Japan Retains Auto Export Quota : Trade: Keeping the limit at 1.65 million vehicles, Japan greets the incoming Clinton Administration with a self-imposed compromise.

Acting before President-elect Bill Clinton takes office, Japan said Friday that it will retain self-imposed limits on car exports to the United States for another year.

The Ministry of International Trade and Industry said the quota for the 1993-94 fiscal year, which begins in April, will be 1.65 million units, the same as the previous year.

Analysts said MITI is aiming to strike a balance between the interests of Japan’s ailing car makers and fears of trade retaliation from the new U.S. Administration.

“MITI has been quite concerned that Clinton would ask them to cut the quota, so they made it an accomplished fact first,” said Andrew C. Blair-Smith, auto industry analyst at Barclays de Zoete Wedd Securities (Japan) Ltd.

The significance of the quota is more political than economic because exports in recent years have never reached the quota level.

“It is just a political principle because most Japanese auto manufacturers have their own factories in the States,” said Masashi Kushira, analyst at Daiwa Institute of Research Ltd.

“Since the late 1980s, the export quota has never been reached, and I believe that very few American auto makers take it seriously,” he added.

In March of last year, Japan cut the quota to 1.65 million units for 1992-93 from 2.30 million in 1991-92.

Leaving the quota unchanged for the coming year reflects improved market conditions in the United States, Japanese officials said.

“The U.S. auto industry looks as if it is recovering,” MITI Minister Yoshiro Mori said Friday.

Last year’s decision to lower the quota, first imposed in 1981, followed mounting U.S.-Japan friction over trade in cars and car parts, which accounts for about 75% of the total U.S. trade deficit with Japan.

In the first 10 months of 1992, Japan’s trade surplus with the United States was $35.35 billion, up 16.8% over the 1991 period.