How Japan turned into an ally from a villain in the U.S.

KIM PIL-GYU
The author is a Washington correspondent of the JoongAng Ilbo.

On the front page of the New York Times on October 31, 1989, an article titled “Japanese Buy New York Cachet With Deal for Rockefeller Center” was published. It is about the Japanese company Mitsubishi’s purchase of Rockefeller Center in midtown Manhattan.

The sale of the building, which was also designated as a U.S. historical monument, had a significant impact. People found it uncomfortable that leading U.S. companies such as General Electric and NBC became tenants of a Japanese landlord.

It was not long after Sony acquired Columbia Pictures, which sparked anti-Japanese sentiment. Nowadays, most villains in Hollywood movies are Russian and Chinese, but back then, Japanese moguls or yakuza gangs were the stereotypical villains. In Congress, voices calling for regulations on Japanese capital investments were raised.

At the U.S.-Japan summit at the White House on April 10, U.S. President Joe Biden reaffirmed his opposition to Nippon Steel’s acquisition of U.S. Steel. His reasoning was that the promises made to the workers must be kept.

Pittsburgh-based U.S. Steel was established in 1901 through a merger with steel magnate Andrew Carnegie’s Carnegie Steel. It once had the biggest market capitalization in the world.

The company’s union hoped that Cleveland-Cliffs, a domestic firm, would become the new owner, but it was virtually impossible due to anti-trust laws. Nevertheless, President Biden insisted that U.S. Steel has been the symbol of the U.S. steel industry for more than a century and should remain a U.S. company.

At first glance, things don’t seem to have changed much over the past 30 years. While it is supposed to be a free market economy, transactions are blocked for reasons other than economic considerations.

However, a former U.S. official whom I met last week said that Japan is construed as a completely different country in the U.S. from the time that it purchased Rockefeller Center. Biden is conscious of steel workers’ votes ahead of the presidential election in November. But after the end of the year, he is expected to allow the U.S. Steel merger to progress rapidly.

Furthermore, Japan is now a partner nation. With Tokyo’s adoption as a partner of the Aukus alliance, the justification for protectionism on the pretext of national security has disappeared.

In fact, immediately after the summit, U.S. Steel held a general shareholders’ meeting and passed the merger plan with Nippon Steel. While a review by the Committee on Foreign Investment in the United States remains, there have been few cases in which transactions with allies were blocked.

Japan seems to already be making full use of this position. Japan’s Mitsui won the $20 billion contract to replace all Chinese-made cranes at U.S. ports. Japan, which was accused of “aggression with the yen” more than 30 years ago, is now re-permeating in the U.S. market as an ally against the greater villainy of China.