By on October 4, 2015


A possible partnership deal between North American countries and Pacific countries may include provisions to penalize Asian governments for not opening up their markets enough for U.S. automakers, Bloomberg reported.

According to the report, negotiators are close to concluding talks regarding automobiles, which has been a contentious point during the talks. The CBC reported that talks in Atlanta were at a critical stage over pharmaceutical drugs, and any eventual deal may be delayed by an upcoming G20 meeting in Turkey.

Talks regarding automobiles have been focused on sourcing local content for each car. North American Free Trade Association rules mandate that cars made within the zone have 62.5 percent of its content sourced within the zone. Asian manufacturers have pressed for lower standards for sourced content in a bid for reduced manufacturing costs.

Terms of the possible deal, which were not made public, could include an eventual phase out of the long-standing tariff on some vehicles produced in Japan. According to the report, the tariff could eventually be eliminated after 20 years.

In exchange, American negotiators have asked for a side deal with Japan to open that market to American-made cars. Japan doesn’t prohibit cars made in America, but domestic automakers have said that critical distribution limits and other factors have essentially made Japan off limits to them.

Union leaders have blasted U.S. negotiators for putting American jobs “at risk” with any potential deal.

Officials in Japan have said Americans should just make better cars.

(Photo courtesy Wikimedia Commons)

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49 Comments on “Pacific Trade Deal Could Force Japan to Sell US Cars...”

  • avatar

    what exact barriers does Japan currently have? former editor-in-chief detailed multiple times how there are none. and US and European cars are being sold in Japan. It is just isn’t such small numbers to not matter.

    From all we know, US manufacturers cloud sell 10 million cars in Japan, if they just found willing buyers.

    the problem may be more that a country where kei-cars are popular, not many people would buy a Suburban. Narrow streets, little parking, expensive fuel… most US manufacturers just don’t have much for that segment.

    there probably always is the 0.1% of the population that keep up with shotty cars that are expensive to run just for the novelty factor. but to sell many cars, the cars have to be economical. In Japan, big American cars are not. and the small american cars, mostly are Dewaoo etc.

    • 0 avatar

      BS isn’t exactly a great source of information.

      If you believe the EU and ACEA, Japan uses non-tariff barriers. For example, Japan does not accept European type approval for the whole car and many of its components, and the bureaucracy is supposedly opaque and otherwise difficult to negotiate. The EU claims that the barriers are equivalent to a 10% tariff and serve to stifle innovation.

      In any case, European automakers oppose a Japan-EU FTA, a fairly basic factoid that Schmitt never told the TTAC audience during his tenure. His efforts to make these concerns appear to be an exclusively US issue were a lie.

      • 0 avatar

        What PCH101 said. BS was revealed to be more cozy than he should have been as EIC of an auto “publication” with a couple of Asian automakers after his removal. It was never said which makers, which isn’t relevant and points to the “why” of his position.

        A great example of BS spin can be found here:

        …Volkswagen is not the only company to use electronic deception. In 1998, Honda and Ford paid $267 million and $7.8 million respectively (home team advantage) for similar monkey-business…

        Now at face value, his added bit of snark (home team advantage) over the much smaller Ford fine seems to hold water – until you look at the two incidents.

        Honda’s electronic shenanigans was hard coding the OBDII system to hid engine misfires and not trigger a CEL. For two years. On practically every Honda and Acura built in 1996 and 1997. OBDII CELs can mean anything today, one of the main reasons for existence originally was to identify misfire conditions. This is due to unburned fuel getting into the cats, increasing emissions and slowly (or quickly) destroying the cats. 1.6 million vehicles were involved. A proper fix would have cost Honda $500 million as it would have required replacing the ECM. Back in 1998 the systems couldn’t be “flashed” with new code. Honda did this to hide misfire CELs so the perception of reliability of their products wouldn’t be damaged.

        The compromise of a total of $267 million was in part to cover an extended warranty program on Honda products on the emission systems, and two free oil changes for Honda customers. OK, now $267 million doesn’t seem so bad seeing how it could have been 1/2 a billion (in 1998 dollars) plus a fine.

        What about Ford, how come they got off so easy? Ford’s $7.8 million “home team advantage” was due to 60,000 E-series vans not meeting emission standards when driven in highway conditions. Ford knew it. The vehicles were recalled and repaired/modified to meet emission standards. The bill was a penalty for the cheating.

