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Japan's Foreign Policy Toward Vietnam 1978-1992/Chapter 1

Introduction and Methodologies
When the United States withdrew from Vietnam in 1973 and South Vietnam fell to the North Vietnamese Army in 1975, US leadership in Asia suffered a severe blow. The power equation in Asia again shifted in 1978, when President Carter announced diplomatic normalization with China and Tokyo signed the Peace and Friendship Treaty (PFT) with Beijing. When Vietnam invaded Cambodia in December 1978, under claims of protecting ethnic Vietnamese, Tokyo's reaction diverged from the responses of Washington and Beijing. Because of the changing power relationships in East Asia, Japan's foreign policy toward Vietnam differed from the US policy when Tokyo acted in its own self interest to steer a course between the United States, China, The Association of Southeast Asian Nations (ASEAN), and Vietnam. An investigation of Japan's foreign policy toward Vietnam during this period could provide an understanding of the larger bilateral relationships of Tokyo and Washington and Tokyo and Beijing, while highlighting regional and domestic factors that caused Tokyo to choose this independent middle course.

Statement of thesis
This thesis covers Japan's foreign relations with Vietnam from 1978 to 1992 in order to gain insights about Japan's general foreign policy goals and its diplomatic style, and to provide possible explanations for Tokyo's actions resulting from international and domestic pressures during this period. In December 1978, the Vietnamese army invaded Cambodia, which prompted Tokyo to cut off official development aid and economic assistance for all but humanitarian relief. Full diplomatic relations continued, but Tokyo refused to restore economic aid to Hanoi until 1992, after Vietnamese forces had withdrawn from Cambodia and the international climate (decreasing pressure from the United States) reached a point that allowed Japan to restore nearly JPY45.5 billion ($370 million) in loans and grants to Vietnam. What prompted Tokyo to cut off aid in 1978? Why did Japan continue diplomatic relations despite the hard line stances of both Washington and Beijing? Why didn't Japan go further (like the US full embargo against Vietnam) in its "punishment" of Hanoi? What domestic factors pressured Japan's policy? How did the Japan-Vietnam relationship color other bilateral relationships in the region for Tokyo?

Examining Japan's dealings with Vietnam during that country's invasion of Cambodia provides insight into facets of Japan's foreign policy such as the tendency to seek a middle ground between two extremes. While the United States, China, and ASEAN called for strong economic punishment of Hanoi, Japan soft-pedalled its sanctions against Vietnam, explaining the suspension of economic assistance in terms of international and regional pressure. This thesis investigates international factors such as pressure from the United States, burgeoning relations with China, stagnant relations with the USSR, and economic integration with ASEAN to determine the outside influences that most affected Japan's policy toward Vietnam.

In order to shed light in terms of domestic goals and pressures on Japan's Vietnam policy, I will present the bureaucratic policies of the Ministry of Foreign Affairs, Ministry of Finance, and Ministry of International Trade and Industry (MITI) that pertained to Vietnam. The thesis also examines the trade activities of the private sector in order to show increasing commercial activity between the two countries despite governmental policies. From this trade data, we can surmise to what degree domestic economic pressures helped determine policy. Trade in some sectors dropped off dramatically after aid was suspended in 1979, while other sectors grew in relation to Vietnam's production capability.

The pattern of Japan "in the middle" reoccurs throughout all these regional relationships. That is, we can view Japan's foreign policy at two levels: (1) bilateral direct actions with other countries (A to B, and B to A), and (2) reactionary responses to developments between two other countries (A's position between B and C). This second level, the reactionary model, manifests itself quite significantly in Japan's relations with Vietnam. Tokyo officials often attempted to place Japan in a conciliatory role between regional hegemons. When Vietnam invaded Cambodia in 1978 and relations between Vietnam and ASEAN came to a standstill, Japan Foreign Ministry officials pleaded the case for maintaining economic assistance to Vietnam on the grounds that someone needed to keep ties with Vietnam in order to prevent further sliding. When the Sino-Vietnamese border war erupted in 1979, Japan offered to act as a go-between toward settlement. As relations between Hanoi and Washington continued to drag over th e POW/MIA issue as well as the Cambodian question, Japanese officials expressed the hope of bringing the two countries together. This thesis describes actions by the major regional powers and includes Japan's position on those actions in an attempt to bolster the description of Japan's foreign policy as one seeking the middle ground.

