Bill Threatens Cuts in Japanese Auto Imports : Congress: Democratic measure demands end to Asian nation’s trade surplus. The proposal could spark a conflict with the Bush Administration.

Key congressional Democrats introduced legislation Friday that would require Japan to phase out its $41-billion trade surplus with the United States or face sharp cutbacks in the number of Japanese cars that could be sold in the American market.

The measure, sponsored by Majority Leader Richard A. Gephardt (D-Mo.) in the House and Donald W. Riegle Jr. (D-Mich.) in the Senate, is expected to get swift approval by Congress next year if President Bush is unable to win major trade concessions during his coming trip to Tokyo.

The proposal could provoke an election-year confrontation with the White House because the Bush Administration prefers a negotiated solution rather than legislation to deal with Japan’s controversial trading practices.

Citing the weak U.S. economy and General Motors Corp.’s announcement that it would eliminate 74,000 jobs and close 21 plants, Gephardt said: “We do not accept further economic decline as inevitable for this country’s future.”

The Gephardt-Riegle bill would establish an import limit of 3.8 million Japanese cars in this country, the number shipped here this year. The level would then be cut in stages by up to 1.25 million if Japan does not take steps to buy more American goods or otherwise slash its trade surplus by 20%.

Japanese cars now account for 33% of the U.S. car market. If all the sanctions in the bill were applied, that share would drop to about 21%, Riegle said.

In contrast, he said, all foreign cars sold in Japan amount to 3% of the market with American-made vehicles accounting for one-third of the total.

Cars, trucks and other automotive products account for three-fourths of the massive U.S. trade deficit with Japan, which Riegle said has drained $459 billion out of the United States since 1980.

Gephardt said the European Community has imposed a ceiling of 1.2 million Japanese car imports each year for the next seven years, equivalent to 16% of the European car market.

“Why can’t we do something similar?” he asked. The Japanese trade surplus, he asserted, has led to the loss of 800,000 jobs in the United States.

Democrats from Michigan, the traditional base for the U.S. auto industry, which has been devastated by a recession-related slump in sales, used even stronger rhetoric to demand action against Japan for its trade policies.

“The recession we’re witnessing here is made in Japan,” said Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee and a leading defender of Detroit’s auto makers.

He and his colleagues charged that Japan is using unfair trade practices to limit access to its domestic market and curb sales of U.S. autos in that country.

“The legislation we are unveiling today gets tough,” said House Majority Whip David E. Bonior of Michigan. “It tells Japan: Reduce the overall trade deficit, open your auto market.”

The bill initially would exempt plants producing Japanese cars in the United States. They eventually would be brought under its provisions unless 60% of their parts are bought from firms not affiliated with Japanese companies.

The bill would establish a general import limit in 1992 of 3.8 million Japanese cars with less than 60% of the value of their components coming from non-Japanese parts makers. This ceiling would be cut by 250,000 cars each year for five years if Japan fails to meet the trade-deficit reduction targets.

A top adviser to Bush said direct talks with the Japanese government to encourage open markets offers the best chance of reducing the enormous U.S. trade deficit with Japan.

“Japan stands out like a sore thumb in the world trading community,” said Secretary of Commerce Robert A. Mosbacher.

MINIVAN DUMPING: Commerce Department charges Japanese auto makers with underpricing minivans to boost sales in United States. D1