[Congressional Record Volume 141, Number 71 (Tuesday, May 2, 1995)]
[Senate]
[Pages S5999-S6000]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AUTOMOBILE TRADE WITH JAPAN
Mr. LEVIN. Mr. President, as the United States-Japan framework
negotiations in autos and auto parts accelerate over the next few
weeks, I want to bring to my colleagues attention a New York Times op-
ed by Thomas L. Friedman published on April 16. Mr. Friedman describes
the problems American auto and auto parts manufacturers face when
trying to sell their products into Japan's closed market and our
limited chances of opening these protected markets unless we are
willing to impose reciprocal treatment on Japan's products in this
country.
Regarding the likelihood of concluding a market opening deal in the
framework negotiations with Japan anytime in the near future, Mr.
Friedman says:
Don't hold your breath. The Japanese will literally do
anything to preserve their domestic car monopoly, even though
it is one of the major causes of the massive trade imbalance
between the U.S. and Japan that is, in turn, causing the yen
to soar in value against the dollar.
In fact, the higher the yen goes the less likely Japan is
to open its auto market. With the yen rising against the
dollar, Japan's cars become more expensive and difficult to
sell in the U.S., so Japanese auto company profits are
squeezed. That makes it all the more important for Japanese
auto makers to protect their home market from competition, so
they can charge higher prices there and run up profits they
need to cover losses abroad.
What the U.S. is seeking is an end to Japan's barriers. For
instance, only 7.4 percent of Japanese car dealers, who are
manipulated by the manufacturers, sell foreign cars alongside
Japanese models. Almost 80 percent of U.S. dealers sell
foreign models alongside their domestic brands.
The U.S. is also seeking better access to Japan's huge
market for replacement auto parts, which has been largely
closed to foreigners through Japanese regulations, customs
codes and cartels. U.S. manufacturers have 3 percent of
Japan's $27 billion replacement parts market, while
foreigners have 18 percent of the U.S. replacement market and
22 percent of Europe's.
Mr. Friedman believes we should be willing to take reciprocal action
against Japan in an effort to get Japan to open its markets to United
States autos and auto parts. Doing so will not result in retaliation.
Mr. Friedman says:
Maybe, just maybe, the Japanese need us more then we need
them.
For starters we should charge Japanese auto manufacturers a
distribution tax on every car they sell in the U.S.--a tax
that will be reduced in proportion to how many Japanese
manufacturers open their showrooms to foreign cars. We should
also inspect every Japanese car and part that comes into this
country, and take our sweet time doing it, which is just what
Japan does.
He goes on to say:
Hold on, the Japanese will say, that is a violation of the
rules of the World Trade Organization. Rules? Did somebody
say rules? Does anyone think that Tokyo shrank the U.S. share
of the Japanese auto market from 60 percent in 1953 to 1
percent in 1960 by playing by the rules? We'll only win equal
opportunity in the Japanese market when we play the game by
their rules--which are no rules at all.
Mr. Friedman has hit the nail on the head. Decades of painful history
have proven that Japan will open its markets only when forced to do so.
Now is the pivotal moment in auto and auto parts negotiations with
Japan and the administration seems prepared to so what no other
administration has done for 25 years: tell Japan that it faces
equivalent restrictions on its goods if it does not open its market to
our autos and auto parts.
Mr. President, I ask unanimous consent that the op-ed be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the New York Times, Apr. 16, 1995]
Where Do Cars Come From?
Washington.--The other day I was playing the computer game
``Where in the U.S.A. Is Carmen Sandiego?'' with my 9-year-
old daughter, Orly. It's a wonderful geography-teaching tool.
You have to follow clues to different cities to trade down
vile criminals. The clues we were given for one trip were all
clearly pointing to Detroit. But instead of giving my
daughter the answer, I wanted to see if she could figure it
out herself, so I asked her: ``Where are cars made?'' And
without missing a beat she answered: ``Japan.''
From the mouths of babes.
Where have I failed as a parent? I guess it's the same
place that we've failed as a nation. We have so blithely
surrendered so much of the car market to the Japanese that my
own daughter thinks cars come from Japan as surely as pizza
comes from Italy and babies from the stork.
My daughter, of course, was only part right. Roughly 25
percent of cars sold in the U.S. today are Japanese models.
But if we were living in Tokyo she would be dead right, since
only 1.5 percent of the cars sold in Japan are American.
This week U.S. and Japanese negotiators will once again try
to work out a deal for opening the closed Japanese auto
market. Don't hold your breath. The Japanese will literally
do anything to preserve their domestic car monopoly, even
though it is one of the major causes of the massive trade
imbalance between the U.S. and Japan that is, in turn,
causing the yen to soar in value against the dollar.
In fact, the higher the yen goes the less likely Japan is
to open its auto market. With the yen rising against the
dollar, Japan's cars become more expensive and difficult to
sell in the U.S., so Japanese auto company profits are
squeezed. That makes it all the more important for Japanese
auto makers to protect their home market from competition, so
they can charge higher prices there and run up profits they
need to cover losses abroad.
What the U.S. is seeking is an end to Japan's barriers. For
instance, only 7.4 percent of Japanese car dealers, who are
manipulated by the manufacturers, sell foreign cars alongside
Japanese models. Almost 80 percent of U.S. dealers sell
foreign models alongside their domestic brands. It's hard to
sell a car by mail order. You need a showroom and U.S. cars
don't have many in Japan. And the old America-makes-the-
wrong-cars line doesn't wash anymore. U.S. companies now make
eight different right-hand-drive vehicles tailored for Japan.
The U.S. is also seeking better access to Japan's huge
market for replacement auto parts, which has been largely
closed to foreigners through Japanese regulations, customs
codes and cartels. U.S. manufacturers have 3 percent of
Japan's $27 billion replacement parts market, while
foreigners have 18 percent of the U.S. replacement market and
22 percent of Europe's.
Clinton officials claim they are finally ready to tell
Tokyo that either it enters into a meaningful agreement to
open Japan's
[[Page S6000]] auto market, with measurable results or the
U.S. will impose punitive tariffs.
(If this is true, it means the White House has rejected the
brain-dead advice of the Pentagon that we must not allow
``trade friction'' to undermine our security ties with Japan.
Nonsense. We're Japan's largest export market and we provide
Japan with its security umbrella. We should use both as
levers to promote our trade interests. Would somebody get the
Pentagon a map. The last time I checked, North Korea and
China were a lot closer to Tokyo than Washington. Maybe, just
maybe, the Japanese need us more than we need them. How about
a little less Keynes and a little more Machiavelli?)
For starters we should charge Japanese auto manufacturers a
distribution tax on every care they sell in the U.S.--a tax
that will be reduced in proportion to how many Japanese
manufacturers open their showrooms to foreign cars. We should
also inspect every Japanese car and part that comes into this
country, and take our sweet time doing it, which is just what
Japan does.
Hold on, the Japanese will say, that is a violation of the
rules of the World Trade Organization. Rules? Did somebody
say rules? Does anyone think that Tokyo shrank the U.S. share
of the Japanese auto market from 60 percent in 1953 to 1
percent in 1960 by playing by the rules? We'll only win equal
opportunity in the Japanese market when we play the game by
their rules--which are no rules at all.
Even a 9-year-old understands that.
____________________