Structure of the thesis
This work is descriptive and is divided chronologically into three main areas:
 * 1) 1978-1984-- limited relations,
 * 2) 1985-1989-- increased trade in a changing international setting, and
 * 3) 1989-1992-- restoration of economic assistance to Vietnam without upsetting the US-Japan relationship.

Within this structure, I examine the bilateral relations between Japan and Vietnam, the international factors that affected the relationship, and the actions taken by the various Japanese bureaucracies. In addition, I have charted the imports and exports between Vietnam and Japan to illustrate the influence (or lack of influence) private sector trade had on Tokyo's policies.

At the international level, this thesis begins by outlining the international setting at the time of Vietnam's invasion of Cambodia and then follows regional developments through 1992. Dramatic change occurred at the macro level between 1978 and 1992, as the Cold War ended and East Asian countries, communist and noncommunist alike, shifted priorities to economic development. Such changes magnified Tokyo's regional position and as a direct result, affected Japan's policy toward Vietnam. Further, international factors and pressures continued to control Japan's "no aid" policy toward Vietnam until 1992.

At the domestic level, bureaucratic politics shaped policy in the form of different goals for different bureaucracies. The Ministry of Finance and Ministry of International Trade and Industry (MITI) were concerned with expanding trade and recycling Japan's aid and trade surpluses throughout the region, while the Foreign Ministry needed to maintain close ties with the United States as well as handle closer relations with China and ASEAN (the Association of Southeast Asian Nations). While more weight should be given to the international factors, the bureaucratic wrangling among these actors affected policy and the timetable for restoring assistance to Hanoi. A study of Japan's policies toward Vietnam gives insight into the relative positions among the bureaucracies-- which bureaucracy determined policy and to what degree.

Party politics played a small role in the debate whether or not to continue with aid in 1979, but had diminished greatly as time progressed and Opposition parties such as the Japan Communist Party and Japan Socialist Party faced the dilemma of agreeing with the majority LDP or supporting their ideological brothers in Indochina. Separately, private industry continued to trade with Vietnam, and therefore never had cause to voice serious opposition to Japan's suspension of economic assistance. The balance between these domestic factors, while not dominant, shaded policy toward Vietnam throughout the fourteen years under study.

Literature review
I am undertaking this work primarily to describe an international relationship (Japan and Vietnam) that has not been extensively researched in English language sou rces. Most of the current information about the expanding trade relationship between these two countries has come from periodicals and business-oriented newspapers. Economic modelling about Japan's relationship with Asian countries has centered mostly on Korea, China, and ASEAN countries. Others have tried to determine Japan's policy to ward third world developing countries. Scholars have also looked at the tie between Japan's economic aid policies and subsequent increase of trade with developing nations. However, I have yet to find more than one or two works describing specifically Japan's relationship to Vietnam during Hanoi's "pariah period". Therefore, this work is primarily descriptive, collecting scattered journalistic reports into cohesive chapters divided into subheadings of international and domestic factors. As stated earlier, this thesis carries three basic goals: (1) describe Japan's bilateral relationship with Vietnam, (2) analyze the international and domestic factors that contributed to that relationship, and (3) draw conclusions about and propose explanations for Japan's diplomatic style and economic policies toward Vietnam.

Japan's bilateral relations with Vietnam
A comprehensive history of economic and security relations in the post WWII era between Japan and Vietnam can be found in Masaya Shiraishi's Japanese Relations with Vietnam: 1951-1987. Shiraishi states that his is the first work to explore this relationship as an overall study. The work is strong in developing the economic ties and aid relations stemming from war reparations (WWII) and Japan's assistance programs during American involvement in the 1960s and early 1970s, with careful consideration to Tokyo's desire to stay as "balanced" as possible once it became evident by 1973 of the eventual fall of South Vietnam and rise of North Vietnam. However, given the span of his work, Shiraishi has little room left to develop political factors that went into Japan's policy following Vietnam's 1978 invasion of Cambodia. My thesis may hopefully be considered the follow-up to Shiraishi's work. This work will be an analysis of Japan's foreign economic policy and will address factors contributing to that policy.

