Geography
Area: 377,864 sq. km. (145,902 sq. mi.); slightly smaller than California.
Cities: Capital--Tokyo. Other cities--Yokohama, Osaka, Nagoya, Sapporo, Kobe, Kyoto, Fukuoka.
Terrain: Rugged, mountainous islands.
Climate: Varies from subtropical to temperate.

People
Nationality: Noun and adjective--Japanese.
Population (2007 est.): 127.5 million.
Population growth rate (2007 est.): -0.088%.
Ethnic groups: Japanese; Korean (0.5%).
Religions: Shinto and Buddhist; Christian (about 0.7%).
Language: Japanese.
Education: Literacy--99%.
Health (2007 est.): Infant mortality rate--2.8/1,000. Life expectancy--males 78 yrs., females 85 yrs.
Work force (67 million, 2003): services--42%; trade, manufacturing, mining, and construction--46%; agriculture, forestry, fisheries--5%; government--3%.

Government
Type: Constitutional monarchy with a parliamentary government.
Constitution: May 3, 1947.
Branches: Executive--prime minister (head of government). Legislative--bicameral Diet (House of Representatives and House of Councillors). Judicial--civil law system based on the model of Roman law.
Administrative subdivisions: 47 prefectures.
Political parties: Liberal Democratic Party (LDP), Democratic Party of Japan (DPJ), New Clean Government Party (Komeito), Japan Communist Party (JCP), Social Democratic Party (SDP).
Suffrage: Universal at 20.

Economy
GDP (2006 est.): $4.883 trillion (official exchange rate); $3.902 trillion (PPP).
Real growth rate (2006): 2.2%.
Per capita GDP (2006 est. PPP): $34,155.
Natural resources: Fish and few mineral resources.
Agriculture: Products--rice, vegetables, fruit, milk, meat, silk.
Industry: Types--machinery and equipment, metals and metal products, textiles, autos, chemicals, electrical and electronic equipment.

GEOGRAPHY
Japan, a country of islands, extends along the eastern or Pacific coast of Asia. The four main islands, running from north to south, are Hokkaido, Honshu (or the mainland), Shikoku, and Kyushu. Okinawa Island is about 380 miles southwest of Kyushu. About 3,000 smaller islands are included in the archipelago. In total land area, Japan is slightly smaller than California. About 73% of the country is mountainous, with a chain running through each of the main islands. Japan's highest mountain is the world famous Mt. Fuji (12,385 feet). Since so little flat area exists, many hills and mountainsides are cultivated all the way to the summits. As Japan is situated in a volcanic zone along the Pacific depth, frequent low intensity earth tremors and occasional volcanic activity are felt throughout the islands. Destructive earthquakes occur several times a century. Hot springs are numerous and have been developed as resorts.

Temperature extremes are less pronounced than in the United States, but the climate varies considerably. Sapporo, on the northernmost main island, has warm summers and long, cold winters with heavy snowfall. Tokyo, Nagoya, Kyoto, Osaka, and Kobe, in central and western parts of the largest island of Honshu, experience relatively mild winters with little or no snowfall and hot, humid summers. Fukuoka, on the island of Kyushu, has a climate similar to that of Washington, DC, with mild winters and short summers. Okinawa is subtropical.

PEOPLE
Japan's population, currently some 128 million, has experienced a phenomenal growth rate during the past 100 years as a result of scientific, industrial, and sociological changes, but this has recently slowed because of falling birth rates. In 2005, Japan's population declined for the first time, two years earlier than predicted. High sanitary and health standards produce a life expectancy exceeding that of the United States.

Japan is an urban society with only about 4% of the labor force engaged in agriculture. Many farmers supplement their income with part-time jobs in nearby towns and cities. About 80 million of the urban population is heavily concentrated on the Pacific shore of Honshu and in northern Kyushu. Major population centers include: Metropolitan Tokyo with approximately 14 million; Yokohama with 3.3 million; Osaka with 2.6 million; Nagoya with 2.1 million; Sapporo with 1.6 million; Kyoto with 1.5 million; Kobe with 1.4 million; and Kitakyushu, Kawasaki, and Fukuoka with 1.2 million each. Japan faces the same problems that confront urban industrialized societies throughout the world: overcrowded cities, congested roads, air pollution, and rising juvenile delinquency.

