claiming that the others had perished from natural causes. Japan's government officially identifies 17 individuals as abductees and says that relations can never be normalized without resolution of this issue.¹²⁸

Coordination between Japan and the United States on North Korean policy has fluctuated depending on the approach taken by different U.S. leaders. In general, when the United States has engaged North Korea with diplomacy, Japanese leaders have expressed concern that the abductee issue does not receive sufficient attention. Under the Trump Administration, Tokyo supported Trump's initial "maximum pressure" approach. When Trump turned to personal diplomacy with Kim Jong-un in 2018 and 2019, Japanese officials expressed concern that the United States would make a deal on long-range missiles that left Japan vulnerable. According to many analysts, some Japanese are unconvinced that North Korea will give up its nuclear weapons or missiles and fear that Tokyo's interests vis-à-vis Pyongyang will be marginalized if U.S.–North Korea relations warm.¹²⁹ When the Six-Party Talks (established to deal with North Korea's nuclear weapons program and that included Japan, South Korea, North Korea, China, Russia, and the United States) were active, U.S. officials identified Japan a key actor in a possible resolution of problems on the Korean peninsula, but the multilateral format has been dormant since 2009.

Relations with Southeast Asia

For decades, Japan has pursued productive relations with Southeast Asian countries, providing generous official development assistance and earning broadly positive reviews from regional leaders. In one 2020 survey, Southeast Asians rated Japan as the most trusted major power.¹³⁰ With China's rising influence, Tokyo has redoubled these efforts. Japanese officials frequently visit the region, and the government has launched several initiatives that emphasize capacity-building in the security sphere. Japan's approach generally complements U.S. policy toward Southeast Asian countries, with both the United States and Japan pursuing strong relations with Vietnam and the Philippines in particular. Japan has developed stronger relations with countries such as Cambodia and Burma, in contrast to the United States, which has placed sanctions and restrictions on interactions with their authoritarian regimes. Some scholars argue that by utilizing their respective comparative advantages, the United States and Japan can coordinate for a broader, more strategic joint approach to Southeast Asia.¹³¹ Under the Biden and Trump Administrations, the United States and Japan have launched a number of initiatives to cooperate on infrastructure projects, including many involving significant public-private partnerships, in Southeast Asia.¹³²

Economic Issues

U.S. trade and economic ties with Japan are assessed by many experts and policymakers as highly important to the U.S. national interest. By the most conventional method of measurement, the United States and Japan are the world's largest and third-largest economies (China is number two), accounting for about 30% of the world's GDP in 2021.¹³³ Furthermore, their economies are closely intertwined by two-way trade in goods and services and by investment in each other's economies.

Overview of the Bilateral Economic Relationship

Japan was the United States' fifth-largest export market for goods and services (behind Canada, Mexico, China, and the United Kingdom) and the fifth-largest source of U.S. imports (behind China, Mexico, Canada, and Germany) in 2021. Japan accounted for 4% of total U.S. exports in 2021 ($112 billion) and 5% of total U.S. imports ($168 billion).¹³⁴ The United States was Japan's second-largest goods export market and second-largest source of goods imports (after China) in 2021.¹³⁵ Japan is also a major investor in the United States, accounting for more than 14% of the stock of inward foreign direct investment in 2021 ($690 billion).¹³⁶ U.S. affiliates of Japanese multinational firms employed about 1 million U.S. workers in 2020 (latest available data).

The relative significance of the bilateral economic relationship for the United States has arguably declined as other countries, including China, have become increasingly important global economic actors.¹³⁷ Some of this shift stems from structural changes in the global economic landscape, including the growth of global supply chains. Data from the Organization for Economic Cooperation and Development (OECD) suggest that even on a value-added basis, which adjusts conventional trade data by attributing intermediate components of traded products to their country of origin, Japan accounts for a declining share of U.S. import activity.¹³⁸ At the same time, U.S. import figures may underestimate the importance of Japan and Japanese companies in U.S. consumption patterns since Japanese firms have invested heavily in export-oriented production facilities in Asia and around the world as well as directly in the United States.

