(Bloomberg) -- A trade group representing U.S. automakers urged the Trump administration to hold off further opening the American market to Japanese cars until Tokyo shows it’s committed to returning the favor.
“We recommend the administration avoid making any concessions that would further open the U.S. market to Japanese imports unless and until there is evidence that Japan is truly committed to opening its auto market to U.S. vehicles,” said Matt Blunt, president of the American Automotive Policy Council, which represents General Motors (NYSE:GM), Ford and Fiat Chrysler.
Blunt commented at a hearing Monday in Washington held by the U.S. Trade Representative’s office on its plans to work out a trade deal with Japan. President Donald Trump’s administration intends to start negotiations as early as mid-January, after notifying Congress of its plans in October. Trump agreed with Japan’s Shinzo Abe in September to refrain from imposing new tariffs on Japanese cars while the two sides are engaged in trade talks.
Japan has one of the most closed auto markets in the developed world, and U.S. carmakers exported less than 20,000 vehicles to the Asian nation last year, Blunt said. Regulatory barriers such as safety and fuel standards make it difficult for American companies to penetrate the market, he said.
Auto Stakes
A trade deal with Tokyo should ease such standards while making the phase-out of U.S. tariffs contingent on American companies gaining market share in Japan, Blunt said. U.S. automakers want tougher provisions against currency manipulation than the Trump administration added in a successor to the North American Free Trade Agreement, he added.
But a representative for foreign-based automakers said a deal with Japan would boost growth, improve competitiveness and help workers and consumers in both countries.
Japanese automakers have major manufacturing operations in the U.S. and produced 3.8 million cars in America last year, said John Bozzella, chief executive officer of the Association of Global Automakers, which represents companies including Nissan and Honda.
Japan was reluctant to enter into trade talks with the U.S., after Trump withdrew from the Trans-Pacific Partnership, an accord with Asia-Pacific nations including Japan. Trade in autos is expected to be one of the most contentious issues in the one-on-one talks.
The U.S. had a $69 billion trade deficit in goods with Japan last year.
Car Exclusion
An official for the United Auto Workers union urged the administration to exclude cars from the accord with Japan.
“We are deeply concerned a free-trade agreement with Japan could ultimately further widen our auto trade deficit and hurt our auto industry,” said UAW international representative Desiree Hoffman.
If cars are included, the U.S. should force Japan to accept a quota on how many vehicles it can export to America, strengthen labor standards and impose strong safeguards against currency manipulation, she said.