Shintoism and Buddhism are Japan's two principal religions. Shintoism is founded on myths and legends emanating from the early animistic worship of natural phenomena. Since it was unconcerned with problems of afterlife which dominate Buddhist thought, and since Buddhism easily accommodated itself to local faiths, the two religions comfortably coexisted, and Shinto shrines and Buddhist temples often became administratively linked. Today many Japanese are adherents of both faiths. From the 16th to the 19th century Shintoism flourished.

Adopted by the leaders of the Meiji restoration, Shintoism received state support and was cultivated as a spur to patriotic and nationalistic feelings. Following World War II, state support was discontinued, and the emperor disavowed divinity. Today Shintoism plays a more peripheral role in the life of the Japanese people. The numerous shrines are visited regularly by a few believers and, if they are historically famous or known for natural beauty, by many sightseers. Many marriages are held in the shrines, and children are brought there after birth and on certain anniversary dates; special shrine days are celebrated for certain occasions, and numerous festivals are held throughout the year. Many homes have "god shelves" where offerings can be made to Shinto deities.

Buddhism first came to Japan in the 6th century and for the next 10 centuries exerted profound influence on its intellectual, artistic, social, and political life. Most funerals are conducted by Buddhist priests, and many Japanese visit family graves and Buddhist temples to pay respects to ancestors.

Confucianism arrived with the first great wave of Chinese influence into Japan between the 6th and 9th centuries. Overshadowed by Buddhism, it survived as an organized philosophy into the late 19th century and remains today as an important influence on Japanese thought and values.

Christianity, first introduced into Japan in 1549, was virtually stamped out by the government a century later; it was reintroduced in the late 1800s and has spread slowly. Today it has 1.4 million adherents, including a relatively high percentage of important figures in education and public affairs.

Beyond the three traditional religions, many Japanese today are turning to a great variety of popular religious movements normally lumped together under the name "new religions." These religions draw on the concept of Shinto, Buddhism, and folk superstition and have developed in part to meet the social needs of elements of the population. The officially recognized new religions number in the hundreds, and total membership is reportedly in the tens of millions.

HISTORY
Japanese legend maintains that Japan was founded in 600 BC by the Emperor Jimmu, a direct descendant of the sun goddess and ancestor of the present ruling imperial family. About AD 405, the Japanese court officially adopted the Chinese writing system. Together with the introduction of Buddhism in the sixth century, these two events revolutionized Japanese culture and marked the beginning of a long period of Chinese cultural influence. From the establishment of the first fixed capital at Nara in 710 until 1867, the emperors of the Yamato dynasty were the nominal rulers, but actual power was usually held by powerful court nobles, regents, or "shoguns" (military governors).

Contact With the West
The first recorded contact with the West occurred about 1542, when a Portuguese ship, blown off its course to China, landed in Japan. During the next century, traders from Portugal, the Netherlands, England, and Spain arrived, as did Jesuit, Dominican, and Franciscan missionaries. During the early part of the 17th century, Japan's shogunate suspected that the traders and missionaries were actually forerunners of a military conquest by European powers. This caused the shogunate to place foreigners under progressively tighter restrictions. Ultimately, Japan forced all foreigners to leave and barred all relations with the outside world except for severely restricted commercial contacts with Dutch and Chinese merchants at Nagasaki. This isolation lasted for 200 years, until Commodore Matthew Perry of the U.S. Navy negotiated the opening of Japan to the West with the Convention of Kanagawa in 1854.

Within several years, renewed contact with the West profoundly altered Japanese society. The shogunate resigned, and the emperor was restored to power. The "Meiji restoration" of 1868 initiated many reforms. The feudal system was abolished, and numerous Western institutions were adopted, including a Western legal and educational system and constitutional government along parliamentary lines.

In 1898, the last of the "unequal treaties" with Western powers was removed, signaling Japan's new status among the nations of the world. In a few decades, by creating modern social, educational, economic, military, and industrial systems, the Emperor Meiji's "controlled revolution" had transformed a feudal and isolated state into a world power.

Wars With China and Russia
Japanese leaders of the late 19th century regarded the Korean Peninsula as a potential threat to Japan. It was over Korea that Japan became involved in war with the Chinese Empire in 1894-95 and with Russia in 1904-05. The war with China established Japan's domination of Korea, while also giving it the Pescadores Islands and Formosa (now Taiwan). After Japan defeated Russia in 1905, the resulting Treaty of Portsmouth awarded Japan certain rights in Manchuria and in southern Sakhalin, which Russia had received in 1875 in exchange for the Kurile Islands. Both wars gave Japan a free hand in Korea, which it formally annexed in 1910.