U.S. trade with Japan has largely risen over the past few decades. Major economic events have also influenced U.S.-Japan trade patterns in recent years, such as the global economic downturn stemming from the 2008 financial crisis and the COVID-19 pandemic, which dampened both U.S. exports and imports. The decline in the value of the Japanese yen since 2012—which hit historic lows in 2022 and is tied to aggressive monetary stimulus in Japan as part of "Abenomics" (described below)—likely affected both the value and quantity of trade as measured in yen.

The Trump Administration's trade policy largely focused on challenging "unfair" trading practices, boosting U.S. import competition, and reducing bilateral trade deficits and strained U.S. economic relations with Japan and other countries. U.S. and Japanese officials addressed some of these concerns in limited trade agreements reached in 2019 (see below). The Biden Administration emphasizes that while opening markets and reducing trade barriers remains fundamental to its trade agenda, repairing U.S. partnerships and alliances is a major priority.¹³⁹ Key issues in the bilateral trade relationship of ongoing U.S. attention and of priority for some Members of Congress include concerns over market access for U.S. products such as autos and agricultural goods and various nontariff barriers, which U.S. companies argue favor domestic Japanese products.¹⁴⁰ The United States has also prioritized renewed regional economic engagement with its launch of the IPEF with Japan and 12 other trading partners. Japan has welcomed U.S. engagement and analysts see it as a key partner for IPEF (see below). The Japanese government, in addition to major auto producers the EU and South Korea, has recently raised concerns over new requirements for electric vehicle (EV) tax credits in P.L. 117-169 (commonly referred to as the Inflation Reduction Act of 2022) and potential discriminatory effects, which some observers see as potentially injecting some tension in the IPEF talks.¹⁴¹

Despite some renewed trade tensions, the major trend in U.S.-Japan bilateral economic relations over the past two decades has largely been easing tension, in particular compared to the contentious and frequent trade frictions at the fore of the bilateral relationship in the 1980s and early 1990s. By contrast, increasing tension in the U.S.-China economic relationship, particularly threats of decoupling, presents significant risks to Japan given its extensive economic ties with both countries.

Japan's Domestic Economy: Seeking Growth amid Challenges

In their first ever "Economic 2+2" meeting held in July 2022, U.S. and Japanese officials emphasized the need to make their economies more competitive and resilient amid various risks and uncertainties in the global economy.¹⁴² Prime Minister Kishida inherited a challenging domestic economic landscape in the wake of COVID-19 and, more broadly, in building on the legacy of Abe's economic policies. Japan's economy grew rapidly from the end of World War II through the 1980s. However, since the collapse of an asset bubble in the early 1990s, the Japanese government has struggled to end persistent deflation (decreasing prices) and weak economic growth. For the past three decades Japan's GDP growth has been below most advanced economies, including the United States (see Figure 3).¹⁴³

Figure 3. GDP Growth: Japan and United States (10-Year Average of Annual % Change)

Source: World Economic Outlook database, October 2020.

Brief periods of recovery have continually been followed by devastating economic events, including the Asian financial crisis in the late 1990s; the global financial crisis in the late 2000s; and the earthquake, tsunami, and nuclear reactor meltdown in northeastern Japan in 2011. (For more on Japan's "triple disaster," see the "Nuclear Energy" section below.)

Most recently, the global recession caused by the COVID-19 pandemic has been acutely felt in Japan. International tourism, for example, had been a targeted growth sector in recent years before the pandemic effectively halted such activities in 2020, including tourism related to the Tokyo Olympics. Japan's economy contracted by 4.5% in 2020 and grew 1.7% in 2021—a relatively low rebound compared to other advanced economies.¹⁴⁴ The economy underperformed relative to expectations and contracted in the third quarter of 2022, raising further concerns over sustained recovery.¹⁴⁵ As such, the government remains focused on economic recovery from the pandemic, with continued fiscal and monetary support.¹⁴⁶ In October 2022, Kishida announced a new package of economic measures worth ¥39 trillion ($264 billion), building on past stimulus for economic relief from rising food and energy prices.¹⁴⁷ The BoJ, unlike other central banks, remains committed to loose monetary policy, taking actions to prevent interest rate increases.¹⁴⁸ Japan's ultra-low interest rates—the BoJ's policy rate is set at minus 0.1%—have in turn put downward pressure on the yen, which fell to historic lows against the dollar in the fall of 2022, prompting BoJ intervention for the first time since 1998. Japanese officials have historically lauded a weak yen, which makes Japan's exports cheaper and imports more expensive and supports the Kishida government's aim to boost tourism spending, but the weaker yen's effect on import costs is of increasing concern given soaring costs of imported energy and other commodities.¹⁴⁹

