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On June 28, 1995, the United States and Japan reached a settlement in a long-running dispute over access to Japan's market for automobiles and parts. 100-percent tariffs by the United States on imports of luxury cars from Japan had been threatened under a Section 301 unfair trade practices case dealing with the aftermarket for autoparts in Japan. This report describes the dispute, the settlement, and questions and issues that still remain.

Measured in dollars, Japan's global trade surplus stands at a record level. Also in recent months the Japanese yen has appreciated markedly against the dollar. The two events seem to foster a sizable degree of concern among many Americans, perhaps, taken to be evidence of Japan's economic success and the United States' economic failure. Things need not be as they seem, however.

On Oct. 7, 1992, Hong Kong's new Governor Christopher Patten unveiled proposals to expand the voting franchise in Hong Kong and broaden the scope of democratic institutions. Patten's proposals reflected a growing desire on the part of the colonial government and the people of Hong Kong that, in the aftermath of the 1989 Tiananmen crackdown, Hong Kong should erect safeguards against capricious Chinese government action after 1997. The proposals were seen by the British authorities as consistent with the 1984 Sino-British Joint Declaration -- the agreement governing Hong Kong's transfer to Chinese rule, but Beijing disagreed.

The United States and Japan are closely tied economically. Japan ranks second only to Canada as the largest U.S. export market. Japan is the leading market for American agricultural exports, such as corn and meat; for U.S. crude materials such as wood; and for U.S.-produced aircraft. Japan is also the second largest supplier of U.S. imports. These include cars, consumer electronics, telecommunications equipment, and computers. The United States ranks as Japan's number one export market and import supplier.

H.R. 1977, passed by the House July 18, 1995, appropriated $87 million for FY1996 for the "orderly closure" of the Bureau of Mines within the Department of Interior. However, when the Senate passed H.R. 1977 on August 9, it approved continuation of the Bureau and appropriated $128 million for FY1996.

Deficient productive capacity has not yet caused an oil crisis, but that does not mean it never will. Significant increases in world oil demand will have to be met primarily from Persian Gulf supplies. This is a region with a history of wars, illegal occupations, soups, revolutions, sabotage, terrorism, and oil embargoes. To these possibilities may be added growing Islamist movements with various antipathies to the West. If oil production were constrained, oil prices could rise abruptly along with adverse world economic repercussions. If the IEA and EIA are correct on the demand side, deficient world oil productive capacity could cause an oil crisis within 15 years and political disruptions in Saudi Arabia could cause one sooner. However, if the increases in world oil demand were more moderate, and there is long-term relative peace in the Middle East, with increasing foreign participation in upstream oil activities, a business as usual world oil demand and supply situation would be a likely scenario for much of the next century.

The Clean Air Act (CAA) was amended in 1990 requiring the sale of cleaner-burning reformulated gasoline (RFG) in the nine worst nonattainment areas. Since the program began on January 1, 1995, legislation has been introduced to delay or repeal the requirement. RFG must contain oxygenates and should result in a 15 percent reduction of volatile organic compounds (VOCs) and air toxins. While the CAA was being debated, affected parties (e.g., automobile manufacturers, oil industry, and agricultural interests) did not agree on whether and how gasoline should be reformulated.

Policymakers on both sides of the Pacific turned their attention to Southeast Asian security issues in late July 1995. The occasion was the Annual Association of Southeast Asian Nations (ASEAN)[1] ministers' meeting; followed by the annual post-ministerial "dialogue" among the ASEAN and other Asian- Pacific ministers (including the U.S. Secretary of State); followed in turn by the second annual ASEAN Regional Forum (ARF), a nascent security framework for the area including participation by the U.S., China, Japan, and Russia.