The rapid appreciation of the Japanese yen has finally triggered a significant decline in the volume of major exports to the United States and other countries.
Some economists believe the sudden change signals a long-term turnabout in Japan's capacity to sell massive amounts of exports to the rest of the world.
The evidence came in the form of trade figures for the second quarter of this year which showed Japan's worldwide exports declined about 2.5 percent from the same period of 1977.
It is the first time in at least 17 years that Japanese exports have declined for an entire quarter, except for a period in 1975 when the effects of the Arab oil embargo curtailed trade temporarily all over the world.
Moreover, officials at the Japanese Ministry of International Trade and Industry are now forecasting that the trend will continue at least through this fiscal year and will wind up amounting to a 4.6 percent decline from 1977.
The trend seems certain to support Prime Minister Takeo Fukuda's pledge at the recent summit meeting in Bonn that Japan's exports will be held below the 1977 level.
But economists here attribute the trend not to pressure from the Fukuda administration but to the 19-month-long appreciation of the yen that has made Japanese products more expensive and gradually reduced their competitiveness, especially in the United States, which is Japan's prime trading partner.
One U.S. Embassy official said, "the appreciation of the yen is beginning to cancel out Japan's advantages."
The sale of Japanese passenger automobiles in the United States declined each month from year-ago levels in April, May and June and exports of color television sets has slipped so far that Japan did not reach the 1.75 million sets per year it is entitled to sell in the United States under a joint marketing agreement.
In both cases, economists said, the price of Japanese products increased so rapidly that they lost their competitive edge. Japanese companies were forced to raise dollar prices in the United States because the dollar had lost so much of its value against the yen.
The Japanese International Trade Ministry reported that total exports of color television sets fell 26 percent in the second quarter from year-ago levels.
Steel exports were down about 27 percent in the same period. Part of that decline is being tentatively attributed to the new U.S. "trigger price" mechanism that is supposed to keep low-priced steel from being dumped on American markets.
The Japanese currency began appreciating in January 1977, when it was valued at about 290 yen to the U.S. dollar. It has risen by about one-third, and the dollar is now worth only about 190 yen.
The U.S. policy has been to let the dollar slide on the assumption that the high-priced yen would eventually price Japanese products out of the American market, and, over the long haul, reduce the large American trade deficit with Japan.
As recently as the first quarter of 1978, however, this did not seem to be happening. Japanese exports increased by 8 percent in that quarter over the first quarter of 1977 and the increase showed no signs of abating. One reason was that even though prices of Japanese products were rising above those of comparable American products many comsumers assumed that the quality of Japanese products was superior.
The trend turned around sharply in April, May and June, particularly for passenger cars. For example, Toyota exports to the United States were down 15, 16 and 19 percent respectively for the months of April, May months of and June and company officials estimated this week that this July sales in the United States will be down 20 percent over last July.
Toyota had raised its prices five times in this model year to keep up with the yen's appreciation. Another auto-maker, Nissan, raised its prices six times!
Under the color television "orderly marketing agreement" Japan was to limit its exports to the United States to 1.75 million sets a year. When the first year of the agreement ended last June 30, Japan had not sold about 50,000 less than that. More significantly, the exports in the month of June were 37 per cent less than in the same month a year ago.
In the field on consumer electronics and the newest export wonder, video tape recorders, Japanese exports continued to surge ahead.
[TEXT OMITTED FROM SOURCE] those field, but there are also signs.
"Japan is still very competitive in that their prices on those items may already be too high," said an American economist.
The beginning of a decline in volume of exports will not show up as much of a change in the current account surplus, which is the chief point of controversy, because it is traditionlly measured in dollars.
The United States trade deficit with Japan amounted to $8.1 billion in 1977.