        Now Bertel is certainly smart enough to know all these details. The facts are easily found. He choose not only to ignore them, but then spin it to imply that Honda was unfairly punished.

        Just as he spins many US auto industry issues. It’s a shame really. He is very smart, and some of his stories game amazing insight into the auto industry – but I always found you had to filter out the truth from the half truth to the total non truth spin with BS

      • 0 avatar

        “If you believe the EU and ACEA, Japan uses non-tariff barriers. For example, Japan does not accept European type approval for the whole car and many of its components, and the bureaucracy is supposedly opaque and otherwise difficult to negotiate.”

        you have a point with that. However, this isn’t different that the cost of “federalization” the Us requires and far away from the chicken-tax. It is more an issue of non-harmonized standards.

        On the other hand, seeing how VW barely gets legal trouble in Europe, I kind of think us having different (mostly higher) standards may be not so bad after all.
        (yes, I added Dieselgate in this single non-VW newsstory :)

        • 0 avatar

          “you have a point with that. However, this isn’t different that the cost of “federalization” the Us requires and far away from the chicken-tax.”

          No it isn’t. The point that the Europeans are making is that Japan uses the process to slow down approvals and its opaqueness to avoid providing guidance as to whether changes comply with the law.

          The US uses a voluntary compliance system. The rules are there for everyone to see, and the major automakers play a role in setting those rules because the US has an open comment/negotiation process.

          With Japan, you don’t know what you’ll get, and it takes awhile to find out. Unlike the US, the cars can’t be sold until they get the blessing of the authority. The VW issue shows how this works — in the US, we trust first, then maybe verify later, versus Japan where nothing gets sold prior to type approval.

      • 0 avatar

        “If you believe the EU and ACEA, Japan uses non-tariff barriers.”

        This argument could only explain if another car maker totally give up bringing a model to Japan. But the real issue is that, with cars that’s already approved in Japan, they sell in small quantity. Is it so hard to admit that American compact passenger cars just suck and Japanese don’t buy them? I mean, even on American home ground, Japanese makes totally dominate the passenger car market (compact and midsize).

        The 10% premium argument does not hold much truth either. Just look at the swing of the exchange rate. USD vs JPY was originally at 1:300~400 when Japanese just started exporting. Then it became 1:80 at one point and now back to 1:120. When all that change, Japanese makers keeps selling in the US. The imagined 10% is really nothing as compared to the currency change.

        • 0 avatar

          Your inability to understand things is quite breathtaking.

          • 0 avatar

            Very accurate self-assessment indeed.

          • 0 avatar

            You have been posting here for years, and I can’t recall even a single instance when you have been correct about something.

            My comment had to do with the Europeans. The US dollar exchange rate has absolutely nothing to do with the EU’s position. Are you aware that “EU” is the European Union and that the ACEA is a European trade organization?

    • 0 avatar

      I wonder how many Kei cars can they sell in the US? Nothing about volume.being discussed I do not think a trade ” equalisation ” will make any difference whatsoever in the current status quo

    • 0 avatar

      I saw way more interesting German cars in Tokyo than I have anywhere else in the world, including Germany itself. The US is a very unique market (favoring large, mushy, automatic barges) compared to basically anywhere else in the world, with the exceptions of Australia and Canada (two other countries that were settled relatively recently, where space is readily available, and whose cities developed after the advent of the car), and I wouldn’t expect US cars to do well in a country like Japan unless they were developed for a global market (i.e. Ford Europe, Opel, etc).

  • avatar

    I see they found a pic of the Toyota Cavalier. Too funny!

  • avatar

    HOW MANY of you have traveled to Asia???

    America’s automakers specialize in making big cars. They are terrible at small cars – with maybe the exception of the Focus which has had so much practice in Europe, Australia and Asia.

    Most of our models just aren’t good for Asia because they aren’t fuel efficient – especially in Japan where fuel is ridiculously expensive – or they lack support overseas to make them ubiquitous.

    TESLA Model S and X will be highly desirable worldwide by the rich, but they’ll need considerable services to protect buyer’s investments in them – not to mention supercharger networks.

    • 0 avatar

      Even BTSR knows. We get a huge selection of Japanese enthusiast vehicles in my country… ie. R34s, Supras, Legnums and Nissan Cubes and Toyota Alphards, Nissan Elgrands. Crap that doesnt make it to most of Europe and the US.

      One thing is clear, the Japanese auto buyer is the most sophisticated on the planet.

      They like Euro and US enthusiast vehicles as they obviously love European and US culture but they would spit on most American and European commuter vehicles.

