U.S. Auto Makers Pressed to Drop Trade Suit : Commerce: The Administration fears that an “auto dumping” case against Japan could poison relations with Tokyo.
The Clinton Administration, hoping to head off an early trade confrontation with Japan, is trying to persuade the Big Three U.S. auto makers to delay or drop a planned multibillion-dollar case against the Japanese auto industry.
Administration officials believe that the suit, alleging Japanese autos are dumped in the U.S. market at artificially low prices, could permanently poison the relationship with Japan at a time when President Clinton’s foreign and trade policies are still in the embryonic stage, sources said Wednesday.
The National Security Council has ordered a major review of U.S.-Japan policy, and there is fear that a bitter early fight over auto imports could preempt the study and become the driving force in relations with America’s chief Pacific ally.
The major U.S. auto firms are preparing a case accusing Japanese auto makers of selling millions of cars in the United States at prices thousands of dollars below those charged in Japan in an illegal effort to build market share here.
Japanese auto exports to the United States accounted for fully half of last year’s estimated $47.6-billion U.S. trade deficit with Japan, although Japanese import share of the U.S. market has slipped slightly in the last year--to just more than 30% of domestic car sales.
If the Big Three are successful in their suit, punitive duties would be slapped on Japanese auto imports, resulting in thousands of dollars in price increases on some models to match the prices charged for the same cars in Japan and other markets.
While some Administration analysts believe that the Big Three have a credible case, there is deep anxiety that the Japanese would interpret the suit as evidence the Clinton Administration intends to pursue a hostile and protectionist trade policy against Tokyo.
One influential member of Congress with close ties to the auto industry said U.S. Trade Representative Mickey Kantor earlier this week expressed concern about the case, saying it would tie his hands as he tries to devise an effective trade policy toward Japan and other major trading partners.
National Security Adviser Anthony Lake and National Economic Adviser Robert E. Rubin are coordinating a top-to-bottom review of Japan policy and have barely begun, officials said.
Kantor said that “he didn’t want to fire all his shots early,” said an aide to the lawmaker. “He wants to further U.S. business objectives but at the same time not jeopardize relations with an important ally and trading partner.”
The lawmaker, who asked not to be identified, and representatives of the domestic auto industry have so far been chilly to the Administration’s entreaties.
Steven Collins, an official with the American Automobile Manufacturers Assn., said Wednesday that his group has not formally been asked by Kantor or any other Administration official to drop the case. But, he said, the industry will probably reject such a plea.
Anti-dumping complaints are filed with the Commerce Department, which must determine under strict deadlines whether the foreign company in fact sold products at cut-rate prices. The independent International Trade Commission then must issue a parallel ruling on whether the domestic industry was harmed by the alleged dumping, or whether its problems resulted from other factors.
The Commerce and ITC evaluations are supposed to be based on facts and conducted free of any political considerations or larger trade concerns.
Last year, the U.S. auto makers filed a complaint alleging that the Japanese had dumped minivans in the United States. They lost the case because they could not prove that domestic auto firms--with more than 80% of the minivan market--had been injured by the Japanese discount pricing.
The new Administration came into office promising tougher enforcement of U.S. trade laws than the previous two Republican administrations. Its first two decisions--the steel case and the announcement on Monday of sanctions against the European Community for alleged unfair government procurement rules--were seen as signs that Clinton’s trade policy would indeed be more muscular.
But Clinton Administration officials clearly are not yet prepared to embrace a sweeping auto dumping case involving as much as $45 billion in imports.
“Their first priority is to try to define the commercial trade relationship with Japan for themselves,” said a Washington trade lawyer familiar with the Administration’s thinking.
“A case like autos . . . tends to drive the policy, so you never have a chance to develop your own policy and consult with the domestic industry on whether a dumping case is a good idea or not.”
Some sources close to the case said the auto makers are preparing to file the dumping complaint as early as Feb. 12, which would come the same week as Ford Motor Co. and General Motors Corp. are expected to formally announce large losses for 1992. Chrysler Corp. already has posted a gain of $723 million for the year.
Pat Choate, a trade specialist who argues that Japan has been cheating on global trading rules for decades, said he was encouraged by the auto industry’s planned action and disappointed in Clinton for trying to block it.
“The Administration is following exactly the same sort of foreign policy script that has been followed for 40-plus years. Japan has always played the ‘relationship card,’ ” Choate said. “They’ll talk the new Administration through three years before anything happens, as one industry after another disappears.”
