Japan Gives Loan to U.S. Auto Maker : Trade: In a bid to ease friction, General Motors got $4.2 million to help finance its auto parts engineering center near Tokyo.
Hoping to ease trade friction between the United States and Japan, the Japanese government is--for the first time--beginning to provide funding to U.S. automotive companies interested in boosting sales in Japan.
Responding to U.S. trade negotiators, who have sought to reduce Japan’s huge surplus in the auto parts trade, the Japanese government has authorized its economic development bank to lend General Motors about $4.2 million. The loan is to help cover the cost of GM’s new Tokyo-based Asian Technical Center, a facility for designing parts for Japanese auto makers.
While industry observers praised the move, most said the Japanese government would have to do much more to allay skepticism about its willingness to open Japan’s markets to U.S. firms. Because the loan was finalized Dec. 9, but not announced until Monday-- about a week before President Bush arrives in Tokyo for trade talks--critics labeled the action a public relations ploy.
The Japan Development Bank, which has helped finance projects for Japanese auto makers such as Nissan and Honda, is giving GM a 15-year loan at an interest rate of 6.1%, said Kazuhiro Takahashi, the bank’s Tokyo-based deputy manager of international accounts.
Takahashi said the loan will cover nearly a third of the cost of GM’s facility, which will be used to design a range of components--from brakes and batteries to emission control devices--for use as original equipment in Japanese-made vehicles. The engineering center, to be staffed by 70 people, was completed this month. Using the center’s designs, GM will manufacture the equipment in the United States for export to Japan.
GM had auto parts sales of about $200 million in Japan in 1991, more than double the amount in 1987, said spokesman Ron Theis.
“Our components are competitive in quality and price, and--in some cases--we have certain technological advances that we can deliver,” Theis said. “The center will give us the engineering and developmental capabilities to get further access to that market.”
The Japan Development Bank hopes to make loans to other U.S. automotive firms interested in supplying parts to Japanese auto makers, Takahashi said.
“The Japan Development Bank is extending loans . . . to promote the import of auto components from the United States and to alleviate trade friction,” he said.
The loan is a Japanese government response to U.S. Commerce Department complaints about Japan’s trade policy on auto parts. The U.S. trade deficit in auto parts with Japan is expected to total $11.5 billion in 1991. It will represent about a quarter of the bilateral trade imbalance.
U.S. trade officials earlier this year concluded that Japanese tariffs and regulations make U.S. auto parts two to three times more expensive in Japan than in the United States.
“This is a step in the right direction,” said Clyde V. Prestowitz Jr., president of the Economic Strategy Institute, a Washington-based think tank. “However, the President and the Japanese prime minister should develop a full-fledged plan to substantially reduce the trade deficit. If this loan is part of a larger Japanese financing plan for American industry, it could be significant.”
Automobile analysts said the loan is a sign of the continuing integration of the auto industry.
“We’re moving toward a global automotive village with or without this kind of financing,” said Arvid Jouppi, a Detroit-based analyst with Keane Securities. “The loan amount is modest but symbolic. To some, this will appear to be lip service. Others will say this represents major progress. The truth probably lies somewhere in between.”