World War I to 1952
World War I permitted Japan, which fought on the side of the victorious Allies, to expand its influence in Asia and its territorial holdings in the Pacific. The postwar era brought Japan unprecedented prosperity. Japan went to the peace conference at Versailles in 1919 as one of the great military and industrial powers of the world and received official recognition as one of the "Big Five" of the new international order. It joined the League of Nations and received a mandate over Pacific islands north of the Equator formerly held by Germany.

During the 1920s, Japan progressed toward a democratic system of government. However, parliamentary government was not rooted deeply enough to withstand the economic and political pressures of the 1930s, during which military leaders became increasingly influential.

Japan invaded Manchuria in 1931 and set up the puppet state of Manchukuo. In 1933, Japan resigned from the League of Nations. The Japanese invasion of China in 1937 followed Japan's signing of the "anti-Comintern pact" with Nazi Germany the previous year and was part of a chain of developments culminating in the Japanese attack on the United States at Pearl Harbor, Hawaii, on December 7, 1941.

After years of war, resulting in the loss of 3 million Japanese lives and the atomic bombings of Hiroshima and Nagasaki, Japan signed an instrument of surrender on the U.S.S. Missouri in Tokyo Harbor on September 2, 1945. As a result of World War II, Japan lost all of its overseas possessions and retained only the home islands. Manchukuo was dissolved, and Manchuria was returned to China; Japan renounced all claims to Formosa; Korea was occupied and divided by the U.S. and the U.S.S.R.; southern Sakhalin and the Kuriles were occupied by the U.S.S.R.; and the U.S. became the sole administering authority of the Ryukyu, Bonin, and Volcano Islands. The 1972 reversion of Okinawa completed the U.S. return of control of these islands to Japan.

After the war, Japan was placed under international control of the Allies through the Supreme Commander, Gen. Douglas MacArthur. U.S. objectives were to ensure that Japan would become a peaceful nation and to establish democratic self-government supported by the freely expressed will of the people. Political, economic, and social reforms were introduced, such as a freely elected Japanese Diet (legislature) and universal adult suffrage. The country's constitution took effect on May 3, 1947. The United States and 45 other Allied nations signed the Treaty of Peace with Japan in September 1951. The U.S. Senate ratified the treaty in March 1952, and under the terms of the treaty, Japan regained full sovereignty on April 28, 1952.

GOVERNMENT AND POLITICAL CONDITIONS
Japan is a constitutional monarchy with a parliamentary government. There is universal adult suffrage with a secret ballot for all elective offices. Sovereignty, previously embodied in the emperor, is vested in the Japanese people, and the Emperor is defined as the symbol of the state.

Japan's Government is a parliamentary democracy, with a House of Representatives and a House of Councillors. Executive power is vested in a cabinet composed of a prime minister and ministers of state, all of whom must be civilians. The prime minister must be a member of the Diet and is designated by his colleagues. The prime minister has the power to appoint and remove ministers, a majority of whom must be Diet members. The judiciary is independent.

The five major political parties represented in the National Diet are the Liberal Democratic Party (LDP), the Democratic Party of Japan (DPJ), the New Clean Government Party (Komeito), the Japan Communist Party (JCP), and the Social Democratic Party (SDP).

Japan's judicial system, drawn from customary law, civil law, and Anglo-American common law, consists of several levels of courts, with the Supreme Court as the final judicial authority. The Japanese constitution includes a bill of rights similar to the U.S. Bill of Rights, and the Supreme Court has the right of judicial review. Japanese courts do not use a jury system, and there are no administrative courts or claims courts. Because of the judicial system's basis, court decisions are made in accordance with legal statutes. Only Supreme Court decisions have any direct effect on later interpretation of the law.

Japan does not have a federal system, and its 47 prefectures are not sovereign entities in the sense that U.S. states are. Most depend on the central government for subsidies. Governors of prefectures, mayors of municipalities, and prefectural and municipal assembly members are popularly elected to 4-year terms.

Recent Political Developments
The post-World War II years saw tremendous economic growth in Japan, with the political system dominated by the Liberal Democratic Party (LDP). That total domination lasted until the Diet lower house elections in July 1993, in which the LDP failed for the first time to win a majority. The LDP returned to power in 1994, with majorities in both houses of the Diet. In elections in July 2007, the LDP lost its majority in the upper house, with the DPJ now holding the largest number of seats but with no party possessing a clear majority. Currently, the LDP maintains a majority in the lower house.

