Japan Quotas Draw Mixed Reviews : U.S. Auto Firms Praise Limits; Administration Indifferent
Japan’s decision to extend its limits on exports of cars to the United States for a sixth year drew praise from leaders of the U.S. auto industry and studied indifference from the Reagan Administration on Thursday, while some questioned whether the move will do anything to reduce this nation’s growing trade deficit with Japan.
Clayton K. Yeutter, the U.S. special trade representative, declared that the decision to freeze exports at the current 2.3 million cars per year announced by the Ministry of International Trade and Industry in Tokyo was Japan’s alone and that “the United States did not ask Japan to extend its voluntary restraints.”
Some Administration officials saw in the Japanese decision to extend auto export restraints to March 31, 1987--some five months after November’s congressional elections--as likely to help dampen protectionist pressures in Congress.
Yeutter added: “While we understand the concerns that had prompted the government of Japan to take this action, export restraints are not the answer to our bilateral trade problems. The only real answer is for Japan to open its markets further to U.S. products. We will continue to seek market-opening initiatives on the part of the Japanese.”
On Monday, U.S. and Japanese officials jointly announced agreement on several moves to open the Japanese market to American medical technology and pharmaceuticals, one of several sectors in which the United States enjoys advantages in quality and price that up to now have not translated into exports to Japan.
Trade officials said Yeutter’s office has been exploring with Japan other such sectors to be added to the four sectors under negotiation with the Japanese since early last year. In addition to pharmaceuticals and medical equipment, those other talks involve electronics, telecommunications and forest products. Officials said a likely new sector is in the food products area, possibly meat, grain or citrus fruits.
In Detroit, Chrysler Chairman Lee A. Iacocca said the Japanese had shown a sense of “realism” about the American market by freezing their quotas, after increasing the limit by 450,000 cars last year.
“I’ve got to commend the Japanese for that,” Iacocca said. “This market is crucial to the Japanese, and it’s big enough, they know, to share. But without some good old-fashioned common sense on both sides of the water, we are headed for a trade war.”
Separately, United Auto Workers President Owen Bieber said the union is “relieved that Japan has decided not to further erode America’s industrial base by allowing new increases in their car shipments here.”
But he warned: “Even with continuing restraints, however, Japan’s market share here is far too high.”
Smaller Japanese Firms
Meanwhile, the announcement in Tokyo that exports will remain frozen for the year beginning April 1 seemed to dash the hopes of smaller Japanese auto makers to expand their exports or, in one case, to enter the U.S. market.
Naoki Kuroda, director of the ministry’s automobile section, said the eight auto makers that already ship to the United States would be held to the quotas now in effect, and no others will be allowed to begin shipments.
Exporters of smaller Japanese cars--Mazda, Mitsubishi, Suzuki, Isuzu, and Fuji Heavy Industries (maker of the Subaru)--had hoped to expand exports to the United States this year once restraints were scheduled to end March 31.
General Motors and Chrysler also will likely be forced to forgo plans to increase shipments from their Japanese partners for sale through their U.S. dealers.
Retaining the same export levels also means that Daihatsu, a major manufacturer of “midget cars,” will have to forgo its plans to export to the United States, Kuroda said.
Daihatsu has never exported to the United States. It has had no export quota under the restraints adopted in 1981.
Kuroda said that, although the number of vehicles will be held at current levels, the value of the cars exported will exceed last year’s $21.8 billion because price increases are expected. Private analysts agreed that there would be price increases but noted that the Japanese also hope to sell more luxury models, which carry higher sticker prices.
44% of Trade Surplus
The $21.8 billion in cars, trucks, buses and automotive parts exported to the United States last year--slightly more than half of Japan’s global automotive exports--accounted for nearly 44% of Japan’s 1985 trade surplus of $49.7 billion with the United States.
The 1985 surplus was $12.9 billion above the previous year’s level, and about one-third of that increase was accounted for by increased auto shipments.
Kuroda and Michio Watanabe, the minister of international trade and industry, both said strong protectionist sentiment in the U.S. Congress was a major consideration in the decision to retain the so-called voluntary restraints.
Another official and the trade and industry ministry said the decision was meant only “to avoid pouring oil on the fires of protectionism in Congress--not an attempt to extinguish them.”
Last March the ministry approved an increase of 450,000 in the number cars to be exported to the United States in the following year, and the decision touched off an explosion in Congress, which adopted a resolution calling for retaliation. The White House, despite public disavowal last year by President Reagan of any desire for continued restraints, also reacted with hostility.
Reaction among Japanese car makers ranged from disappointment to relief that the overall limit had not been reduced. Watanabe said the ministry had considered cutting the quota “as one option.”
Takashi Ishihara, chairman of Nissan and head of the Japanese Automobile Manufacturers Assn., described the decision as “a very political one.”
In previous years, Ishihara has heatedly condemned the restraints, but this time he said Japan’s auto industry realizes that “if the trade imbalance increases, political problems will increase.”
This story was prepared by Times staff writers Sam Jameson in Tokyo, Oswald Johnston in Washington and James Risen in Detroit. HOW QUOTAS ARE ALLOCATED Number of cars, in thousands, for April 1-March 31 fiscal year
1985/ Percent 1986 1984 Increase Toyota 617 552 12 Nissan 545 487 12 Honda 427 372 15 Mazda 228 173 32 Subaru 108 76 42 Mitsubishi 194 123 58 Mitsubishi- Chrysler 140 88 60 Isuzu 120 50 242 Isuzu-GM 91 30 308 Suzuki-GM 61 17 359 TOTAL 2,300 1,850 24
Source: Japanese news reports
