Big 3 Won’t Pursue Case Against Japanese : Automobiles: Detroit decides to defer any legal action against Tokyo rivals over what it called illegal dumping.
The Big Three auto makers, while charging that Japan’s auto manufacturers were illegally dumping billions of dollars worth of cars in the United States, announced Tuesday that they will not file legal action to halt the alleged trade violation.
Responding to outcries from consumer groups and Clinton Administration displeasure with the threatened dumping suit, the chairmen of the three U.S.-based auto companies said in a rare joint statement that they were deferring legal action in hopes that the Administration would take aggressive steps to address the growing trade imbalance with the Japanese.
Administration officials believe that the suit could have permanently poisoned the relationship with Japan at a time when President Clinton’s foreign and trade policies are still being debated internally. Consumer groups feared that the suit could lead to higher prices for imported autos.
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The auto executives said they will continue to monitor what they called the “unfair trade and business practices” of the Japanese and would reserve the right to file a dumping case in the future.
“Although our legal counsel have advised us that we have a strong case under U.S. trade law that Japanese manufacturers are dumping cars into the U.S. market--with total disregard for the future of the U.S. economy and American jobs--we have decided not to take legal action at this time,” said a statement issued by the auto makers. It was signed by Robert J. Eaton, chairman of Chrysler Corp.; Harold A. Poling, chairman of Ford Motor Co., and John F. Smith, chief executive of General Motors Corp.
“We believe this approach will give the Clinton Administration the opportunity to develop its position on trade and jobs,” their statement said.
While some officials believe that Detroit could have presented a credible claim that the Japanese are selling cars here at less than the cost of production, there was considerable anxiety that the Japanese would have interpreted the suit as evidence that the Administration intends to pursue a hostile and protectionist trade policy against Tokyo.
The resulting friction could have severely limited the Administration’s options in dealing with Tokyo on a range of foreign policy and economic issues, officials said.
The auto makers’ decision comes two days before Japanese Foreign Minister Michio Watanabe is to arrive in Washington for the first high-level talks between Tokyo and the new Administration. Watanabe is to meet with Clinton, Vice President Al Gore and top officials to reaffirm the two nations’ longstanding alliance, but also to warn against the dangers of protectionism.
To win a dumping case, the auto makers would have had to persuade the Commerce Department that the Japanese auto makers were selling cars in the United States for less than their production cost or at lower prices than those charged in the home market.
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In addition, they would have had to prove to the independent International Trade Commission that the Japanese pricing policies had injured the U.S. auto industry.
While the Administration’s opposition to the suit was well known to the auto makers, industry officials said they had had “no direct or indirect” contact with government officials seeking to persuade them to drop or delay it.
Ford spokesman Al Chambers said Clinton was sensitive to the competitive problems faced by the U.S. auto industry and said he hoped that the new Administration was serious about dealing with the growing trade imbalance with Tokyo.
He said the three top executives, along with United Auto Workers President Owen Bieber, met privately with Clinton and Gore in Little Rock, Ark., in December and made their case for aggressive action in dealing with Japan’s trade practices.
Detroit’s decision was applauded by foreign car makers and by consumer groups.
“It’s good news for the consumer,” said Philip A. Hutchinson Jr., president of the Assn. of International Automobile Manufacturers, the foreign auto makers’ trade group. “It’s going to assure that the competition is in the marketplace where it belongs, rather than in the courts and the agencies.”
He said the Big Three’s accusation that the Japanese were selling cut-rate cars and their calls for government retaliation were “inappropriate rhetoric.”
Hutchinson added that he believed the real reason Detroit decided to drop the suit was public opposition to heavy-handed actions that would have raised the prices of imported cars by thousands of dollars in some cases.
