Many countries have run up trade deficits with Japan. Mindful of the negative impact on domestic industry that chronic large trade deficits can have, the United States and some other countries have demanded from time to time that Japan reduce its surplus, and Japan has placed voluntary ceilings on exports of certain manufactured items.

Japan is working to reduce the surplus by implementing various import-promotion policies in the belief that a reduction will contribute to the healthy development of the global economy. For instance, a government-affiliated organization that promotes imports dispatches staff overseas and provides information to help foreign companies export to Japan.

Japanese manufacturers of such products as electrical equipment and cars are moving production facilities overseas, moreover, to offset the costs of the stronger yen--which is a result of Japan's large trade surplus to begin with. In fiscal 1996 (April 1996 to March 1997) investment in overseas factories topped ¥5.4 trillion ($45 billion at a rate of ¥120 to the dollar).

As a result, many items that used to be exported are now being produced in overseas markets. And there has been an increase in imports of manufactured goods and parts, whose prices have dropped with the yen's appreciation.