In addition to the effects of the pandemic, Japan faces a number of ongoing, long-term structural economic challenges. Primary among these is a rapidly aging and shrinking population, which among other difficulties places increasing strain on a heavily indebted government, as the working age population declines relative to retirees.¹⁵⁰ At 259% of GDP in 2020, the size of Japan's federal government's gross debt relative to its economy was already the largest in the world before it implemented massive fiscal stimulus in response to COVID-19.¹⁵¹ Attempting to put Japan on a path of long-term fiscal sustainability without disrupting the economy in the short-term has proven a difficult balancing act. Consumption tax increases in 2014 and in 2019 pushed down domestic consumption, resulting in sizeable quarterly economic contractions. As a result, Japan's economy was already in the midst of contraction when the COVID-19 shutdowns took effect.

Faced with a declining working-age population and an aversion to immigration, Japan's future economic growth depends on increasing labor productivity (the output of each individual worker), which has grown slowly for the past several decades and declined relative to other major economies.¹⁵² Although the causes of this decline are debated, many economists see Japan's rigid and bifurcated labor market as a significant impediment to improving productivity. The rigidity in the system stems from the traditional Japanese employment model, a result of both cultural and legal structures in which "salaryman" workers accept a grueling work schedule in exchange for the benefit of long-term job security with pay strongly linked to seniority.¹⁵³ Some experts have argued that this "job-for-life" system potentially dampens productivity by lowering the incentive to learn new skills during the course of a career and by impeding the dissemination of innovations and best practices that would normally occur when workers change from one employer to another.¹⁵⁴ Businesses have made the employment system more flexible by expanding the group of nonregular or temporary employees who garner less competitive salaries and face easier dismissal than their salaryman counterparts. Since the 1980s, the share of nonregular workers in the workforce has grown from 15% to nearly 40%, with women accounting for the bulk of the growth.¹⁵⁵ Instead of improving productivity, many analysts see this dual system as having exacerbated the problem while adding to concerns over gender inequality.¹⁵⁶ The Japanese government has attempted to reform the system, including through legal measures to ensure that nonregular workers receive "equal pay for equal work," but enforcing such provisions has proven a challenge.¹⁵⁷ A related challenge, which may also help explain Japan's sluggish wage growth despite its tight labor market, is the disparity in productivity between firms, which is among the highest in the OECD.¹⁵⁸

Former Prime Minister Abe attempted to tackle a number of these domestic challenges through a three-pronged economics program known as "Abenomics." The program's three components or "arrows" consisted of expansionary monetary policy, flexible fiscal stimulus, and structural reforms. The BoJ has deployed unprecedented levels of monetary stimulus, including quantitative easing through massive purchases of government bonds and the use of negative interest rates to encourage lending. Government spending under Abe was also largely stimulative, but some observers argue that consumption tax increases in 2014 and 2019 put unnecessary strain on a still weak economy.¹⁵⁹ The Abe government also made some progress on structural reforms, including in the energy and agriculture sectors and in corporate governance, and sought to spur productivity by opening the Japanese marketplace to greater international competition, lowering tariff and nontariff barriers through a series of trade agreements. Another key component focused on "womenomics," or boosting economic growth through policies to encourage the participation and advancement of women in the workforce (see text box).¹⁶⁰

Overall, the program appears to have had moderate success, primarily by halting deflation. Price levels exceeded their previous 1998 peak for the first time in recent years (see Figure 4).¹⁶⁹ In addition, during Abe's tenure the labor force participation rate increased as additional workers, especially women, joined the labor force, despite a declining working age population (see Figure 5). In 2019, the unemployment rate fell to 2.4%, its lowest levels in more than 25 years, and increased slightly to 2.8% since the pandemic.¹⁷⁰ Some analysts also credit the program with injecting optimism into Japan's economy after its decades-long period of sluggish economic growth coupled with its demographic challenges had given rise to a narrative of Japan as a nation in decline.¹⁷¹