Juichi Inada speaks specifically on Japan's role in Vietnam in Koppel and Orr's volume on foreign aid, in a chapter entitled "Stick or Carrot: Japanese Aid Policy and Vietnam." Inada covers the period from the end of the Vietnam War to 1990 and traces the internal Vietnam security issues and the international (regional) concerns that influenced Japan's approach to Vietnam. Although short on Japan's internal political factors accounting for Japan's aid to Vietnam, this work does discuss the history of international events surrounding the Japan-Vietnam relationship between 1978 and 1990. However, its primary focus is to describe the Japan-Vietnam relationship within a larger context of Tokyo's aid policies, and the chapter was written before the Cambodian situation was fully resolved. Therefore, Inada's main focus is to use the Vietnam relationship as simply a case study or example of Tokyo's aid policy; his policy recommendations are based on conjecture about how Japan could restore assistance to Hanoi. The recommendations seem sound, but fall short in anticipating the degree to which US pressure and regional economic competition provided the controlling factors for Japan's decision on when and to what degree to restore economic assistance.

International political factors
This thesis adds to a growing body of research on Japan's emerging regional leadership position. Current scholarship on Japan's foreign policy focuses on Japan's role in a post-Cold War world. Gerald Curtis' 1993 volume ties together several articles that address Japan's relationships with Asian powers, the third world, and former communist states. Articles on Japan's diplomatic style are concerned with what effect the end of the cold war will have on the "coping" paradigm: Japan has always followed older brother "Uncle Sam" in security issues and now faces a crossroads as a regional and economic dominating power. This thesis, which investigates Tokyo's role in resolving the Cambodian issue in the face of sometimes conflicting pressure from the United States on the one hand and Asian powers (China, ASEAN) on the other, adds to scholarship on Japan's regional responsibilities and addresses the questions of Japan's independence or dependence upon Washington to determine foreign policy. As this thesis will show, Washington influenced Japan's policy toward Vietnam well through 1992, as evidenced by Tokyo's close association with US envoys to Vietnam over the POW/MIA issue-- an association that continued through the US Presidential election in November 1992.

Politics of Japan's aid and foreign economic policy
By cataloging the trade between Japan and Vietnam, this thesis may contribute as a case study of one of the largest debates among Japanese policy scholars: the connection between business and government (the "Japan, Inc." debate). In a 1977 volume, Fukui outlines the division among scholars over the existence and influence of a "power elite" in Japanese policy making, similar to the model made famous by C. Wright Mills in 1956. Fukui references many Japanese scholars who provide variants on the theme of a "power elite." These models became popular as Japan's economic power increased in the 1980s. Probably two of the more widely read works conveying this stance is Karl van Wolferen's 1989 book The Enigma of Japanese Power, and Chalmers Johnson's MITI and the Japanese Miracle. Earlier, moderates such as T.J. Pempel had outlined a strong connection between LDP politicians and civil service bureaucrats, but stopped short of a Marxist interpretation of the power of the bureaucracy. This thesis examines a situation where Japan's government stopped aid and trade support mechanisms. Links between government-led programs and private industry should therefore be found in the statistical evidence of the subsequent drop in trade following the suspension of aid. Extremists like Karel van Wolferen and Johnson may see such a drop as evidence to support their "state-capitalism" theories, but I believe this thesis will conclude differently: trade increased despite the aid embargo and was probably more dependent on Vietnam's production capability rather than LDP-business policy harmony.

Fukui, Tempel and Stockwin all produced case studies of policy produced in a pluralistic model as a compromise between competing bureaucracies or factions within the LDP. However, Japan's relations with Vietnam were dominated by one bureaucracy-- the Ministry of Foreign Affairs-- throughout the fourteen years covered in this work. Some compromise did occur, though not to the level of other cases listed by these authors.

