US Automakers Oppose Free Trade Agreement with Japan

January 16th, 2012 - Drew Dowdell - CheersandGears.com

In a statement released on Friday the American Automotive Policy Council (AAPC), a political action committee formed by General Motors, Chrysler Group, and Ford Motor Company, announced opposition to Japan joining the currently running Trans-Pacific Partnership (TPP) free trade negotiations. The original members of the TPP formed in 2006 are Brunei, Chile, New Zealand and Singapore. From 2008 to 2010, five additional countries, Australia, Malaysia, Peru,United States, and Vietnam, announced they had entered negotiations to join the trade pact. On November 11, 2011, Japan’s Prime Minister announce his country’s intention to join the negotiations.

AAPC’s objection to Japan’s entry into the negotiations stems from Japan’s closed automotive market. They claim that 70% of the U.S. trade deficit with Japan comes from the auto industry with 201 cars exported from Japan for every 1 car imported. The Japanese car market had sales of over 4.7 million vehicles in 2010, however only 225,000 of those were imports. Of that, only 8,000 of the imported cars were built in the United States contrasting sharply with the 1.5 million vehicles that Japan exported to the U.S.

Japanese officials claim that the reason imported vehicles don’t sell well in Japan is because they don’t meet the diminutive size needs of the Japanese customer. Most Japanese parking spaces and garages will only fit sub-compact or micro cars which are not a specialty of U.S. manufacturers.

While the Japanese claim against U.S. manufacturers may hold some water, that claim falls flat against manufacturers from other parts of Asia and the European Union. Indeed, South Korean auto manufacturer Hyundai stated in 2009 that they would withdraw from the Japanese market after only moving 1,875 cars per year.

AAPC is suggesting a two year “time out” before Japan is allowed to enter negotiations. During which time AAPC wants to see drastic changes for rules regarding imports that honor an agreement signed by the U.S. and Japan in 1995.

In Japan, the TPP is causing controversy as well particularly among the agricultural community. Japan protects its agricultural businesses with high tariffs on imported food products and subsidies for domestically grown ones. The tariff on imported rice is set a 777.7%, wheat is 252%, and sugar is 325%. The proposed removal of those tariff as part of the TPP agreement has been causing more headaches for the already increasingly unpopular Japanese Prime Minister Noda. On Thursday, 6 members of Noda’s own political party told U.S. officials that despite PM Noda’s enthusiasm for the treaty, they would vote against it and Japan’s Parliament would not ratify it.

Source: American Automotive Policy Council, The International News

Photo Credit: Gobierno de Chile