Auto Industry, White House Unsurprised, Unimpressed by Move : Japan to Continue Limiting Car Exports to U.S.

From Associated Press

Japan will limit its passenger car exports to the United States for the eighth consecutive year to avoid fanning protectionist sentiment in Washington, the Japanese government said Friday.

In Detroit, auto makers and union officials reacted coolly, saying the decision by the Japanese Ministry of International Trade and Industry was no surprise but also no solution.

"It's better than nothing, but at that level it won't do anything to improve the U.S. trade deficit with Japan," Ford Motor spokesman Tom Foote said. "The present limit of 2.3 million units was announced in 1985 and was based on a higher volume car industry."

The decision to retain the limit of 2.3 million cars in the fiscal year beginning April 1 was made in spite of a debate within the Ministry of International Trade and Industry.

Some MITI officials argued that 1988 was a good time to scrap the restraints because the strong Japanese yen has raised export prices so much that auto makers will not even fill their allotment in the current fiscal year.

The Japan Automobile Manufacturers Assn. announced Friday that Japan's exports declined 6.1% in calendar year 1987 to 2.2 million autos.

But MITI chief Hajime Tamura said the government decided to continue the restrictions in light of rising protectionist sentiments in the U.S. Congress.

In Washington, the Reagan Administration was largely unmoved by the announcement.

"We haven't asked them to do it. In fact, since 1985, we have been urging them not to put on automobile export restraints. That policy hasn't changed. We favor free and fair trade," said White House spokesman B. Jay Cooper.

The Administration has contended all along that the Japanese quotas, while they may benefit U.S. auto makers, still represent the kind of artificial market restraints it is seeking to eliminate in world markets.

Japanese auto makers have long argued that the limits should be removed, saying the quotas originally were set to allow U.S. auto makers to recover from an industry slump from which they have now recovered.

Ford and Chrysler would like to see Japan cut the voluntary export restraints quota by one vehicle for every two Japanese vehicles built in the United States.

General Motors doesn't support trade barriers, but said Japan should open its markets to Western goods. GM and Chrysler both have questioned whether their Japanese competitors are "dumping" vehicles illegally on the U.S. market by charging less for them here than in Japan.

The UAW had called for a cut of 600,000 vehicles from the limit for fiscal 1988, which begins April 1, to reflect the vehicles built at foreign-owned U.S. plants. The union was unhappy with MITI's decision.

Industry analysts noted that Japanese auto makers didn't use the whole quota in 1987 and probably won't use it in 1988, in part because the strength of the Japanese yen against the dollar made their products more expensive.

The real threat to U.S. auto makers are vehicles produced at U.S. factories owned by companies such as Toyota and Mazda, but many of those products have or will have as much U.S. content as Big Three vehicles, analysts said.

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