A 1993 scholarly work on Japan's bureaucratic workings vis-a-vis foreign aid in the Finance Ministry is Japan's Foreign Aid: Power and Policy in a New Era. Editors Koppel and Orr have compiled case studies of Japan's aid to various countries. Taken as a whole, this book claims that Japan's foreign aid is a major tool for foreign economic policy toward Japan's Asian neighbors. Others have investigated the relationship between trade and aid. Margee M. Ensign, in a prior study of Japan's overseas development aid (ODA) practices, found a significant relationship between trade in infrastructure-related equipment to a country and the amount of infrastructure aid provided to that country the previous year. The focus of her study was an investigation into the contract bidding practice for aid-funded projects. She found that a majority of these contracts come back to Japanese firms because of the bureaucratic hoops inherent in the structure that give firms with close government contacts an advantage.

Thus, models of Tokyo's intricate connections between private sector trade and foreign aid have been proposed by numerous scholars. Basic questions about the degree of power concentration within Tokyo have remained since the end of the occupation and the rise of the LDP in 1955. This thesis may provide fodder for those who believe in a strong link between the government and trade, a link that is reflected by the drop in trade in 1979. Further research showing increased trade amounts following the resumption of aid and assistance programs could bolster such arguments. In addition, comparisons to similar economies that enjoyed economic assistance could highlight the effects of Tokyo's suspension of aid from 1978 to 1992.

Factual information and trade data
A primary concern of this research is to catalog trade data for the embargo period. On a macro level, trade statistics for the region have been taken directly from the United Nations Direction of Trade Yearbooks. However, statistics specific to Vietnam are sketchy. While some production statistics are provided in the Vietnam 1991 publication Economy and Trade of Vietnam: 1986-1990, only spotty figures are given for certain years. Journalistic sources such as the Foreign Broadcast Information Service, Far Eastern Economic Review, The Economist, The Nikkei Weekly, and the Japan Economic Journal all provide similar, if not identical, numbers for volumes of trade in and estimates of the Vietnam market. These sources are currently the best available and will have to do for this study. Unfortunately, the scarcity of consistent statistics gauging Vietnam's production capability prevent regression analysis similar to Ensign's work on aid/trade relationships. The present work will have to rely on primarily qualitative analysis of international and domestic factors, with support from trade data as indications of these factors.

On a bureaucratic level, the Ministry of Finance publishes a yearly report of Japan's official development assistance, which gives statements of policy goals and structure as well as charts breaking down the amounts of aid by country and sector. This supplementary information is useful because this thesis will attempt to show some of the political ties between aid and investment in developing countries. Furthermore, every few years the Ministry of Foreign Affairs prepares its Diplomatic Blue Book that summarizes the state of diplomatic relations and aid to foreign countries. Drawing information from both the Ministry of Finance (MoF) reports and the Ministry of Foreign Affairs (MoFA) summaries gives subtle clues about differing goals between the ministries.

Methodologies
This thesis is a descriptive work that first looks at the bilateral relations between Japan and Vietnam and then addresses the international and domestic factors that may have affected Tokyo's policy toward Hanoi. Chapters are arranged chronologically, and factors are organized by country or bureaucracy within each chapter.

Chronology
The thesis is divided into five chapters: the introductory chapter, three chapters discussing the factors surrounding this relationship, and a chapter containing the conclusions derived from the description of international and domestic factors. The three middle chapters will divide the period chronologically. Chapter 2 presents the international and domestic powers that carried influence in Tokyo on the eve of the invasion of Cambodia in 1978 and the steps Japan took against Vietnam in the early years of the embargo period. Chapter 3 covers the years from 1985 through 1989 and discusses discussing the economic reforms within Vietnam and Japan's gradually increasing role in Southeast Asia. Chapter 4 outlines the sequence of diplomatic events and pressures that led to a resumption of aid in 1992. Chapter 5 contains the conclusions we can draw from the thesis on bilateral, international, and domestic levels.