Many analysts agree, however, that further structural reforms remain vital for Japan to maintain its standard of living in the face of persistent demographic challenges.¹⁷² To mitigate these challenges and enhance economic growth, the International Monetary Fund, for example, has recommended prioritizing (1) labor market reforms aimed at increasing participation among women, older workers, and foreigners, and reducing distortive effects of Japan's two-tier labor market system by providing more training for nonregular workers; (2) reforms to increase long-term productivity growth (such as deregulation aimed at facilitating expansion of higher productivity small- and medium-sized enterprises and exit of poor-performing firms); and (3) continued reduction of tariff and nontariff barriers.¹⁷³ The COVID-19 pandemic in particular has further highlighted the structural inequities in the Japanese labor market: Women, young, and nonregular workers who remain overrepresented in vulnerable industries were hit particularly hard.¹⁷⁴

Prime Minister Kishida has pledged to correct for the perceived shortcomings of Abenomics with a focus on a "new form of capitalism" aimed toward reducing social disparities and driving broad-based growth in the economy.¹⁷⁵ His plan calls for more investment in human capital and expanded support of innovation and startups, as well as efforts to decarbonize the economy and advance digitalization. While the response to the economic fallout from the COVID-19 pandemic remains at the forefront, Kishida has emphasized economic priorities including supply chain security (for which he created a new ministerial economic security post), improvements in the use of digital technologies, and green growth.¹⁷⁶

U.S. Tariffs Modified Under the Biden Administration

Unilateral tariff increases on several significant U.S. imports from Japan imposed during the Trump Administration remain in place under the Biden Administration with some modifications.¹⁷⁷ In 2018, President Trump announced tariffs of 25% and 10% on certain U.S. steel and aluminum imports, respectively.¹⁷⁸ The tariffs, imposed under Section 232 of the Trade Expansion Act of 1962 on the premise that such imports threaten U.S. national security, drew criticism from Japan (the fifth-largest supplier of affected U.S. steel imports in 2020) given its close security relationship with the United States. Japan did not retaliate against the tariff actions, in contrast to other trading partners including the EU and China. Japan, however, appeared to be a relatively significant beneficiary of the Department of Commerce's product exclusion process, which allowed U.S. importers to petition the government for tariff relief on individual products from specific countries.¹⁷⁹ Bilateral tensions heightened further when President Trump also declared auto imports, including from Japan, a national security threat, but the U.S. government ultimately refrained from imposing additional tariffs.¹⁸⁰

The Biden Administration has expressed preference for multilateral solutions to the economic issues the Trump Administration sought to address through its tariff actions, including overcapacity in the global steel market, while acknowledging that tariffs are a legitimate and at times necessary U.S. trade policy tool.¹⁸¹ In February 2022, the Biden Administration reached an agreement with Japan to partly lift the Section 232 tariffs through a tariff-rate quota, which exempts up to 1.25 million metric tons of Japanese steel annually from the 25% tariff.¹⁸²

Japanese exports of washing machines and solar panels were also subject to additional temporary U.S. safeguard tariffs imposed under Section 201 of the Trade Act of 1974 to address serious or threatened serious injury from these imports to domestic industries. U.S. safeguards on large washers are currently in effect through 2023. In February 2022, President Biden extended the safeguard tariffs on solar products, with some product exclusions, for four years until 2026.¹⁸³

U.S.-Japan Trade Negotiations

After facing potential Section 232 auto tariffs, Japan agreed to enter into negotiations with the United States on a bilateral trade agreement. In October 2019, the United States and Japan signed two agreements: the U.S.-Japan Trade Agreement (USJTA), which provides for limited tariff reductions and quota expansions to improve market access, and the U.S.-Japan Digital Trade Agreement. The agreements, which took effect in January 2020, without formal action by Congress, constituted what the Trump and Abe Administrations described as "stage one" of a broader U.S.-Japan trade agreement, but further talks did not materialize.

