[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.
       

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