[Congressional Record Volume 141, Number 82 (Wednesday, May 17, 1995)]
[Senate]
[Pages S6797-S6800]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     AUTOMOTIVE TRADE NEGOTIATIONS

  Mr. LEVIN. Mr. President, the purpose of the recently collapsed 
automotive trade negotiations between the United States and Japan and 
the administration's subsequent announcement to impose reciprocal 
restrictions on Japanese products and file an unfair trade complaint 
with the World Trade Organization is simple That purpose is to open 
Japan's closed and protected auto and auto parts markets.
  Yesterday, the administration took an important step toward opening 
Japan's automotive market to American products by announcing the 
specific list of Japanese products to be sanctioned in retaliation for 
the unfair exclusion of American products from Japan. We have listened 
to 25 years of trade rhetoric from one administration after another 
promising to open Japan's automotive markets to United States products. 
Endless talks and endless negotiations have not produced results. 
Japan's markets remain almost totally closed, and we have lost huge 
numbers of jobs during this period.
  I have a little chart here which shows the statements of American 
Presidents since 1971. Every President of both parties has had promises 
made to him and, in turn, has assured the American people that we are 
going to act to open up Japanese markets to American products.
  President Nixon in 1971 said:

       Japan has accelerated its program of liberalizing its 
     restrictions on imports.

  When President Nixon said that, the deficit with Japan was $1.3 
billion. [[Page S6798]] 
  In 1974, President Ford said:

       The United States and Japan will negotiate to reduce tariff 
     and other trade distortions.

  By that time the trade deficit with Japan had grown to $2.8 billion.
  In 1975, President Carter said:

       [W]e're trying to get the Japanese to buy spare parts and 
     parts for assembly of their own automobiles in the U.S.

  By that time the deficit had grown to $2.9 billion.
  President Reagan in 1983 said:

       [W]e're encouraged by recent commitments to further open 
     Japan's markets.

  By that time the trade deficit had grown to $21.6 billion.
  In 1991, President Bush issued a statement through the Vice President 
as follows. Vice President Quayle said:

       The President will take a direct message to the Prime 
     Minister of Japan after the first of the year, saying that we 
     don't anticipate continuing business as usual.

  Well, by then the trade deficit was $43.4 billion. By now the trade 
deficit is over $60 billion.
  So actions clearly are long overdue. The administration's decision to 
tell Japan to either open its markets or it will face concrete 
reciprocal restrictions is the right thing to do and can best be 
understood by showing that decision in a historical context of these 
three decades. When Japan has had total access to America's auto and 
auto parts markets while we have had no real access to Japan's 
automotive markets, decades of painful history and lost American jobs 
have proven that Japan will open its markets only when forced to do so.
  The Japan Automobile Manufacturers Association, JAMA, of course, 
complains about the announced sanctions. In fact, the day after United 
States Trade Representative Mickey Kantor announced last week that we 
would take trade actions to open Japan's automotive markets to 
competition, JAMA put an ad in the Washington Post saying that managed 
trade does not work. I find it incredible that Japan can even mouth the 
words ``managed trade'' given the fact that they have the world's most 
managed economy and have had the world's most managed economy for 
decades. They are the undisputed world champions of managed trade. 
Their wall of protectionism against our auto parts and our automobiles 
has been built over 30 years.
  JAMA's own general director, William Chandler Duncan, before becoming 
general director of JAMA, wrote a book. That book demonstrated just how 
Japan was able to stop the opening of its automobile market to the 
United States and to our automobiles, and that shutting us out of that 
market has been a three-decade-old conscious policy of the Japanese 
Government.
  In 1973, Mr. Duncan published a book entitled ``U.S.-Japan Automobile 
Diplomacy, A Study in Economic Confrontation.'' What a painful part of 
our history is set forth in that book. The book provides strong 
historical support for the administration's decision to pry open 
markets which have been discriminatorally closed to American products 
for three decades. William Duncan's book documents how Japan's 
automotive industry was protected from outside competition by the 
Government of Japan in order to protect their domestic auto industry.
  As you are going to hear from some of the quotes that I have 
excerpted from this book, it is a demonstration of unfair trade policy 
at its worst. American negotiators suffering from Japan fatique have 
three decades of fruitless negotiation as a cause of that fatique. An 
American President has finally acted based on the certain belief that, 
unless we do as other countries and act to force open Japan's market 
with reciprocal treatment, that market will remain closed.
  Mr. Duncan's book gives us a historical view of the years 1967 to 
1971. It has only gotten worse.
  Mr. President, I ask unanimous consent that selected quotations from 
the book entitled ``U.S.-Japan Automobile Diplomacy, A Study in 
Economic Confrontation'' by William Chandler Duncan be printed in the 
Record.
  There being no objection, the materials was ordered to be printed in 
the Record, as follows:

Selected Quotes From United States-Japan Automobile Diplomacy, a Study 
                       in Economic Confrontation

       The period under discussion ranges from the opening of the 
     U.S. diplomatic offensive in the fall of 1967 until the 
     Japanese approval of the Mitsubishi-Chrysler joint venture in 
     June 1971 where Chrysler was limited to 35 percent ownership 
     of Mitsubishi over 3 years.
       ``The course of trade and capital liberalization was not a 
     smooth one. It involved time-consuming consultations between 
     government and industry, long-term schedules of decontrol, 
     and complicated qualifications attached to concessions 
     granted. This naturally lead to frustrations, if not 
     bitterness, on the part of many American's anxious to share 
     in rapidly expanding Japanese markets.'' [Introduction, page 
     16]
       ``Though this dispute was later attributed to a 
     misunderstanding, it nevertheless clearly indicates the 
     reluctance of the Japanese to negotiate as well as the type 
     of frustration that was to plague the U.S. team 
     continually.'' [page 4]
       [January 1968] ``It was natural, therefore, that the 
     Americans would continue to emphasize the abolition of 
     Japan's quantitative trade restrictions. Again the Japanese 
     delegation would make no commitment beyond a vague statement 
     to make a forward looking investigation.'' [page 6]
       ``While all the (Japanese) automobile companies indicated a 
     concern over the possible consequences of capital 
     liberalization the Toyota Motor Company was most adamant on 
     the issue. In January (1968) they went as far as amending 
     their articles of incorporation to the effect that no 
     foreigner could sit on the board of directors of the 
     company.'' [page 7]
       [June-August 1968] ``The Japanese concessions were so 
     painfully slow in coming, and even then frustratingly offset 
     with other types of market restrictions, that the American 
     government never once gave the Japanese side an affirmative 
     response.'' [page 15]
       [March 1968, LDP mission to Washington] ``Congressmen of 
     both parties emphasized in particular the problems of iron 
     and steel imports and the liberalization of automobile parts 
     . . . . especially, Wilbur Mills, Chairman of the House Ways 
     and Means Committee, pointing to the increase of Japanese 
     made automobiles into America, countered by saying that if it 
     is Japanese policy to promote free trade, it should 
     liberalize the import of American automobiles.'' [page 17]
       [June, 1968, USTR's response to Japan's trade opening 
     proposal] ``One example that is giving us great concern 
     relates to one of our biggest export industries, and that is 
     the automobile industry. Here the Japanese have clearly 
     illegal restrictions . . . . This has been under bilateral 
     discussion since the beginning of the year. We have finally 
     told them (Japan) that unless they come up with a 
     satisfactory solution in a very short period of time, we will 
     invoke article 23 of the GATT to take them to court, which in 
     turn will most likely give us the ability to retaliate 
     against them.'' (Special Representative for Trade 
     Negotiations, William M. Roth). [page 19]
       ``These proposals clearly indicate the continued Japanese 
     determination to exclude foreign automobiles from their 
     markets.'' [page 21]
       [May 1968] ``However, it is clear that MITI officials were 
     unwilling to face the possibility of a fully owned Ford 
     assembly plant in Japan.'' [page 22]
       [August, 1968] ``Though none of these initial efforts were 
     realized, the considerable discussion generated by them point 
     out the intensity with which many Japanese feared the 
     entrance of the U.S. companies into Japan. Numerous articles 
     and statements in the Japanese press maintained that a `big 
     three' advance would result in a wave of take-overs of 
     Japanese firms.'' [page 24]
       [Quote from Daiyamondo--Japanese newspaper] ``If we 
     liberalize within two years, it is certain that the second 
     class makers will be bought out by foreign capital . . . 
     Since their mission, if they invest, will be to maintain and 
     increase that investment, Americans will surely come to 
     manage it. In that case the Japanese will become slaves 
     driven unmercifully by American capital.'' [Duncan's comment] 
     ``This gives an indication of the strength of feeling among 
     those who advocated the so-called `Jidosha Joi Ron.' 
     `Jidosha' means `automobile' while `joi Ron' refers to the 
     `expel-the-barbarian' movement of the mid-nineteenth 
     century.'' [page 24]
       [June 21, 1968, Prime Minister Sato] ``Capital 
     liberalization must be advanced according to present day 
     international trends. There is no problem with Japanese 
     shipbuilding, but capital liberalization for automobiles is 
     still impossible even though their exports have been 
     flourishing. Domestic production is a matter of great concern 
     and allowing the improvement of national prosperity is 
     essential. But we would like to promote foreign capital 
     induction in a way that will advance Japan's technology.'' 
     [page 24]
       [July 20, 1968 debate between leaders of the major Japanese 
     automobile firms over whether or not the industry was over 
     protected]. ``Keeping in mind the fact that the government 
     has heretofore fostered the automobile industry as an 
     essential industry, the industry will in the future endeavor 
     to develop on a national basis.'' [Duncan's comment] ``This 
     latter point, known as the `Hakone Declaration' is quite 
     significant in that it was interpreted as a unanimous 
     agreement by Japan's major auto manufacturers not to tie up 
     with foreign capital.'' [page 28]
       ``Henry Ford II continued to be the most outspoken 
     representative of the American industry: `The U.S. Government 
     never gets tough enough . . . if they (the Japanese) go far 
     enough and start importing still more [[Page S6799]] into 
     this country, you'll see a lot of action in Congress.''' 
     [page 32]
       [Chairman of the Keidanren's Foreign Capital Problems 
     Committee, Teizo Okamura] ``If we continue to hold on like 