      To me it smacks of a govt. who doesnt understand the Japanese consumer and wants to force their crap on a buyer who doesnt want to buy that.

      Hell, heaps of European and American customers wont eat their own fare and yet you want other people to?

      I think the best selling non Japanese compact car in Japan is the VW Golf and Polo. That tells you all you need to know about what they want. They dont want Darts and Cruzes and that kind of car. Who does?

      • 0 avatar

        Right, its too bad Ford doesnt make an excellent B segment car. Oh, wait, it does. The Fiesta is widely acclaimed worldwide. European an American automakers also produce excellent small crossovers, a booming section of the market. There is no reason a rational person wouldnt consider a Kuga.

        Ignoring the Japanese government’s intentional suppression of non-Japanese cars and just claiming “the Japanese consumer doesnt want our crap” is ignorant and biased.

        Do you remember out cash-for-clunkers scheme in the US? Remember the two models that were at the top of the list? Toyota Corolla and Ford Escape.

        Japan had a very similar program, similar except on which cars qualified. Sure, MPG was a part of it, so it was with ours. What was different was that ONLY JAPANESE cars qualified. Imagine their reaction if they werent allowed to sell the Corolla or Rav4 in our C4C program. The outrage wouldve been impossible to ignore.

        But, yeah, pulling stunts like that is okay because Japan.

        A few years ago, everyone (who hated non-Asian cars) was claiming the same was true in South Korea. That they didnt want our stupid F-250s and Yukon XLs (because thats ALL Ford, GM and Chrysler build, right?). Except then the Korean government backed off. Now they are buying Impalas like theyre going out of style. Turns out more than just Budwiser-swilling rednecks will buy an American car. Who’da thunk it?

        • 0 avatar

          ” Fiesta widely acclaimed worldwide” ? I know the Japanese are not stupid,but even they would have a hard time trying to justify buying a Fiesta. It does not sell here,, poor build quality and less than stellar dynamics make it a very slow seller here.
          US 2 Litre cars on stilts are pretty poor sellers outside the US

          • 0 avatar

            @STS Endeavour,
            Japanese, Korean and to a lesser extent European vehicles are selling very well in the Australian Market. Ford’s European offerings sell in very tiny numbers.
            Concern about what to sell after local production ceases.

          • 0 avatar

            Yeah I dunno, the Fiesta was never very competitive stateside. Nowhere as versatile or roomy as a Fit, not as refined on the highway as a Sonic, not as cheap as a Versa. That and most of them were saddled with the tragic PowerShift. Apparently they’re popular in the UK though, but that might be a matter of selling on reputation as the older Fiestas were particularly excellent.

        • 0 avatar

          I once read many years ago in the 1990’s, and man do I ever wish I remember what publication it was and when it was published, of Ford running an experiment with getting vehicles into the Japanese market. Ford had constructed several vehicles slated for sale in Japan, paying excruciating attention to detail in quality and craftsmanship, exceeding the quality of vehicles Japan had exported to the US of which Ford was using for comparison. Of course, we wish Ford would do this with all the vehicles they make all the time, but this was an experiment. When it came to getting passed the Japanese inspectors, they would fail their quality standards inspection. Because… Reasons? It proved, to Ford at least, that the cards are indeed stacked against US auto manufacturers in Japan. It is a crackable nut, but it’s tough. Or at least it was once.

          Moving on to the Japanese C4C program, at first the program excluded US made cars, but a January 2010 USA Today article reported that the program was altered to allow US made cars. Fewer than 40% of US brand vehicles sold in Japan at the time would actually qualify for JC4C. A symbolic gesture to appease the politicians.

          Japanese culture itself may also play a major factor. The Japanese perception of America isn’t necessarily accurate. An American car dealership in Japan will have an ambiance that makes the potential buyer that they have actually stepped into America, or rather, a Japanese version of America. Black and white floor tiles, chrome fixtures, neon… It’s all very nice, but it’s cliché, and it plays into the many stereotypes of America and its cars.

          I don’t see why the Fiesta in European spec couldn’t see some moderate success in Japan. It appears to be the right car for the country. I wish somebody could actually show me the so-called poor build quality and less-than-stellar dynamics rather than simply pointing the the US auto brand and saying “Because ‘Muricuh.”

          Even Japan doesn’t get it correct every time. Rover 75 and Citroen C5 really have no business being on Japan Import Car of the Year.