The USJTA commitments cover about 5% of bilateral trade. Under its provisions, the United States is reducing tariffs on mostly industrial goods and certain Japanese niche agricultural products. Japan is reducing or eliminating tariffs on about 600 agricultural tariff lines, such as beef, pork, and cheese, and expanding preferential tariff-rate quotas (which permit access for a specified quantity at a specified tariff rate). Opening Japan's highly protected agriculture sector (the fourth-largest U.S. agriculture market in 2021) and reaching parity with exporters from Japan's FTA partners were key drivers of the agreement for the United States.¹⁸⁴ The USJTA does not cover trade in motor vehicles, a driver of the U.S. bilateral trade deficit and long-standing area of bilateral tension.¹⁸⁵ The agreement on digital trade, an area in which the two countries have broadly similar goals, largely reflects the digital trade rules in the 2020 U.S.-Mexico-Canada Agreement.

The limited scope agreement was a significant shift in approach from recent U.S. FTAs, which typically involve one comprehensive negotiation. The Trump Administration used delegated tariff authorities in Trade Promotion Authority (TPA) to proclaim the tariff provisions, while treating the digital trade agreement, which did not require changes to U.S. law, as an Executive Agreement.¹⁸⁶ Some Members of Congress and U.S. stakeholders raised questions regarding the congressional role in approving trade agreements and urged second-stage talks to achieve a comprehensive deal.¹⁸⁷ Expeditious reduction of Japan's agricultural tariffs, however, was widely supported in Congress and by some U.S. agriculture stakeholders given growing concerns that Japan's other trade agreements disadvantage U.S. exports.¹⁸⁸ At the same time, many industries expressed concerns about the extent of USJTA's new market access or lack of attention to other key issues typically covered in comprehensive FTAs.

Japan has continued to enter trade agreements with its other trading partners. Following U.S. withdrawal from the TPP in 2017, Japan led efforts among the remaining 11 countries to conclude the CPTPP, which took effect in December 2018 for Japan. Japan's FTA with the EU, which went into effect soon after in 2019, is to eventually remove nearly all tariffs, including for example the EU's 10% auto tariff.¹⁸⁹ In addition, in early 2022, the Regional Comprehensive Economic Partnership entered into force and will lower trade barriers among Japan and 14 other Asian members, including China.¹⁹⁰ Some experts and Members of Congress see the advancement of mega-regional trade deals without U.S. participation as limiting U.S. economic and strategic influence in the Asia-Pacific. Other stakeholders and Members have supported the United States not participating in agreements such as the CPTPP.¹⁹¹ Those concerned over limited U.S. influence contend, moreover, that following TPP withdrawal, the United States failed to present an alternative economic strategy in the region.¹⁹² While Japan continued to urge the United States to consider joining the CPTPP, the Biden Administration has currently expressed no such interest.

In May 2022, Japan joined 13 other countries as an inaugural negotiating partner in the U.S.-led IPEF initiative. IPEF appears to be the Administration's response to urging from policymakers, stakeholders, and U.S. allies such as Japan for the United States to advance a more robust trade agenda in the region.¹⁹³ IPEF will not take the form of a traditional comprehensive U.S. FTA and instead involves commitments in four separate "pillars" covering (1) select trade issues (e.g., labor, environment, digital trade, trade facilitation); (2) supply chains; (3) infrastructure and decarbonization; and (4) tax and anti-corruption. IPEF members held their first in-person ministerial meeting in September 2022.¹⁹⁴ The Biden Administration has said it sees the potential agreement as attracting a broad base of U.S. domestic support, which it argues was missing from the TPP.¹⁹⁵ Unlike U.S. FTAs, IPEF will not cover tariffs and comprehensive market access provisions. The Administration has also suggested that IPEF is to take the form of executive agreements, which has prompted concern among some Members who say that the Administration is potentially circumventing "congressional input, authority, and approval."¹⁹⁶ In December 2022, a group of Members of the Senate Finance Committee asserted that Congress must have a role in approving any future IPEF agreement as it aims to regulate foreign commerce and reshape international trade flows.¹⁹⁷ Some Members of Congress and stakeholders support IPEF as an opportunity for the United States to take a lead role in establishing updated trade and economic rules in partnership with key partners in the region. At the same time, some observers have raised concerns over IPEF's potential lack of substantive commitments, including in market access, and overall ambition to deepen economic linkages.¹⁹⁸ Japan and IPEF partner countries have generally welcomed U.S. engagement via the framework but also voiced various concerns and hopes for the agreement.¹⁹⁹