     this (to an isolationist attitude) there is the possibility 
     of escalating the `yellow peril thesis.' Presently there has 
     appeared a movement for voluntary restrictions on steel and 
     synthetic textiles, but it is conceivable that against 
     automobiles as well as voluntary restriction policy will 
     appear requesting a limit of 200,000 cars a year.'' [page 32]
       [February 21, letter from Automobile Manufacturers 
     Association chairman Thomas Mann to acting assistant 
     Secretary of State Joseph A. Greenwald]. ``. . . The critical 
     area of discrimination is the severely restrictive policies 
     of Japan with reference to capital investment by the United 
     States auto interests. This is a clear violation of the 
     United States-Japan Treaty of Friendship Commerce and 
     Navigation. The Department of State may wish to consider the 
     advisability of again appraising the government of Japan with 
     these views. At the same time its attention might be called 
     to the consequences of a continuing denial to U.S. 
     manufacturers of opportunities for trade and investment in 
     Japan . . .'' [page 35]
       [Duncan's comment] ``Though the contents of this letter 
     revealed nothing new as far as the U.S. automobile industry's 
     position was concerned, the U.S. Embassy in Tokyo took the 
     unusual step of submitting the Mann letter directly to 
     Kiyohiko Tsurumi, the Economic Affairs bureau Director of the 
     Foreign ministry, a move which created considerable comment 
     in Japan and underscored the dissatisfaction of the U.S. 
     government as well as the auto industry with continued 
     Japanese recalcitrance.'' [page 36]
       [1971] ``The automobile concessions, however, while 
     designed to mitigate these growing pressures were, 
     nevertheless, also a reflection of MITI's continuing efforts 
     to insure that the Japanese automobile industry would be 
     managed by Japanese citizens according to Japanese business 
     practices.'' [page 43]
       [October 1969] ``The Japanese, however, resisted this 
     (American) pressure (for further concessions), maintaining as 
     before that they needed time to strengthen their industry so 
     that it could remain competitive with the `big three.' Their 
     reasoning is reflected in a document attached to the cabinet 
     announcement: . . . the actual situation of our country's 
     automobile industry is weak when compared with the mammoth 
     enterprises of the United States and Europe; thee are still 
     considerable differential, in capital power, technical 
     development ability, etc . . .. For this reason, it capital 
     liberalization were to be carried out with the situation as 
     it is now--there is strong danger that big disturbances would 
     be created in the automobile industry, through the advance of 
     foreign capital which has huge capital and enterprise 
     power.'' [page 44]
       [March 1970, letter from Thomas Mann of the American 
     Automobile Manufacturers Association, to the State Department 
     outlining the industry's objections to Japan's October (trade 
     concessions) announcement] ``In sum, the Japanese 
     ``concession'' in the automotive sector, including the most 
     recent decisions announced last October, have been keenly 
     disappointing and, in our judgment, are incompatible with 
     Japan's responsibilities as one of the world's great trading 
     nations.'' [page 44]
       [1971] ``Additional pressure on the Japanese automobile 
     industry came as a result of the dramatic increase in exports 
     to the United States during this period.'' [page 46]
       ``In July (1971) Toyota Motor Sales vice president Kato 
     revealed that Ambassador to the United States Shimoda had 
     warned the automobile industry that if the rate of exports 
     continued, the Japanese industry might expect either 
     protectionist measures in Congress or antidumping measures 
     such as had recently occurred with color television sets.'' 
     [page 46]
       ``Throughout the negotiations the major Japanese automobile 
     companies were recording substantial profits; their exports 
     were expanding at a dramatic rate, and their sales in the 
     United States were increasing during a time when total U.S. 
     automobile sales were generally declining. Furthermore, they 
     were setting up assembly plants and selling equipment 
     abroad.'' [page 53]
       ``In short, when the Japanese spoke of reorganizing an 
     industry they were referring to a government, or more 
     specifically, a MITI policy of encouraging the amalgamation 
     of designated industries into larger units so as to keep them 
     competitive with foreign firms on the one hand, and secure 
     from foreign acquisition on the other.'' [page 53]
       ``One of the most striking aspects of these negotiations, 
     for example, was the strength of Japanese resistance to the 
     intense pressure applied by the United States. By 1969 
     Japan's automobile industry was the world's second largest 
     with rapidly expanding exports and foreign assembly 
     operations; yet despite threats of a U.S. import surcharge, 
     appeals to GATT, pressure from international institutions, 
     and the implied consequences embodied in peripheral issues 
     such as textiles, Okinawa, etc. the Japanese refused to allow 
     the American automobile industry any more than a token 
     position in their automobile market.'' [page 111]
       ``Since the prewar financial combines dissolved by the 
     occupation have, in different forms, gradually reconstructed 
     themselves, the Anti-Monopoly Law has become the center of 
     one of the more significant controversies in Japan. . . . it 
     did not discourage MITI from pushing for reorganization in 
     the automobile industry, or, for that matter, in other 
     industries as well.'' [page 113]
       ``. . . given present day conditions, it is unlikely that 
     an American firm will in the near future acquire significant 
     management control of a Japanese automobile assembly 
     operation.'' [page 114]
       ``The attempt of the American automobile industry to enter 
     the Japanese market covered three and a half years (fall 
     1967-June 1971) of frustrating negotiation and contributed 
     significantly to a growing uneasiness in Japanese-American 
     relations.'' [page 115]

