Good Relations Means Straight Shooting : Panel was right to knock down Detroit’s minivan claim
Detroit’s hard-pressed auto makers are calling a U.S. trade agency’s decision on minivan imports a big defeat. Their Japanese competitors say it’s a victory for American consumers. But the real significance may be in soothing strained U.S.-Japan relations.
The U.S. International Trade Commission voted 4 to 2 last week that the nation’s Big Three auto makers do not suffer significant harm from Japanese minivan imports. The ruling stops the Commerce Department from imposing punitive tariffs on the imports.
The department had ruled the other way last December, charging that two Japanese auto makers, Mazda and Toyota, were selling--or dumping, to use the jargon of international trade--their vehicles at below “fair market” prices. As a result, the agency levied tariffs of up to 12.7% on Japanese minivans, which could have added as much as $2,000 to their sticker prices. Now, the ITC has decided that the evidence the U.S. industry was being hurt by the minivan imports was not compelling.
The minivan, introduced by Chrysler Corp. in 1984, is one of the fastest-growing segments of the auto market. Chrysler, Ford and General Motors dominate the category, controlling about 88% of the market. The majority of American minivan owners go for the Chryslers, whose prices begin as low as $13,500, compared to about $16,000 for the Mazdas.
U.S. auto makers filed the complaint last year when they were deep in the red and were starting to lose overall market share to their Japanese rivals. Today the situation is different, and the Big Three are poised for what probably will be their best offensive against the Japanese in years. In the first five months of this year, Detroit had 72.4% of the U.S. market for cars and light trucks, up 1.6 points from a year ago, while the Japanese lost 1.4 points, dipping to 24%.
Coincidence or not, the U.S. auto recovery followed President Bush’s trip to Japan in January, on which he was accompanied by grim-faced U.S. auto executives complaining at every available media opportunity about car imports. Shortly afterward, Japa- nese auto makers raised their prices and began exporting fewer vehicles to the States. A flurry of informal “Buy American” campaigns brought more shoppers into showrooms of U.S. auto makers, where many were pleasantly surprised to discover the improved quality of American models. Other market conditions too may be creating a more equal selling field. Borrowing costs for Japanese firms are higher now, bringing their capital costs in line with Detroit’s.
Still it’s tempting for U.S. politicians to protect the Big Three. A congressional committee passed a tariff renewal bill Wednesday that would raise the duty on imported minivans and sport utility vehicles to 25% from 2.5%.
Such protective measures in the past have not spurred Detroit to greater competitiveness. The auto makers, by their own admission, relaxed and got lazy instead.
Far better than Congress’ knee-jerk protectionism, the ITC’s decision showed a balanced assessment of industry claims versus market conditions. U.S.-Japan trade relations could use reform, but unnecessary tariffs are not the way to achieve it.