Shinzo Abe was elected Prime Minister in a Diet vote in September 2006. Abe was the first prime minister to be born after World War II and the youngest prime minister since the war. However, Abe resigned abruptly on September 12, 2007, not long after the LDP lost control of the upper house in the July 2007 elections in which the LDP's handing of domestic issues was a leading issue. Yasuo Fukuda of the LDP was elected Prime Minister by the Diet on September 25, 2007 to replace Abe. Fukuda, whose father served as Prime Minister in the late 1970s, is known as a moderate and for his experience building consensus behind the scenes.

Principal Government Officials
Head of State--Emperor Akihito
Prime Minister (Head of Government)--Yasuo Fukuda
Minister of Foreign Affairs--Masahiko Komura
Ambassador to the U.S.--Ryozo Kato
Permanent Representative to the UN--Kenzo Oshima

Japan maintains an embassy in the United States at 2520 Massachusetts Avenue NW, Washington, DC 20008 (tel: 202-238-6700; fax: 202-328-2187).

ECONOMY
Japan's industrialized, free market economy is the second-largest in the world. Its economy is highly efficient and competitive in areas linked to international trade, but productivity is far lower in protected areas such as agriculture, distribution, and services. After achieving one of the highest economic growth rates in the world from the 1960s through the 1980s, the Japanese economy slowed dramatically in the early 1990s, when the "bubble economy" collapsed, marked by plummeting stock and real estate prices.

Japan's reservoir of industrial leadership and technicians, well-educated and industrious work force, high savings and investment rates, and intensive promotion of industrial development and foreign trade produced a mature industrial economy. Japan has few natural resources, and trade helps it earn the foreign exchange needed to purchase raw materials for its economy.

Japan's long-term economic prospects are considered good, and it has largely recovered from its worst period of economic stagnation since World War II. Real GDP in Japan grew at an average of roughly 1% yearly in the 1990s, compared to growth in the 1980s of about 4% per year. The Japanese economy is now in its longest postwar expansion after more than a decade of stagnation. Real growth in 2005 was 2.7% and was 2.2% in 2006.

Agriculture, Energy, and Minerals
Only 15% of Japan's land is arable. The agricultural economy is highly subsidized and protected. With per hectare crop yields among the highest in the world, Japan maintains an overall agricultural self-sufficiency rate of about 40% on fewer than 5.6 million cultivated hectares (14 million acres). Japan normally produces a slight surplus of rice but imports large quantities of wheat, corn, sorghum, and soybeans, primarily from the United States. Japan is the largest market for U.S. agricultural exports.

Given its heavy dependence on imported energy, Japan has aimed to diversify its sources. Since the oil shocks of the 1970s, Japan has reduced dependence on petroleum as a source of energy from more than 75% in 1973 to about 57% at present. Other important energy sources are coal, liquefied natural gas, nuclear power, and hydropower.

Deposits of gold, magnesium, and silver meet current industrial demands, but Japan is dependent on foreign sources for many of the minerals essential to modern industry. Iron ore, coke, copper, and bauxite must be imported, as must many forest products.

Labor
Japan's labor force consists of some 67 million workers, 40% of whom are women. Labor union membership is about 12 million.

FOREIGN RELATIONS
Japan is the world's second-largest economy and a major economic power both in Asia and globally. Japan has diplomatic relations with nearly all independent nations and has been an active member of the United Nations since 1956. Japanese foreign policy has aimed to promote peace and prosperity for the Japanese people by working closely with the West and supporting the United Nations.

In recent years, the Japanese public has shown a substantially greater awareness of security issues and increasing support for the Self Defense Forces. This is in part due to the Self Defense Forces' success in disaster relief efforts at home, and its participation in peacekeeping operations such as in Cambodia in the early 1990s and Iraq in 2005-2006. However, there are still significant political and psychological constraints on strengthening Japan's security profile. Although a military role for Japan in international affairs is highly constrained by its constitution and government policy, Japanese cooperation with the United States through the 1960 U.S.-Japan Security Treaty has been important to the peace and stability of East Asia. Currently, there are domestic discussions about possible reinterpretation or revision of Article 9 of the Japanese constitution. Prime Minister Abe made revising or reinterpreting the Japanese constitution a priority of his administration. All postwar Japanese governments have relied on a close relationship with the United States as the foundation of their foreign policy and have depended on the Mutual Security Treaty for strategic protection.