  Mr. LEVIN. Mr. President, two-and-a-half decades later, the story is 
the same. William Duncan was hired to run JAMA, but his own book, 
written before he was hired by JAMA, is a dramatic reminder of Japan's 
determination to prevent us from having access to its markets.
  Mr. President, I will just read three or four of those excerpts. 
Again, this is the man who wrote about what happened in the late 1960's 
and early 1970's, wrote about how Japan acted as a government and an 
industry to keep American products out of Japan in his book. He is now 
the director of the Japan Automobile Manufacturers Association, JAMA. 
But this is what he wrote prior to being hired as the director of JAMA.
  In January 1968, this is what Mr. Duncan wrote:

       It was natural, therefore, that the Americans would 
     continue to emphasize the abolition of Japan's quantitative 
     trade restrictions. Again, the Japanese delegation would make 
     no commitment beyond a vague statement to make a forward 
     looking investigation.

  That was 1968, January.
  In June 1968, again quoting Mr. Duncan's book:

       These proposals clearly indicate the continued Japanese 
     determination to exclude foreign automobiles from their 
     markets.

  Then in 1969, this is what Mr. Duncan said was going on:

       By 1969 Japan's automobile industry was the world's second 
     largest with rapidly expanding exports in foreign assembly 
     operations; yet despite threats of a U.S. import surcharge, 
     appeals to GATT, pressure from international institutions, 
     and the implied consequences embodied in peripheral issues 
     such as textiles, Okinawa, etc., the Japanese refused to 
     allow the American automobile industry any more than a token 
     position in their automobile market.

  Finally, from Mr. Duncan, the final quote that I will read here, 
although there are many more that will be in the Record, is the 
following:

       The attempt of the American automobile industry to enter 
     the Japanese market covered three and a half years (the fall 
     of 1967 through June of 1971) of frustrating negotiation and 
     contributed significantly to a growing uneasiness in 
     Japanese-American relations.

  Mr. President, there is a long history here. It is written very 
clearly by the man who took a personal interest in that history at that 
time. Two and a half decades later, the story is the same, albeit 
worse. The trade deficit has grown by a about 40 times what it was in 
1970.
  Mr. Duncan was hired to run JAMA, but his own book written before he 
was hired by JAMA is a dramatic reminder of how Japan's determination 
to prevent us from having access to its markets worked. It worked to 
Japan's advantage. It worked to our disadvantage. It worked to the 
disadvantage of American workers who have lost jobs by the thousands 
because Japan has been allowed to maintain a protected market. We have 
tolerated it. It is long overdue that we stop tolerating it, and I am 
glad that the President finally took action to knock down that 
protectionist wall which has surrounded the Japanese automobile and 
auto parts market for now three decades.
  Mr. President, I thank the Chair. I will yield the floor and note the 
absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. GORTON. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered
  Mr. GORTON. Mr. President, an inquiry: Are we in morning business?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GORTON. Is there a time limitation on speeches? [[Page S6800]] 
  The PRESIDING OFFICER. No, there is not.
  Mr. GORTON. Thank you, Mr. President.

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