[Congressional Record Volume 141, Number 102 (Wednesday, June 21, 1995)]
[Senate]
[Pages S8818-S8819]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                 UNITED STATES-JAPAN AUTO NEGOTIATIONS

  Mr. BAUCUS. Mr. President, I rise today to express my strong support 
for the President and Ambassador Kantor in their efforts to open 
Japan's auto and auto parts market.
  In just 1 week, we are scheduled to impose sanctions on Japanese 
luxury cars. That is a last resort. I hope in these last few days 
Japan's auto companies will show themselves willing to accept a 
reasonable agreement. But if not, we will have no choice.


                 STATUS OF UNITED STATES-JAPANESE TRADE

  Japan has always had a good public relations operation. They have 
done their best to present themselves as the victim in this issue. So 
before we look at the details of the auto issue, let us look at the big 
facts.
  For decades now, American business has met a Japanese market closed 
in all sorts of sectors. We have negotiated over semiconductors, glass, 
insurance, apples, oranges, medical equipment, supercomputers, wood 
products, beef, and more.
  In all these areas we had some success. Japan is now our largest beef 
market. We have sold a few supercomputers. The detail work has helped. 
But we are still far away from open trade with Japan. The statistics 
tell the story. Let me include them for the Record.

------------------------------------------------------------------------
                                                                 Imports
                                                       Exports    from  
                                                      to Japan    Japan 
------------------------------------------------------------------------
1990................................................      48.6      89.7
1991................................................      48.1      91.5
1992................................................      47.8      97.4
1993................................................      47.9     107.3
1994................................................      53.5     119.1
------------------------------------------------------------------------

  To sum it up, since 1990 Japan's exports to the United States have 
grown from $89.7 billion to $119.1 billion--an average of $7.35 billion 
per year. Our exports to Japan, by contrast, did not grow by a penny 
between 1990 and 1993. In fact they shrank. Only in 1994 did we improve 
at all.
  So let us put all the complaints and talk of protectionism from Japan 
aside. They are doing fine. If there was protectionism here, their 
exports would not have grown by $12 billion last year. And just today, 
figures came out showing that in April, Japan sold us a record $2.4 
billion worth of cars. The problem is Japan's closed market.
                       the framework negotiations

  And that is what we began to address in 1993, in the so-called 
framework talks. These had three main baskets, as follows:
  The United States agreed to cut its budget deficit.
  Japan agreed to macroeconomic reforms--deregulation in particular--to 
reduce its worldwide current account surplus.
  And both agreed on talks covering several specific sectors of the 
Japanese market: Insurance, telecommunications, patent law, medical 
equipment, and autos and auto parts.
  Two years later, we have kept our part of the bargain. We have 
reduced the deficit by $500 billion over the 1993-98 budget years, and 
we are on track to do even more this year. [[Page S 8819]] 
  In the second basket, Japan has made some halting steps toward 
deregulation. At least in part because of those steps, Japan's economy 
began to recover last year and we had a relatively good exporting year.
  And in the third basket, we have agreements on medical equipment, 
telecommunications, insurance, patent laws, and flat glass. But autos 
and auto parts remain unsolved. Japan has resisted all efforts at a 
deal. And that is why we have a deadline next week.


                       japan's closed auto sector

  Let us now take a closer look at this issue. Autos and auto parts 
account for close to two-thirds of our total trade imbalance with 
Japan. And the reason is that our auto and parts companies simply do 
not have a fair deal in Japan. A coalition of big companies and 
economic bureaucrats make sure Japanese dealers do not carry foreign 
products. And the effects are clear if we review some statistics.
  In all the OECD countries but Japan, American auto parts average a 
20.4-percent market share. Our share of Japan's auto parts market is 
2.4 percent.
  And in 1994, the world as a whole was able to export only 300,000 
vehicles to Japan, where 6.5 million vehicles were sold.
  This is a result of a deliberate policy to reserve Japan's auto 
market for domestic production. It began in the 1950's, when between 
1953 and 1960 the United States share of Japan's auto markets fell from 
60 to 0 percent. That is right. Zero.
  It continues today, 40 years later. In 1993, for example, Japan's 
Fair Trade Commission found that 47 percent of Japanese dealers think 
they are prohibited from handling competing products, or worry their 
current supplier would retaliate if they sold those products.
                       autos and the u.s. economy

  This is a critical issue for the American economy. Our automobile 
industry makes up 4.6 percent of America's GDP. It is our largest 
manufacturing employer, employing 2.3 million Americans. And it is one 
of the world's most efficient and productive industries.
  Since 1990, the auto industry has spent $58.3 billion on new plants 
and equipment. Its R&D spending stands at $44 billion, behind only our 
computer industry. Cars like the Chrysler Neon, GM's Saturn or the Ford 
Probe show that this investment has paid off in cars that are the 
world's standard for quality. There is no reason they cannot sell in 
Japan.
  And these talks affect more than the automobile industry and its 
parts suppliers. They are critical for electronics, semiconductors, 
steel, chemicals, aluminum, machine tools and more.
  Let me give you one example. When you think about autos, you do not 
often think about Montana. But you should. Because the auto industry is 
the aluminum industry's second largest market, and aluminum is a 
critical Montana industry.
  An average vehicle contains about 200 pounds of aluminum. So in 1993, 
the aluminum industry shipped about 4.2 billion pounds of aluminum to 
the transportation market. And if American autos sell in Japan, we open 
a new export market for American aluminum and reduce some of the 
chronic oversupply on our domestic market.
  So these talks are important not just in Washington, Detroit, and 
Tokyo, but in the Flathead Valley.


                               conclusion

  We should also remember that a good deal is good for Japan, too. 
Japanese citizens want cheaper cars. And Japanese surveys show a 
majority of Japanese dealers want to sell imported cars. If we reach a 
good agreement this week, both countries will benefit. The time to 
settle this is now.
  Finally, I have said before that the ultimate solution to our trade 
problems with Japan lies not in trade policy, but in Japan's domestic 
regulatory and antimonopoly policies.
  Broad reform of these areas would solve many problems which now 
appear to us as sectoral trade barriers. It would remove much of the 
tension which has pervaded our trade relationship over the past 20 
years. And it would be in the fundamental interest of Japan's consumers 
and domestic economic growth as well.
  As Singapore's Senior Minister Lee Kuan Yew said last May:

       If Japan re-examines its past strategy, its leaders must 
     recognise that conditions have changed so fundamentally that 
     they have to break the mold of the last 50 year. That 
     strategy, which was designed to maximize exports and minimize 
     imports, will not limit Japan's role and damage its growth.

  That is a long-term choice, and it is ultimately up to Japan. Until 
Japan's political leaders, business elite and--most of all--economic 
bureaucrats accept the choice, we will have to be firm, and autos are 
no exception. We have made fair offers, and there is no reason Japan 
cannot accept them. So let us stand behind the President and Ambassador 
Kantor, and get the job done.

                          ____________________