When looking at key monetary aggregates of Japan where Big Drive Auto is located, you have to factor in the effective exchange rates to understand Japan’s international competitiveness. This international competitiveness is affected by variables of the existing exchange rate and foreign and domestic price movements. Exchange rates for each currency are quoted and released by the International department, Bank of Japan. According to the Bank of Japan statistic on foreign trade, the following countries and regions import 90.20 % of Japan’s export products. They are (ranked high to low) the United States ... US$135.9 billion (22.9% of total Japanese exports), European Union ... $87.6 billion (14.7%), China ... $80.1 billion (13.5%), South Korea ... $46.6 billion (7.8%), Chinese Taipei ... $43.6 billion (7.3%), Hong Kong ... $36 billion (6%), Thailand ... $22.5 billion (3.8%), Singapore ... $18.4 billion (3.1%), Malaysia ... $12.5 billion (2.1%), Australia ... $12.4 billion (2.1%), Indonesia ... $9.2 billion (1.5%), Philippines ... $9.1 billion (1.5%), Canada ... $8.8 billion (1.5%), Panama ... $7.4 billion (1.2%), Mexico ... $6.9 billion (1.2%) when calculating the above percentages the Asian market accounts for over 50% of Japan’s exports. (Bank of Japan, 2009)
Because Japan depends on export, it needs to continue to negotiate free trade agreements (FTA’s) with Asian market countries as they impose the highest tariff rates on Japan according to the Congressional Research Service, The Library of Congress. Tariffs range from 10% to a high of 37.5%. Any reductions in tariffs will provide opportunities to not only expand Japans economy but will help small companies like Big Drive Auto to grow as well. Japan has already entered into FTA’s with Singapore as 98% of tariffs have been eliminated between the two countries. Japan also has an FTA agreement with Mexico 90% of tariff will be eliminated by 2015. (Library of Congress, 2005)
Companies like Big Drive Auto...