The Biden Administration is concurrently pursuing other bilateral initiatives and economic engagement with Japan. It announced a new Competitiveness and Resilience (CoRe) Partnership with Japan during the April 2021 bilateral summit, which is to focus on cooperation in technological innovation.²⁰⁰ The Administration also launched a cooperative U.S.-Japan Partnership on Trade to advance collaboration and engagement on common areas of interest and address specific trade issues.²⁰¹ The Administration has emphasized the importance of working with allies such as Japan to meet the challenges posed by China. The United States, European Union, and Japan recently renewed trilateral talks, which had been held intermittently since 2018, "to address the global challenges posed by non-market policies and practices of third countries that undermine and negatively affect our workers and businesses."²⁰²

Energy and Climate Issues

Unlike security cooperation, which has reflected continuity across recent U.S. and Japanese governments, U.S.-Japan cooperation on energy, climate, and other environmental issues has been more prone to changing priorities by U.S. and Japanese political leaders.

Energy

Enhancing energy security is a high priority for Japan's policymakers. The country's archipelagic geography and vulnerability to natural disasters, limited domestic energy sources, and under-connected energy transmission infrastructure make it vulnerable to energy supply and transmission disruptions. Japan's reliance on imported oil and natural gas for more than 90% of its energy needs has led policymakers to seek to diversify the country's energy sources.²⁰³

The United States and Japan convene several energy-focused dialogues and initiatives.²⁰⁴ These aim to promote shared energy security, accelerate "the clean energy transition" in both countries, and facilitate public-private efforts to provide access to "affordable, clean, and reliable energy" in third countries, particularly in Southeast Asia and the Pacific Islands.²⁰⁵

Nuclear Energy

Japan is undergoing a national debate over the future of nuclear energy, with major implications for Japan's energy diversification efforts, U.S. businesses operating in Japan, and nuclear safety and nonproliferation measures worldwide. In 2010, nuclear power was providing roughly 30% of Japan's power generation capacity, with the Japanese government aspiring to increase that share to as much as 40% by 2030.²⁰⁶

However, the policy to further expand nuclear power was abruptly reversed in the aftermath of the March 11, 2011, natural disasters and meltdowns at the Fukushima Dai-ichi nuclear power plant (see text box, below). Public trust in the safety of nuclear power collapsed, and a vocal antinuclear political movement emerged.²⁰⁷ This movement tapped into an undercurrent of popular antinuclear sentiment, a legacy of the U.S. atomic bomb attacks on Japan in 1945. Following the disaster, all of the country's 54 nuclear reactors were shut down until 2015, when some gradually began to come back online. As of October 2022, Japan had 33 operable reactors, with two more under construction.²⁰⁸ The drawdown of nuclear power generation resulted in many short- and long-term consequences for Japan: increased fossil fuel imports; rising electricity costs for residences and businesses; heightened risk of blackouts in the summer; widespread energy conservation efforts by businesses, government agencies, and ordinary citizens; and significant losses for and near-bankruptcy of major utility companies.²⁰⁹

Since 2015, the Japanese government has aspired for nuclear energy to account for 20%-22% of Japan's power supply by 2030.²¹⁰ Public opinion on the role of nuclear power in Japan remains divisive, however. One 2022 poll suggested that public support for restarting inactive reactors reached 53%, the highest level of support since 2011.²¹¹ Russia's 2022 invasion of Ukraine appears to be shaping debates over nuclear power in Japan, with some arguing that the country should expand nuclear power to reduce dependency on Russian fossil fuel imports and others arguing that Russia's targeting of Ukrainian nuclear facilities demonstrates the vulnerability and danger nuclear reactors present in wartime.²¹² U.S.-Japan cooperation on nuclear energy ranges from technical collaboration (to extend reactor life and ensure a secure fuel supply, for example) to leveraging financial, technical, and commercial tools to expand nuclear power capacity elsewhere in the Indo-Pacific region. "Fully utilizing existing nuclear power" is a goal of the U.S-Japan "CoRe Partnership," which aims to address climate change and promote green, sustainable global economic growth, according to the White House.²¹³