While maintaining its relationship with the United States, Japan has diversified and expanded its ties with other nations. Good relations with its neighbors continue to be of vital interest. After the signing of a peace and friendship treaty with China in 1978, ties between the two countries developed rapidly. Japan extended significant economic assistance to the Chinese in various modernization projects and supported Chinese membership in the World Trade Organization (WTO). Japan's economic assistance to China is now declining. In recent years, however, Chinese exploitation of gas fields in the East China Sea has raised Japanese concerns given disagreement over the demarcation of their maritime boundary. Prime Minister Abe's October 2006 visits to Beijing and Seoul helped improve relations with China and South Korea that had been strained following Prime Minister Koizumi's visits to Yasukuni Shrine. At the same time, Japan maintains economic and cultural but not diplomatic relations with Taiwan, with which a strong bilateral trade relationship thrives.

Territorial disputes and historical animosities continue to strain Japan's political relations with South Korea despite growing economic and cultural ties. Japan has limited economic and commercial ties with North Korea. A surprise visit by Prime Minister Koizumi to Pyongyang on September 17, 2002, resulted in renewed discussions on contentious bilateral issues--especially that of abductions to North Korea of Japanese citizens--and Japan's agreement to resume normalization talks in the near future. In October 2002, five abductees returned to Japan, but soon after negotiations reached a stalemate over the fate of abductees' families in North Korea. Japan strongly supported the United States in its efforts to encourage Pyongyang to abide by the nuclear Non-Proliferation Treaty and its agreements with the International Atomic Energy Agency (IAEA). Japan responded to North Korea's missile launches and nuclear tests by imposing sanctions and working with the United Nations Security Council. The U.S., Japan, and South Korea closely coordinate and consult trilaterally on policy toward North Korea, and Japan participates in the Six-Party Talks to end North Korea's nuclear arms ambitions.

Japan's relations with Russia are hampered by the two sides' inability to resolve their territorial dispute over the islands that make up the Northern Territories (Southern Kuriles) seized by the U.S.S.R. at the end of World War II. In August 2006, a Russian patrol shot at a Japanese fishing vessel, claiming the vessel was in Russian waters, killing one crewmember and taking three seamen into custody. The stalemate over territorial issues has prevented conclusion of a peace treaty formally ending the war between Japan and Russia. The United States supports Japan on the Northern Territories issue and recognizes Japanese sovereignty over the islands. Despite the lack of progress in resolving the Northern Territories dispute, however, Japan and Russia have made progress in developing other aspects of the relationship.

Japan has pursued a more active foreign policy in recent years, recognizing the responsibility that accompanies its economic strength. It has expanded ties with the Middle East, which provides most of its oil, and has been the second-largest assistance donor (behind the U.S.) to Iraq and Afghanistan. In 2006, Japan's Ground Self Defense Force completed a successful two-year mission in Iraq, and the Diet extended the Anti-Terrorism Special Measures Law which allowed for Japan's Maritime Self Defense Force refueling activities in support of Operation Enduring Freedom in the Indian Ocean. On July 10, 2007 the Japanese Government decided to extend the Air Self-Defense Force's (ASDF) airlift support mission in Iraq to July 31, 2008. Under the Iraq Special Measures Law a wing of the ASDF's C-130 transport planes, based in Kuwait, will continue to carry personnel and supplies for the U.S.-led multinational forces and the United Nations in Iraq. The law has been extended to July 31, 2009 and will be voted on again in 2008.

Japan increasingly is active in Africa and Latin America--recently concluding negotiations with Mexico and Chile on an Economic Partnership Agreement (EPA)--and has extended significant support to development projects in both regions. A Japanese-conceived peace plan became the foundation for nationwide elections in Cambodia in 1998. Japan's economic engagement with its neighbors is increasing, as evidenced by the conclusion of an EPA with Singapore and the Philippines, and its ongoing negotiations for EPAs with Thailand and Malaysia.

In May 2007, just prior to the G8 Summit in Heiligendamm, Prime Minister Abe announced an initiative to address greenhouse gas emissions and seek to mitigate the impact of energy consumption on climate. Japan will host the G8 Summit in 2008.

