Detroit is finally dropping the mask and says what it really wants in U.S. / Japanese trade relations. It wants to keep existing barriers that frustrate importation of Japanese cars, and that, for all intents and purposes, prevent importation of Japanese trucks. For the next generation, Detroit wants to be in your pocket without outside interference.
Japan is formally joining negotiations on the proposed Trans-Pacific Partnership (TPP) agreement next month in Malaysia. Despite, or possibly because of shrill rhetoric based on lies and deception, Detroit could not prevent it.
Last week, a U.S. government panel led by the Trade Representative’s Office held a hearing to get advice on negotiating objectives for Japan.
“Now that Japan is part of the negotiations,” wrote Reuters, the American Automotive Policy Council, a lobbying group representing GM, Ford, and Chrysler, “is trying to hold on to the current 2.5 percent tariff on Japanese cars and the 25 percent tariff on Japanese trucks for as long as it can.” The unions joined the pleas to keep trade barriers against Japanese imports in place. “Thea Lee, deputy chief of staff for the AFL-CIO labor federation, said eliminating the 2.5 percent duty on Japanese cars would gut the Detroit automakers’ profit margins, especially for small- to medium-sized cars.” Reuters says. “Getting rid of the 25 percent truck tariff would eliminate the incentive for Japanese companies to build trucks in the United States, putting U.S. jobs at risk.”
According to Reuters, “Japan already agreed in principle that the phase-out period for U.S. auto tariffs would be the same as the longest phase-out for any other product in the pact.” The longest phase-out would be the pact with for South Korea, which eliminates the 2.5 percent U.S. car tariff after four years and the 25 percent U.S. truck tariff after 10 years.
Detroit and the unions finally drop the charade that all they are interested in is an opening of the allegedly closed Japanese car market, which has been wide open. The 25 percent chicken tax, along with skewed CAFE rules created a protected market for overpriced trucks that are safe from foreign competition. Detroit wants it to be protected for as long as possible, and the price to be paid by the American truck buyer.
In its representations to the panel, the AAPC still reiterated that Japan “maintains the most closed auto market in the developed world,” but nobody except Detroit and the unions believe the tired lies anymore. Hard pressed to name the non-tariff barriers it blamed for the low sales of American cars, the AAPC lamely demands that Japan adopts more UNECE rules, while the U.S. does not adopt any.
In contrast, the Japanese Auto Manufacturer Association JAMA delivered short and very polite comments:
“At times during the Japan TPP debate in the U.S., misunderstandings have led to statements that Japan’s market is closed to imports. In fact, Japan has zero auto tariffs and no restrictive customs or regulations only apply to imported vehicles. With regard to dealerships, there is no restriction on the brands or vehicles dealers in Japan can sell and Japanese automakers cannot intervene in these dealer decisions.
In the case of the Japanese market, it is essential to note that Japanese consumers overwhelmingly prefer very small cars, which U.S.-based automakers rarely provide. In 2012, smaller passenger cars, those with up to 2,000cc in engine capacity, had a 90 percent market share in Japan. However, the U.S.-based automakers offered only five models in this segment while European automakers offered 87 models. Accordingly, European car sales and market shares have been rising. These realities confirm that a critical factor to success in any auto market is to offer sufficient choices of models that appeal to local consumers.”