[Congressional Record Volume 142, Number 51 (Friday, April 19, 1996)]
[Senate]
[Pages S3730-S3731]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            TRADE WITH JAPAN

  Mr. THOMAS. Mr. President, as the chairman of the Subcommittee on 
East Asian and Pacific Affairs, I come to the floor today to discuss 
briefly an issue that causes me some concern.
  I see from press reports and statements released by the White House 
that during his recent visit to Japan, President Clinton touted his 
successes vis-a-vis trade with Japan, claiming that his administration 
has steered that trade relationship in the most positive direction in 
years. These statements follow others President Clinton made last week 
stating that recent increases in automobile and automotive parts 
exported to Japan are the result of an auto trade agreement his 
administration signed with Japan last August.
  Now, you'd think that after two recent articles in the Journal of 
Commerce and the Washington Post--entitled respectively ``More Auto 
Exports to Japan: Who Gets the Credit?'' and ``Clinton Claims on Auto 
Trade Disputed''--the President would have thought twice about taking 
credit for something that's going on anyway. Since the articles speak 
for themselves, I would ask unanimous consent that they be printed in 
the Record.
  There being no objection, the articles were ordered to be printed in 
the Record, as follow:

            Move Auto Exports to Japan: Who Gets the Credit?

                            (By John Maggs)

       Washington.--The closer one looks at the upturn in U.S. 
     automotive exports to Japan, the tougher it gets to lay all 
     the credit at the feet of President Clinton and his top trade 
     negotiator Mickey Kantor.
       President Clinton is expected to trumpet those trade 
     results in a White House event today marking the first six 
     months since last year's landmark U.S. Japan auto trade pact.
       Claiming credit for that agreement is a small but 
     significant piece of Mr. Clinton's re-election strategy, in 
     which he will argue that his ``free and fair'' trade policy 
     has created thousands of U.S. jobs.
       As the center of that strategy, the Japan agreement 
     mandates some of the biggest reforms Japan has ever 
     undertaken to loosen formal and informal barriers to imports.
       U.S. officials cite numerous regulatory changes they expect 
     to yield results in additional imports. The trickier part is 
     making the connection between these reforms and the 
     statistics on auto trade that Mr. Clinton is expected to cite 
     today.
       The numbers are impressive. Exports to Japan by American 
     and Japanese-owned auto factories in the United States were 
     up 50% in 1995, and exports by Ford, Chrysler and General 
     Motors alone are up 36% in the first two months of 1996.
       U.S. auto parts exports to Japan--the real focus of the 
     trade agreement--seem to be increasing steadily, although the 
     rise in 1995 was smaller than the year before.
       The U.S. parts-content of cars made at Japanse-owned 
     ``transplant'' factories in the United States, meanwhile, 
     increased 14% in 1995.
       The problem is the sheer number of factors affecting the 
     huge U.S.-Japan auto trade, including currency shifts--which 
     made U.S. products much more competitive in 1995--and the 
     lead time to design parts into Japanese models, a factor that 
     makes higher import part levels more likely after 1998.
       Among replacement parts, there is very encouraging 
     anecdotal evidence of new retail outlets opening in Japan 
     that will carry U.S. parts, but little evidence that this has 
     yet had a trade effect.
       Mr. Clinton will note that auto parts exports to Japan have 
     increased 60% since 1992 but the growth rate is slowing.
                                                                    ____


                 Clinton Claims on Auto Trade Disputed

                           (By Paul Blustein)