International factors
Within each of these chronologically divided chapters, I address both the international and domestic factors that I think influenced Japan's policies. Internationally, I focus on the major players in the region: the United States, the USSR, China, ASEAN, and factions in Cambodia (known also as Kampuchea). The United States cannot be ignored because Washington led the charge for sanctions against Vietnam and maintained a full trade embargo until 1994. The USS.R, as Vietnam's parent state and longtime antagonist to US positions in Asia, must be included in any discussion about Indochina. Strained Japan-Soviet relations must also be addressed when discussing Tokyo's policy toward a communist country. Japan concluded a friendship treaty with Beijing within weeks of the United States' doing so in 1978, just prior to the Vietnamese invasion of Cambodia. Beijing's support of the Khmer Rouge pitted China against Vietnam, which led to a "punishment" war in 1979. China was and is a major focus of Tokyo's foreign policy in Asia; therefore, the Tokyo-Beijing relationship during this period must be examined to understand politics in Indochina.

Along with the superpowers-- the United States, the Soviet Union, and China-- ASEAN and factions in Cambodia certainly affected Japan's Vietnam policy. ASEAN was perhaps the most vociferous in its condemnation of Vietnam's incursion into Cambodia. Throughout the period under study, Japan floated trial balloons of reconciliation toward Indochina, only to be lambasted in the press by ministers from ASEAN countries. Under the Fukuda Doctrine, ASEAN took a primary position in Japan's foreign policy goals and economic assistance programs. In order to understand the hurdles between Tokyo and Hanoi, this thesis includes Tokyo's dealings with ASEAN and how they affected the Japan-Vietnam relationship.

Cambodia comes into play in the Japan-Vietnam relationship on a significant level only after 1985. Up until that point, Cambodia (or Kampuchea) hardly existed as a nation- state in the international context. However, as Tokyo began to increase her role in searching for a solution to the Cambodian problem, resolution of that problem became a central point between Japan and Vietnam.

Hunches and assumptions
Going into this work, I assumed Japan would align itself closely with the United States in security matters but leave the door open for development of economic ties. Previous study of Japan's relations with Vietnam during the Vietnam War (Second Indochina War 1964-75) showed that Tokyo attempted to follow an "omnidirectional" (zenp“) policy in the East-West confrontation in word but cooperated with the United States in a secondary or supportive (and very low profile) role. When President Carter announced the normalization of relations with China in 1978, Japan acted quickly to avoid another Nixon shock. Thus it is reasonable to assume that (1) Japan would act in concert with the United States and China against Hanoi's actions, and (2) Japan's "omnidirectional" or nonmilitary policies would require it to search for some middle ground and maintain some relations with Vietnam.

As bilateral trade grew from 1985 onward, I assumed Japan would grow more lenient toward Hanoi at the behest of the Ministry of International Trade and Industry (MITI) and Japan's private sector. However, as I will show, the Ministry of Foreign Affairs dominated the relationship with Vietnam and withheld economic assistance (the responsibility of the Ministry of Finance) until 1992 both out of deference to the United States and in an effort to minimize the international perception of Japan's "checkbook" or "merchant diplomacy."

Background history
Southeast Asia has proven crucial to production in postwar Japan. Beginning with the American occupation of Japan following WWII, US policymakers attempted to keep Japan harmless by breaking up large industries and limiting farms to seven acres. However, the rising Soviet threat in Europe and China's fall to Mao Tse Tung and the communists in 1949 prompted Supreme Command Allied Powers (SCAP) to change course. Japan's recovery would occur only with domestic prosperity via vigorous trade with other Asian countries. With China out of the trade picture, American policymakers looked to steer Japan toward Southeast Asia. Edward M. Doherty of the Far Eastern Bureau's Office of Northeast Asian Affairs summed up the issue:
 * How can we utilize idle labor and capital in Japan to furnish the needed economic assistance to the countries of South Asia now threatened by communism and at the same time help Japan balance its international accounts and become independent of US assistance?

