Trade with Japan: a question of balance.

• Author: Richardson, Jeff
• Position: International Trade

Trade With Japan: A Question of Balance

For years, Japan was the trading partner that Alaskans loved to hate. Long powerless to protect local fisheries from foreign incursions, struggling to throw off the cobwebs spun by years of federal economic inertia prior to statehood and constantly embattled with domineering commercial interests in Seattle, state residents often sounded alarm at the prevalence of Japanese investment in Alaska resource production. To many, it seemed that the Japanese were high on a long list of interlopers who kept a young state in economic bondage, preying on provincial naivete and insecurity.

Now that the partnership between Alaska and Japan is three decades old, the emotional, sometimes paranoid, rhetoric makes fewer headlines. Still, with the rest of America, Alaskans ponder ways to emulate Japanese business prowess. And among some there is a persistent concern that Alaskans are not realizing all possible benefit from the connection with Japan.

"I think we're vassals to Japan, only because we provide natural products, and they buy such a volume of them, they dictate the price," says Jane Angvik, assistant commissioner of the Alaska Department of Commerce and Economic Development.

"I think we are perceived (by the Japanese) as a third world nation that is abundant in natural resources that they can buy in their natural state. The volume is astounding. They buy 80 percent of our stuff; maybe 85 percent of our fish. It's a staggering amount. It becomes the only game in town."

Japan leads all other nations in the volume of its trade with Alaska in several key areas, including fish and other marine products, metallic ores and concentrates, lumber and wood products, paper and allied products and petroleum and coal products. In almost all areas, trade has been on the rise in recent years, especially petroleum, coal, fish products and lumber and wood products. According to the U.S. Department of Commerce, Alaska's total exports to Japan were worth nearly $1.9 billion, a 23 percent increase over the year before.

Angvik says the marketing of Alaskan seafood illustrates the Japanese trade muscle that keeps the state at a disadvantage: "From their perspective, they get fish from many sources. We represent 40 percent of their source, they represent 90 percent of our market. We are dependent on them for our market."

Jim Campbell is a Republican candidate for governor with 10 years experience on the North Pacific Fisheries Management Council. From that position he helped oversee the eventual Americanization of Alaska's fisheries. Campbell agrees with those who say the partnership with Japan has matured. The establishment of shore-based surimi plants in the Aleutians to process bottomfish into edible paste is a notable success story. But Campbell notes that Alaskan plants could be manufacturing additional products based on the surimi.

Losing their fishing rights was a blow to the Japanese. "It created a substantial hardship for them," says Campbell. But while Americans from Alaska and the Pacific Northwest have duked it out for control of North Pacific and Bering Seas fisheries harvest, important processing opportunities have been overlooked and Japanese companies have quietly re-entered the scene.

"They went out fighting. They lost out, but now they're buying their way back. What concerns me is it's a steady supply of jobs to them. They have outsnookered us everytime. Just look at the history of Alaska," says Campbell. Loren Lounsbury, a former commissioner of Commerce and Economic Development, now a consultant to businesses operating in the Orient, warns of the dangers of over-simplifying any analysis of Alaska's relationship with Japan. He agrees Alaska could be profiting more from trade, but notes that many people ignore the long-term commitment the Japanese have made to Alaska.

"Of course you'd like to have all the value-added possible. We haven't been taking advantage of these situations," Lounsbury says. But he cites the example of Alaska Pulp Co. in Sitka, one of the original targets for Japanese investment in the 1950s.

"That plant didn't make money for a long, long time," he points out. "They're in it for the long haul. They're willing to take the ups and downs while many American companies are not." The result, Lounsbury says, is jobs for Alaskans where no jobs would otherwise exist.

Most observers agree there are ways for Alaskans to earn more from trading with Japan. Although there is no unanimity about the best approach to accomplishing this goal, one frequently cited development has sparked considerable, and hopeful, speculation about the future of the Japanese market: the rise of the Japanese consumer.

Pio Park, vice president for corporate...