       The hoopla is scheduled to start around 2 p.m. today at the 
     White House. President Clinton will be there, as will 
     representatives of the Big Three U.S. auto companies and the 
     United Auto Workers. Three new American cars will be on 
     display, with the steering wheels on the right-hand side--
     made to order for the Japanese market.
       The purpose? To celebrate rising automobile and parts sales 
     to Japan and make the claim--which critics call hype--that a 
     major cause was an auto trade agreement that the 
     administration negotiated with Tokyo last year.
       The White House has marshaled some impressive-sounding 
     statistics to make the accord look like a job-generating 
     winner. An administration report due to be released today 
     will highlight the fact that in the six months after the pact 
     was signed last August, sales of U.S.-made General Motors 
     Corp., Ford Motor Co. and Chrysler Corp. vehicles in Japan 
     rose 33 percent over the same period a year earlier, 
     according to people familiar with the report.
       It also trumpets higher sales of U.S. auto parts to 
     Japanese companies, citing an anticipated increase of 14 
     percent in the North American content of 1996 model vehicles 
     at Japanese factories on this side of the Pacific.
       But many experts question whether such recent increases can 
     be attributed to an agreement reached just a few months ago. 
     While the administration can reasonably claim it created new 
     business opportunities in Japan's repair parts market, they 
     say, most of the latest surge in sales of automotive products 
     is part of a longer-term trend stemming from prior trade 
     deals, the weakness of the U.S. dollar and other factors.
       It's ``a notable achievement'' that U.S. auto parts are 
     making inroads in Japan, said Marcus Noland, a Japan expert 
     at the Institute for International Economics and former 
     senior economist at Clinton's Council of Economic Advisers. 
     But ``the administration is probably taking credit for 
     something that's going on anyway.'' Other skeptics note that 
     sales in Japan of European carmakers like AB Volvo and 
     Volkswagen AG have risen at roughly the same sizzling pace 
     over the past few months as those of the Big Three--without 
     the benefit of a trade deal.
       The upbeat nature of today's event will set the tone for 
     Clinton's trip to Tokyo next week, which is shaping up as one 
     of the friendliest U.S.-Japan summits in years as the two 
     sides concentrate on shoring up their security alliance. 
     While Clinton is expected to raise simmering trade disputes 
     over film, computer chips and insurance, the administration 
     is planning to try to focus attention on successes in other 
     trade areas.
       U.S. Trade Representative Mickey Kantor is fond of pointing 
     out that U.S. exports to Japan soared 20 percent last year, 
     to $64 billion, yielding the first decline since 1990 in the 
     U.S.-Japan trade gap. But many economists ascribe Japan's 
     rising appetite for foreign goods to the strength of the yen, 
     which makes foreign goods cheaper to Japanese buyers, and 
     market-opening measures adopted long ago, rather than to the 
     20 U.S.-Japan trade deals struck during the Clinton era.
       But in an election year, the White House is eager to claim 
     that its aggressive trade diplomacy is producing results. 
     That's particularly true for the auto pact, which came after 
     a high-stakes confrontation.
       On one score, the accord has clearly helped generate 
     business for U.S. firms. Tokyo's loosening of its rules 
     concerning the parts used in required periodic auto repairs 
     enabled Tenneco Automotive, among others, to strike a 
     lucrative deal for distribution of its Monroe shock absorbers 
     in Japan.
       But can the administration claim that it is responsible for 
     the sizable rise in sales of cars and components to Japanese 
     consumers and factories? ``Whatever success you see today, 
     the seeds were planted for that many years earlier,'' said a 
     Bush administration trade official, who noted that Japanese 
     auto companies typically choose their parts suppliers several 
     years before a car model is produced.
       Moreover, the pact has fallen short of administration hopes 
     in one area--agreements by Japanese auto dealers to sell U.S. 
     cars. When the deal was signed, Washington declared (without 
     Tokyo's concurrence) that over the remainder of this decade, 
     200 dealers a year should sign up with GM, Ford or Chrysler. 
     Only 30 have done so in the months since the accord was 
     struck, although sources said yesterday that Chrysler may 
     soon announce a deal for 60 or 70 more.

  Mr. THOMAS. While I would agree that our Trade Representative Mickey 
Kantor has done an impressive job, not only in negotiations with Japan 
but with other countries as well, most notably China, but I would also 
agree with the vast majority of economic analysts who believe that most 
of the improving climate for American cars in Japan is due to natural 
market forces. For example, over the last year or so the yen has grown 
stronger compared with the dollar, making American goods cheaper in 
Japan. Matsushita Noriyuki, a senior economic analyst at the Nikko 
Research Centre, attributes increased sales of U.S. cars in his country 
primarily to the fact that the price of those cars has decreased. In 
addition, Matsushita points to major changes made by American car 
manufacturers to accommodate Japanese tastes and habits--such as 
increased attention to quality, right-hand steering wheels, and smaller 
model sizes--as a major factor in increased sales. More importantly, 
trade agreements struck before Mr. Clinton took office--under 
Republican administrations--are finally bearing fruit.
  Mr. President, since 1992 we've grown used to a Clinton foreign 
policy that is an oxymoron, to a foreign policy that is reactive rather 
than proactive. We've grown used to a wide credibility gap between what 
Governor Clinton said as a candidate and what his actions are as 
President--I've spoken before on this floor about the irony of a 
President who accused George Bush of coddling China now doing more 
coddling of that country than President Bush could ever have been 
accused of.

[[Page S3731]]

 We've grown used to President Clinton coopting as his own such 
Republican initiatives as the line-item veto, budget cutting, and calls 
for an end to the era of big government.
  I guess that now, as the November elections approach, it should come 
as no surprise that we can now also look forward to President Clinton's 
rhetoric far outpacing his performance in the foreign policy arena and 
for him to increasingly take credit for the hard work of others.

                          ____________________