Industry News: US Automakers Oppose Free Trade Agreement with Japan

[Drew Dowdell]

January 16th, 2012 - Drew Dowdell - CheersandGears.com

In a statement released on Friday the American Automotive Policy Council (AAPC), a political action committee formed by General Motors, Chrysler Group, and Ford Motor Company, announced opposition to Japan joining the currently running Trans-Pacific Partnership (TPP) free trade negotiations. The original members of the TPP formed in 2006 are Brunei, Chile, New Zealand and Singapore. From 2008 to 2010, five additional countries, Australia, Malaysia, Peru,United States, and Vietnam, announced they had entered negotiations to join the trade pact. On November 11, 2011, Japan’s Prime Minister announce his country’s intention to join the negotiations.

AAPC’s objection to Japan’s entry into the negotiations stems from Japan’s closed automotive market. They claim that 70% of the U.S. trade deficit with Japan comes from the auto industry with 201 cars exported from Japan for every 1 car imported. The Japanese car market had sales of over 4.7 million vehicles in 2010, however only 225,000 of those were imports. Of that, only 8,000 of the imported cars were built in the United States contrasting sharply with the 1.5 million vehicles that Japan exported to the U.S.

Japanese officials claim that the reason imported vehicles don’t sell well in Japan is because they don’t meet the diminutive size needs of the Japanese customer. Most Japanese parking spaces and garages will only fit sub-compact or micro cars which are not a specialty of U.S. manufacturers.

While the Japanese claim against U.S. manufacturers may hold some water, that claim falls flat against manufacturers from other parts of Asia and the European Union. Indeed, South Korean auto manufacturer Hyundai stated in 2009 that they would withdraw from the Japanese market after only moving 1,875 cars per year.

AAPC is suggesting a two year “time out” before Japan is allowed to enter negotiations. During which time AAPC wants to see drastic changes for rules regarding imports that honor an agreement signed by the U.S. and Japan in 1995.

In Japan, the TPP is causing controversy as well particularly among the agricultural community. Japan protects its agricultural businesses with high tariffs on imported food products and subsidies for domestically grown ones. The tariff on imported rice is set a 777.7%, wheat is 252%, and sugar is 325%. The proposed removal of those tariff as part of the TPP agreement has been causing more headaches for the already increasingly unpopular Japanese Prime Minister Noda. On Thursday, 6 members of Noda’s own political party told U.S. officials that despite PM Noda’s enthusiasm for the treaty, they would vote against it and Japan’s Parliament would not ratify it.

Source: American Automotive Policy Council, The International News

Photo Credit: Gobierno de Chile

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[Camino LS6]

Japan has never played by the rules, maybe it's about time that they start doing so.

[G. David Felt]

Camino, I totally agree, after we rebuilt their country for the war they started, they stated they would beat us economically. They did it by keeping a closed market and expecting the US to consume everything they build.

Time to open up and be equal access.

[67impss]

So true

[loki]

we did have a ...steel? embargo with them before ww2....

camino, "Japan has never played by the rules"...what rules? ours? cause it doensn't work like that. what should be done is pull our troops out and let them play by their rules.....always push open trade with them but let them do their own thing.... they had a "lost decade" for a reason...it could happen again. if they are blind to thier failings, let them stay blind, it will come back to them.

[Drew Dowdell]

Why should we impose less restrictive trade rules on them than they impose on us?

[loki]

we've gone over this Drew, reciprocating trade barriers hurt those that do. it's economic warfare, mercantilism.....and even though "it would serve them right", we still get their products cheaply here and thus helps keeps the left over wealth for otherthings instead of paying another "few 1000 $" for the same product assuming the buyers would choose the same as they do now, because competition is good, when it is fair......not when it is equal.

[Drew Dowdell]

fair competition is equal access to the same markets. Toyota doesn't sell anything here at any special discount.

[loki]

i agree. but if we institute japans trade barrier here, what would the ramifications be? would it apply to canada too?....or mexico?

[Drew Dowdell]

.... we have NAFTA with those other countries.

[loki]

so why don't we have "nafta" with everyone?

[Drew Dowdell]

That would be nice... but the Japanese don't want NAFTA into their country. They only want NAFTA out.

That is the big reason people on all sides are opposed to Japan joining the TPP trade agreement. Japan wants all of the benefits of exports but doesn't want to allow imports. It isn't just GM, Chrysler, and Ford protesting this.

[loki]

i would thinhk if they agreed to TPP, it would have to open barriers both ways...

http://www.economist.com/blogs/banyan/2011/11/free-trade-agreements

sounds like everyone wants japan in the talks, but will be afraid that progress will upset the well connected back in japan and will cause their negotiator to have to leave.

[loki]

remember.. japan's debt http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

%gdp per CIA and eurostat 197.5 2010 est.

same but by IMF in 2010

220.00%

they are obviously doing something wrong.