Natural Gas

Following the "triple disaster" of 2011, natural gas grew as a share of Japan's energy mix. It constitutes approximately one-quarter of Japan's energy mix.²¹⁴ More than 90% of Japan's natural gas consumption comes from liquefied natural gas (LNG) imports.²¹⁵

LNG is an area where the United States and Japan claim to have complementary interests. Both governments foresee LNG contributing to their respective energy security needs, and the sector emerged as a priority area of energy cooperation during the Trump and Abe Administrations.²¹⁶ A Clean Energy and Energy Security Initiative established by the two countries in 2022 aims to, among other things, promote stable and sufficient energy supply through LNG.²¹⁷ Japan was the third-largest destination for U.S. LNG exports in 2021,²¹⁸ while the United States is the world's third-largest LNG exporter, set to become the top exporter by 2025.²¹⁹ Japanese companies are invested in U.S. LNG projects, and Japan is increasing its imports of U.S. LNG. Since 2016, Japan has pursued a strategy of trying to establish itself as a regional LNG trading and pricing hub.²²⁰

Climate Change

On climate policy, Tokyo has taken cues on from Washington and shifted its own priorities in response to U.S. pressure.²²¹ During the Obama Administration, Japan and the United States cooperated on a wide range of bilateral and multilateral environmental and climate initiatives. During the Trump Administration, cooperation shifted away from climate change toward regional energy security in service of the two countries' shared interest in a "free and open Indo-Pacific." Facing pressure from the Biden Administration, Japan since 2021 has embraced more ambitious climate-related targets, and leaders from both countries have signaled that cooperation on the "climate crisis" is "a pillar of the U.S.-Japan bilateral partnership."²²² In 2021, Washington and Tokyo announced a "U.S.-Japan Climate Partnership" to "reinforce" existing cooperation in several "priority areas" such as climate finance, advanced clean energy technology development, and supply chain resilience and diversity "to support energy security and the clean energy transition."²²³

Japan's 2021 Nationally Determined Contribution to global climate actions notes that the country "aims to reduce its greenhouse gas emissions by 46 percent" by FY2030 (from 2013 levels) and aims to realize carbon neutrality by 2050.²²⁴ Climate Action Tracker, an international research consortium that rates countries' progress toward the Paris Agreement goal of "holding warming well below 2℃, and pursuing efforts to limit warning to 1.5℃," rated Japan "insufficient" in 2021 and 2022, a slight improvement from "highly insufficient" ratings in previous years.²²⁵

Japanese Politics

The LDP Coalition's Control over the Diet

Since 2012, the locus of Japanese politics has been centered in the dynamics within Japan's ruling LDP and its smaller coalition partner, the Komeito party. (The coalition has won every parliamentary election since December 2012. Since that time, Japan's opposition parties have generally struggled to reach double digits in many public opinion polls.) Prime Minister Kishida's LDP enjoys a dominant position in the Japanese political world. With Komeito, the LDP holds nearly two-thirds of the seats in the Lower House of Japan's Diet and nearly 60% of the seats in the Upper House. (See Figure 6 for a display of major parties' strength in Japan's parliament.) The LDP has been in this position of parliamentary supremacy since former Prime Minister Abe led it back into power in December 2012. Since then, the LDP, in coalition with the Komeito party, has won victories in seven consecutive parliamentary elections in July 2013, December 2014, July 2016, October 2017, July 2019, October 2021, and July 2022. The last two wins occurred under the leadership of Kishida, whom the LDP selected as party leader in September 2021.

Since 1955, the LDP has ruled Japan for all but about four years. Its most recent, and longest, time out of power was in 2009-2012, when the left-of-center Democratic Party of Japan (DPJ) ruled the country. Japan's political stability since 2012 stands in contrast to the turmoil of the 2007-2012 period, when the premiership changed hands six times in those six years, and no party controlled both the Lower and Upper Houses of the parliament for more than a few months.

Figure 6. Party Affiliation in the Japanese Diet (Parliament) The LDP and Its Partner, Komeito, Control the Lower House, Which Elects the Prime Minister.

Source: Japan's Lower and Upper Houses of the Diet.