SCAP and the bureaucratic equivalents in Washington agreed to end the occupation and turn Japan's economy toward exporting to Asia to ensure security, political stability and economic welfare of the region. In order to secure Asia from the threat of communism, the West funneled aid money through the International Cooperation Administration (ICA), where purchases or procurement often wound up as profits in Japan's economy. Indochina figured greatly as an economic front, both to shore up Japan's economy and to stop communist expansion in a classic colonialism economic plan.

War Reparations 1960-1965
In 1951, in San Francisco, Japan signed a formal peace treaty that included the Bao Dai government of South Vietnam. Japan did not recognize the Ho Chih Minh government. War reparations treaties followed, with Japan and South Vietnam signing an agreement in May 1959. The French initially demanded $2 billion in reparations from the Japanese at the peace conference in San Francisco. However, both sides eventually agreed on $39 million, the Vietnamese themselves understanding that the payments were a sort of investment for Japanese exporters preparing markets in Indochina. War reparations were an essential precursor to any economic diplomacy in Southeast Asia. The reparations came to be seen as economic opportunity for both parties. Beginning in 1960, Japan was to pay $10 million for the first three years and $4.5 million for the next two years, totalling the $39 million.

The content of these payments, however, provides insight into Japan's motives in providing reparations. $27.8 million was earmarked for a dam at Da Nhim, $7.5 million for consumer goods, $2 million for use at Saigon's discretion, and $1.7 million for the South Vietnamese delegation to use in Tokyo. Almost all of the money would end up back in Japan through contracts for construction equipment and services connected with the Da Nhim project. War reparations to Indochina and other parts of Asia entitled to payments under the San Francisco Treaty became an echo of America's Marshall Plan economics, with money funneled to poor countries to enable trade and export production in the mother country. The only difference is that this money was "required," not donated.

American Escalation: 1965-1970
War reparations ended in 1965. Follow-up loans, however, were postponed indefinitely because of the escalating war in South Vietnam. US forces increased dramatically in 1965. Accompanying this increase in manpower and firepower in Vietnam was the subsequent increase in support apparatus and secondary equipment (noncombat.) The Japanese could not participate in military activities because of  to Article IX, which restricted offensive forces, in Japan's constitution. However, the legalities of economic cooperation in supporting military action were at best a grey area. The Sato cabinet in Japan followed US diplomatic stances toward China and Vietnam with deference, but allowed tacit economic collaboration with the US military effort. Article VI of the 1960 US-Japan Security Treaty allowed US forces the use of base facilities in Japan to assure not only Japan's security but also "international peace and security in the Far East." The Sato government interpreted the security treaty as allowing the US military machine to use bases in connection with Vietnam short of flying directly into combat from them. Although Vietnam was not in the original definition of "Far East," the Vietnam War did pose a threat to security in the Far East according to the Sato government. Thus the conduits for military-industrial spending in Japan were set: money from US procurement flowed directly to stations in Japan, along with money for the Army of the Republic of Vietnam (ARVN) support equipment to be exported from Japan and the money earmarked for the US forces' supplies to its swelling ranks on the ground in Vietnam. All these funds passed through the Japanese economy in some form or another.

US forces in Vietnam relied heavily on Japanese products. Havens catalogs some of these items in his 1987 book Fire Across the Sea:
 * Data from MITI [Ministry of International Trade and Industry] show that Japanese firms supplied most of the materials needed for camps and bases: prefabricated buildings, lumber, cement, cranes, generators, tents, jeeps, and toilet paper. American soldiers drank Kirin beer, chewed Lotte gum, and ate Chiba lettuce.  American pilots dropped more than a billion propaganda leaflets, written in Vietnamese and printed in Kanagawa [Japan].

Japanese factories were closer to Vietnam, advantageous for both time and transportation costs, and Japanese labor was skilled, fastidious, and cheap. Many of the quality control methods and high technology-based factory processes benefited from manufacturing the heavy-industry specialized products developed for the war.