U.S.-JAPAN RELATIONS
The U.S.-Japan alliance is the cornerstone of U.S. security interests in Asia and is fundamental to regional stability and prosperity. Despite the changes in the post-Cold War strategic landscape, the U.S.-Japan alliance continues to be based on shared vital interests and values. These include stability in the Asia-Pacific region, the preservation and promotion of political and economic freedoms, support for human rights and democratic institutions, and securing of prosperity for the people of both countries and the international community as a whole.

Japan provides bases and financial and material support to U.S. forward-deployed forces, which are essential for maintaining stability in the region. Under the U.S.-Japan Treaty of Mutual Cooperation and Security, Japan hosts a carrier battle group, the III Marine Expeditionary Force, the 5th Air Force, and elements of the Army's I Corps. The United States currently maintains approximately 50,000 troops in Japan, about half of whom are stationed in Okinawa.

Over the past decade the alliance has been strengthened through revised Defense Guidelines, which expand Japan's noncombatant role in a regional contingency, the renewal of our agreement on Host Nation Support of U.S. forces stationed in Japan, and an ongoing process called the Defense Policy Review Initiative (DPRI). The DPRI redefines roles, missions, and capabilities of alliance forces and outlines key realignment and transformation initiatives, including reducing the number of troops stationed in Okinawa, enhancing interoperability and communication between our respective commands, and broadening our cooperation in the area of ballistic missile defense.

Implementation of these agreements will strengthen our capabilities and make our alliance more sustainable. After the tragic events of September 11, 2001, Japan has participated significantly with the global war on terrorism by providing major logistical support for U.S. and coalition forces in the Indian Ocean.

Because of the two countries' combined economic and technological impact on the world, the U.S.-Japan relationship has become global in scope. The United States and Japan cooperate on a broad range of global issues, including development assistance, combating communicable disease such as the spread of HIV/AIDS and avian influenza, and protecting the environment and natural resources. Both countries also collaborate in science and technology in such areas as mapping the human genome, research on aging, and international space exploration. As one of Asia's most successful democracies and its largest economy, Japan contributes irreplaceable political, financial, and moral support to U.S.-Japan diplomatic efforts. The United States consults closely with Japan and the Republic of Korea on policy regarding North Korea. In Southeast Asia, U.S.-Japan cooperation is vital for stability and for political and economic reform. Outside Asia, Japanese political and financial support has substantially strengthened the U.S. position on a variety of global geopolitical problems, including the Gulf, Middle East peace efforts, and the Balkans. Japan is an indispensable partner on UN reform and the second largest contributor to the UN budget. Japan broadly supports the United States on nonproliferation and nuclear issues. The U.S. supports Japan's aspiration to become a permanent member of the United Nations Security Council.

Economic Relations
U.S. economic policy toward Japan is aimed at increasing access to Japan's markets and two-way investment, stimulating domestic demand-led economic growth, promoting economic restructuring, improving the climate for U.S. investors, and raising the standard of living in both the United States and Japan. The U.S.-Japan bilateral economic relationship--based on enormous flows of trade, investment, and finance--is strong, mature, and increasingly interdependent. Further, it is firmly rooted in the shared interest and responsibility of the United States and Japan to promote global growth, open markets, and a vital world trading system. In addition to bilateral economic ties, the U.S. and Japan cooperate closely in multilateral fora such as the WTO, Organization for Economic Cooperation and Development, the World Bank, and the International Monetary Fund, and regionally in the Asia-Pacific Economic Cooperation forum (APEC).

Japan is a major market for many U.S. products, including chemicals, pharmaceuticals, films and music, commercial aircraft, nonferrous metals, plastics, and medical and scientific supplies. Japan also is the largest foreign market for U.S. agricultural products, with total agricultural exports valued at $9.7 billion, excluding forestry products. Revenues from Japanese tourism to the United States reached nearly $13 billion in 2005.

Trade between the United States and Japan remained strong in 2006. Total trade grew about 7.3% year-on-year. U.S. exports to Japan reached $59.6 billion in 2006, up from $55.4 billion in 2005. U.S. imports from Japan totaled $148.1 billion in 2006 ($138.1 billion in 2005).

U.S. foreign direct investment in Japan reached $78 billion in 2004, up from $73 billion in 2003. New U.S. investment was especially significant in financial services, Internet services, and software, generating new export opportunities for U.S. firms and employment for U.S. workers.