Japan Urged to Buy More U.S. Auto Parts

U.S. Ambassador Michael Armacost on Wednesday urged Japan’s auto makers to dramatically increase purchases of U.S. auto parts.

Complaining that the automotive trade is causing more than three-quarters of America’s $41-billion deficit with Japan, Armacost took up for the first time an issue that has been the subject of frequent complaints from U.S. officials in Washington.

Commenting in a speech at a lunch sponsored by the Yomiuri International Economic Symposium, Armacost warned that a new political-economic issue was brewing over auto parts.

“While Japanese finished car exports have leveled off, the projections of auto parts imports into the United States show a deficit that is growing very dramatically. For many Americans, this carries with it a certain fear that your keiretsu (chain-like links between producers and suppliers) are re-establishing themselves in our market,” he said.

Negative perceptions about such arrangements are bad enough when applied to the Japanese market, he said, “but when it also looks like it’s going to be true in our market, then people get real excited. I guarantee you the politicians hear this back home,” he warned. “Progress in this area is important because it represents such a large chunk of the bilateral trade imbalance.”

Japanese auto parts suppliers have gained a foothold in the United States--following customers such as Toyota and Nissan to supply their U.S. plants as well as their Japan-based operations.

Armacost said he heard complaints about the pattern often during a recent Midwest visit: “Many Americans resent what they discern, whether fairly or unfairly, as cozy, informal, non-transparent supplier relationships to which our companies enjoy limited access and which seem to reserve much of the high value-added business for themselves.”

He suggested that Japanese firms establish closer links with U.S. parts suppliers.

He cited a doubling of American exports to Japan in the last five years and a 20% slash in the annual trade deficit from its peak of nearly $60 billion in 1987 as examples of “good news” in the bilateral economic relationship. But he called the automotive issue part of “the bad news” and said the overall bilateral imbalance “may grow larger once again” this year--a development that “historically provokes . . . Congress.”