The Vietnam War's effect on special procurement can be estimated by taking a base figure of $314 million (personal consumption for US forces and dependents, payroll for Japanese employees on bases, and payments for supplies and services) for pre-1965 levels, and noting the increase to $516 million in 1967, an increase of $202 million because of escalated activity linked to Vietnam. Havens further notes:

 * The Bank [of Japan] concluded that direct Vietnam procurement earned Japan $292 million in 1967, rising to a peak of $467 million three years later. It was widely believed during the war that another $150 million (perhaps twice that sum) in less visible purchases of politically sensitive goods like weapons and chemicals went publicly unrecorded each year.[italics added]

However, direct procurement to Vietnam and increased US military support expenditures in Japan accounts for only part of the equation. Goods exported to other countries, like South Korea, Taiwan, and other Southeast Asian states, went to fill procurement contracts eventually destined for Vietnam.

President Johnson issued a "buy American" policy in 1967. Textiles and light industry began to move toward Southeast Asia, but Japanese production still prospered because only they could produce certain items like cameras, truck diesel engines, locomotives, and two-way radios. Aircraft repair and overhauling rose 146 percent in 1966, and naval repair jumped 378 percent. Some economists estimate R&R in Japan added $13 to 20 million annually from 1965 to 1970.

In all, leading financial institutions estimate that the total economic impact of the Vietnam war-- from escalated military activity at US bases in Japan, to direct procurement, to increased exports to fill military contracts in third countries-- to be about $1 trillion annually from 1965-1967. Sanwa Bank, Nomura Sogo Institute, and Nihon Kangyo Bank all give much higher figures than MITI estimates. Exports to South Vietnam increased dramatically beginning in 1966-- peaking in 1969 at a level of $223,156,000-- while imports from Vietnam never rose above $7,000,000 until 1972, when levels rose to $30 million: the increase came mostly from timber and fishery products.

An Opportunity, Not a Problem
Japan, despite her constitutional restrictions on waging war except to in self-defense, participated heavily in the military-industrial complex connected to the Vietnam War. War reparations provided the seeding ground for economic export to South Vietnam in the early 1960s, a pattern learned from the American Marshall plan and ICA in Asia during the 1950s. On top of this export market, increased US military activity in Japan-based operations (shipping, airlifting, secondary equipment) coupled with direct procurement to South Vietnam for purchases from Japan and increased exports to fill military-industrial contracts in several countries, including the United States, combined to expand the Japanese economy almost $1 trillion annually during the height of the US involvement in Vietnam from 1965-1970. The ruling conservatives in Japan saw Vietnam for what it was, both good diplomacy with the United States and good politics among their big business constituents. Murakami Yoshio, a member of the cabinet at the time, was noted as saying, "the Vietnam War to Japanese conservatives was an opportunity, not a problem." This investment opportunity suffered a severe blow the winter of 1978 when Vietnamese tanks rolled into Phnom Penh. Tokyo cut off aid to Hanoi, and trade dropped off across the board. The rest of this thesis describes the long, slow process toward the resumption of aid and the development of a working relationship between Japan and Vietnam.

Thesis | Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 |


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Taxation in the United Kingdom/Stamp taxes/Introduction

In the United Kingdom, stamp duty is a form of tax charged on instruments (that is, written documents), and requires a physical stamp to be attached to or impressed upon the instrument in question.

The scope of stamp duty has been reduced dramatically in recent years. Apart from transfers of shares and securities, the issue of bearer instruments and certain transactions involving partnerships, stamp duty was largely abolished in the UK from 1 December, 2003. Stamp duty land tax (SDLT), a new transfer tax derived from stamp duty, was introduced for land transactions from 1 December 2003. Stamp duty reserve tax (SDRT) was introduced on agreements to transfer certain shares and other securities in 1986.

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Taxation in the United Kingdom/Stamp taxes/Stamp duty reserve tax

Stamp duty reserve tax (SDRT) was introduced under Finance Act 1986 to ensure that a form of tax equivalent to stamp duty would continue to be payable on the transfer of uncertificated shares. At that time, it was expected that the TAURUS share trading system would come into operation. In the event, SDRT was adapted for the charge to trading in uncertificated shares in CREST, and is charged on agreements to transfer shares and other securities. SDRT is not a stamp tax, but a self-assessed transfer tax which is usually collected automatically by stock market participants (such as brokers) when a transaction takes place.

