The Article II Mandate: Forging a Stronger Economic Alliance between the United States and Japan

November 28, 2018

The U.S.-Japan alliance has been a force for peace and prosperity in the Indo-Pacific region for nearly 60 years. Article II of the Treaty of Mutual Cooperation and Security mandates that the two allies “seek to eliminate conflict in their international economic policies and…encourage economic collaboration between them.” Despite persistent bilateral economic tensions, U.S. and Japanese strategic interests in the Indo-Pacific region are substantially aligned. Both Washington and Tokyo seek to ensure regional security and stability, expand trade and other economic opportunities, and support universal democratic norms. By working together to advance their preferred rules and norms, Washington and Tokyo can ensure better economic outcomes for themselves and others.

To explore opportunities for greater economic cooperation between the United States and Japan in third countries, the Center for Strategic and International Studies (CSIS) in Washington and the Asia Pacific Initiative (API) in Tokyo embarked on a joint research project using a case-study approach to examine four countries (Myanmar, Vietnam, India, and South Korea) and two institutional arrangements (regional trade architecture and the G7) where the United States and Japan have aligned interests. We found that shared interests and goals of the United States and Japan transcend today’s bilateral trade tensions, and despite China’s growing influence and assertive behavior there nevertheless remains a strong demand in the region for U.S. and Japanese leadership. Washington and Tokyo should, therefore, work to better coordinate their economic engagement in the region.

Yoichi Funabashi is the co-founder and chairman of the Asia Pacific Initiative. Matthew P. Goodman is senior vice president, senior adviser for Asian Economics. Ann Listerud is research associate, Simon Chair in Political Economy.