          • 0 avatar

            During the 2008 auto down turn, the US only gave cash infusion to GM and Chrysler, not any of the Japanese makes. Why, in return, would US cars expect Japanese C4C incentive?

          • 0 avatar

            The Fiesta has poor interior packaging for its footprint, something that I think is simply unacceptable in the land of packaging efficiency.

            You know what totally random US vehicle has a cult-like following in Japan? Chevy Astros, I kid you not. They’ve also taken a liking to Russian UAZ 452s. So I guess a van with good packaging is what they’re into.

    • 0 avatar

      Now the day has finally arrived, I agree with something bigtruck posted. I should buy a lottery ticket.

  • avatar

    So why would the Japanese want to buy US cars unless under their own brand, like Made in USA Toyota or Honda? And that avenue already exists. Been done.

    The Japanese have not expressed any desire to buy US cars up to this point. How is this deal going to make the Japanese want to buy US cars?

    And why would the Japanese want to buy some inferior product, unless made in their own American factories?

    You can lead a horse to water but you can’t make the damn animal drink it.

  • avatar

    Given Japan’s demographics, the concept of spending a lot of money designing/building a right hand drive car for their domestic market is a fool’s errand. Much better to try to sort out the markets of China and India, at least there are a lot of people there. Admittedly China’s demographics (for those a little too Malthusian to notice) is not exactly cheery either: rapidly aging populations have their challenges. China may not be Japan or Italy but it is not that far behind. Other then Jeep I don’t think any American mfg. should spend a nickel trying to enter the Japanese market.

    • 0 avatar

      Newsflash: Jeep isn’t American.

      The net impact of this side deal will be that Honda exports more cars into Japan from Ohio. As it is, Honda is already a net exporter of cars from NAFTA, so I don’t see anything to get excited over.

    • 0 avatar

      Jeep has problems. Well it already makes a RHD vehicle straight from the US Factory, too bad about reliability, which is terrible

    • 0 avatar
      87 Morgan

      China has a very serious demographic issue after Japan. Japan is the oldest net age with China second in terms of the next generation, or lack thereof.

  • avatar

    Seriously. The car above is a JDM Toyota Cavalier. What were they thinking? It could have destroyed Toyota’s rep in one shot! LOL

  • avatar

    A trade deal is going to force Japanese consumers to buy cars they don’t want? I don’t think so.

  • avatar

    GM has done too many bad ventures with foreign auto manufacturers, Subaru, Suzuki, Saab…just to name a few. Their Daewoo branch is now sold as Chevrolet. I’m sure the Japanese know better than to bother with that American brand. Maybe Opel can help.

  • avatar

    Higher Chinese part content in US cars in exchange for lower barriers to US car sales in a country they aren’t persuing sales in? UAW wishes they had a vote, because the US boardrooms are pretty happy to be able to put a Japanese skirt on this Wall Street pig.

  • avatar

    Strangely Japanese media do not tell anything about this possible factor in automobile sector agreement.
    worry if any miss communication happened during the negotiation.

  • avatar

    I’m with BS on this one

  • avatar

    I cannot think of a single Japanese compact that I would not rather have than that Chevy Cavalier. I bet the Japanese feel the same way.

  • avatar

    “Officials in Japan have said Americans should just make better cars.”

    If they really said that, this is part of the reason I buy japanese, haha. ZING!

  • avatar

    Excuse me, I have trouble understanding the intention of US Government.

    US Government wants to force Japan and Asian countries to open up their market to American-made vehicles and loosen up their automotive emission and safety regulations so the American-made vehicles can be sold without extensive engineering modifications.

    Yet, US Government doesn’t want to be forced to open up its highly protectionist market to the wider selection of body types, engines, gearboxes, equipments, and such due to its hebetudinous regulations that are unrealistic in the real world applications.

    Understandably, the manufacturers must make decisions based on return of investment. Not to mention the schizophrenic product liability laws that manufacturers must set certain amount of money aside. The latter one is the biggest reason Big Three fought against opening up the US market to the ECE vehicles: they don’t want to be liable for ECE version of Chevrolet Caprice ending up in Ohio.

    I don’t need to bring up the 25% chicken tax again…

    • 0 avatar

      Those arguments are going to kill any progress on any negotiations. It is never going to happen, I suspect after this round it will be conveniently forgotten, to be dusted off as a political side issue later

  • avatar

    I think I’d prefer a Toyota Cavalier to the Honda Crosswind. Ha.

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