Stamp duty remains in force for shares and securities that are held in certificated form which can only be transferred by using a physical stock transfer form, and runs in parallel to SDRT on agreements to transfer shares. Since 1986, both stamp duty and SDRT have been charged at a rate of 0.5% of the consideration for the transfer of shares (in the case of stamp duty, rounded up to the nearest £5). The same transaction may include an agreement to transfer shares which may trigger a liability to SDRT, and the agreement may later be completed by a transfer of the shares which is liable to stamp duty. Provided that the transfer is stamped within 6 years, the charge to SDRT is cancelled to avoid a double charge.

A higher rate of SDRT at 1.5% is charged for the issue or transfer of shares to a person who operates a depositary receipt scheme or a clearance service (other than CREST, which is exempted). The higher charge compensates for the fact that later transfers of depositary interests or through the clearance services will not attract SDRT.

It is widely expected, although the UK Treasury may wish otherwise, that as a practical matter SDRT will not ultimately survive the introduction of the EU Markets in Financial Instruments Directive (MiFID.) which is designed to create a single market in financial services across the EU. As currently operated, SDRT will create a number of tax, legal and operational barriers that could effectively present an uneven playing field. It is totally unclear how UK Tax Authorities could hope to police transctions wholly effected in other member states.

There is little sign that this is clearly understood by the UK Government nor even faintly comprehended by the UK Stamp Office who are still stuck on the concept of imposing SDRT on transactions effected on national exchanges


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Taxation in the United Kingdom/Stamp taxes/Stamp duty land tax

Stamp duty land tax (SDLT) is a new tax in land transactions that was introduced by Finance Act 2003 and largely replaces stamp duty with effect from 1 December, 2003. SDLT is not a stamp duty, but a form of self-assessed transfer tax. SDLT is charged on "land transactions" and for typical transactions in land, such as the buying and selling of a residential house, there is little change from stamp duty, except that a tax return is required to be made to the Inland Revenue and documents no longer need to be given a physical stamp. Like any other self-assessed tax, but unlike stamp duty, the Inland Revenue is able to enquire into an SDLT return and raise assessments to recover unpaid SDLT.

For residential house purchases, the current rates in the UK are as follows:

SDLT is not a progressive tax, but rather works on a "slab" basis, so the above percentages apply to the whole of the purchase price. For example, a house priced at £250,000 would attract a SDLT of £2,500, but one of £250,001 would be liable to SDLT of £7,500. Some areas have been designated as disadvantaged areas and have relief from SDLT on residential transactions below a certain level.

In previous years, there had been a high level of house price inflation in the UK but no change in these thresholds, leading to a substantial increase in the revenue from SDLT through fiscal drag. In 2000-01, the Inland Revenue received £2.145bn from residential stamp duty. In 2002-03, it received £3.59bn.

In 2005, the threshold for paying SDLT was raised from £60,000 to £120,000. In 2006, the threshold was further raised to £125,000.

In addition to SDLT on the purchase price for land, SDLT is also charged when a lease is granted. Any premium for the grant is charged to SDLT at the same rates as for the purchase price for a sale of land; SDLT is also charged on the rent payable under the lease, at the rate of 1% of the (discounted) net present value of rent passing under the whole term of the lease. Previously, stamp duty was charged at rate of up to 24% of the annual rent. The amount of SDLT due on the grant of a typical commercial lease generally amounts to a substantial increase from the amount of stamp duty that would have been due previously.

SDLT is also charged on certain transactions involving the transfer of land involving partnerships (transfers of land from or to the partners, or changes in the partners' partnership interests where the partnership owns land).

Whether or not tax is payable Her Majesty's Customs and Revenue require a Return to be received by them within four weeks of the transaction completing failing which they have power to levy a fine on the tax payer - the fine is not for failure to pay the tax but for failure to make the return. When a return is accepted by HMRC they provide a Certificate without which it is impossible to register a change in the land ownership.