The LDP's reliance on Komeito to maintain its political dominance extends beyond the latter party's crucial Upper House seats, which give the coalition a majority in that chamber. Komeito is a political offshoot of the Soka Gakkai Buddhist movement that is able to mobilize its followers into a reliable voter bloc in many electoral districts. According to one estimate, by 2019 the organization was providing 5%-20% of the votes for each LDP candidate.²²⁶ Komeito's outsized political importance also manifests itself on selected security issues, given Soka Gakkai's pacifist leanings. Komeito arguably influenced former Prime Minister Abe to water down a number of the provisions of his 2014 reforms allowing Japan to participate in collective self-defense activities. Komeito's more pacifist tendencies also appeared to have complicated Abe's unsuccessful efforts to revise Japan's constitution, particularly its pacifist-oriented Article 9. Ultimately, Abe was unable to realize these reforms during his nearly eight years in office.²²⁷

Revising the constitution has been a long-standing goal of Japanese conservatives, who have come to dominate the LDP. Many of these politicians in the LDP's dominant wing are also known for advocating nationalist (and in some cases ultra-nationalist) views that many argue embrace a revisionist view of Japanese history that rejects the narrative of Imperial Japanese aggression and victimization of other Asians in the first half of the 20^th century.²²⁸ In contrast, Kishida is generally not associated with the LDP's nationalist wing and, prior to seeking the premiership in 2021, had tended to advocate a more dovish approach to foreign and defense policy matters. However, as with many LDP members of parliament, Kishida is a member of Nippon Kaigi Kyokai, a group that contends Japan should be applauded for liberating much of East Asia from Western colonial powers in the 20^th century, that the 1946-1948 Tokyo War Crimes tribunals were illegitimate, and that the killings by Imperial Japanese troops during the 1937 "Nanjing massacre" were exaggerated or fabricated.²²⁹

Japan's Main Opposition Parties

Since 2012, Japan's opposition parties have generally struggled to reach double digits in many public opinion polls, compared to over 30% for the LDP. In general, disarray among Japan's opposition parties has arguably contributed to the LDP-Komeito coalition's electoral success since the center-left DPJ lost power in December 2012. The DPJ subsequently split, and one of its successor parties, the Constitutional Democratic Party, has been the largest opposition party since 2019. Another opposition grouping, the center-right Nippon Ishin (Japan Innovation) Party, which has strong roots in the Osaka-Kyoto region, increased its seat total in the July 2022 Upper House election. Its members, along with those of the smaller Democratic Party for the People, have supported revising the constitution and a more robust defense policy. In the future, they could potentially provide the LDP with additional votes to offset the possible loss of Komeito votes on those issues.

Popular Views on Japan's Security

Public opinion polls in Japan reveal a citizenry that is considerably more concerned about threats to Japan but still reluctant to drastically revise Japan's approach to security. In one poll, just over one-third of respondents favored increasing defense spending to 2% of GDP, in contrast to the enthusiasm among many Japanese politicians.²³⁰ Another poll showed just over half supporting some increase in the defense budget.²³¹ Further, the LDP's coalition partner, the Komeito party, has expressed major reservations about shifting to more security activism.²³²

Japan's Demographic Challenge

Japan's combination of a low birth rate, strict immigration practices, and a shrinking and rapidly aging population presents policymakers with a significant challenge. Polls suggest that Japanese women are avoiding marriage and childbearing because of the difficulty of combining career and family in Japan: The fertility rate is 1.36, below the 2.1 rate necessary to sustain population size.²³³ Japan's population growth rate is -0.2%, according to the World Bank, and its current population of 126 million is projected to fall to about 102 million by midcentury.²³⁴ Concerns about a huge shortfall in the labor force have grown, particularly as the elderly require more care. The ratio of working-age persons to retirees is projected to fall from 5:2 around 2010 to 3:2 in 2040, reducing the resources available to pay for the government social safety net.²³⁵ Japan's immigration policies have traditionally been strictly limited, limiting one potential source of new workers. In 2019, the Japanese government introduced a new visa policy aiming to attract 500,000 foreigners to Japan's workforce by 2025 but is not on track to meet this goal.²³⁶ Some scholars have raised concerns that the United States may face challenges as its Indo-Pacific allies—especially Japan and South Korea but also Thailand, Australia, and New Zealand—struggle to keep their economies healthy as the labor force declines.²³⁷