A prominent feature of Japan's capitalism consists of families of companies called keiretsu that are linked by crossholdings of stock shares, intra-group financing, and certain coordinating mechanisms. Two types of keiretsu exist: large horizontally organized industrial conglomerates, such as Mitsubishi, Mitsui, and Sumitomo, and vertically integrated manufacturers, such as Toyota, Nippon Steel, and Matsushita Electric. They have become a contentious issue in U.S. trade negotiations with Japan for several reasons.

Discussions in Japan in May 1992 related to potential agreements at the September 1992 Russian-Japanese summit were keyed to the central question, Will the barriers to significant commercial cooperation involving Russia, Japan and the United States in Russian Siberia be removed? [1] From these discussions among key Japanese industrialists, bankers, government officials and academics who influence policy, came a tentative "yes", if four conditions are met. A positive outcome would thus seem more likely than at any previous time. Such an outcome would likely promote profitable trade and investment, creating jobs in U.S. enterprises and serve as a vehicle for mutually beneficial U.S.-Japanese cooperation.

This report discusses the relationship between the United States and Japan, including Japanese efforts to support the U.S. in the wake of the September 11th, 2001 terrorist attacks and the two countries' economic ties. This report also discusses the general political atmosphere of Japan.

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