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Testing Japan Foothold in Europe

BRITAIN and France are locked in a trade dispute over Japanese cars, and the outcome will test the European Community's commitment to open markets in the 1990s. The dispute centers on the export to France of Japanese cars made in Britain. The French government says that unless Nissan's Bluebird car, built in northeast England, contains at least 80 percent EC-components, it must fit within Japan's 3 percent quota of France's car market.

Basing its arguments on the principles of free trade, Britain says that France's decision, announced last summer, is a restraint on trade which violates EC policy. Britain has referred the matter to the European Commission and threatens to take it to the European Court. In a letter to the European Commission this month, the British government pointed out that there are no specific EC rules on local content.

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``The French want to keep out Japanese goods regardless of where they are made. This is a restraint on trade and that is `fortress Europe,''' said a senior adviser to British Prime Minister Margaret Thatcher.

Already the biggest beneficiary of Japanese investment in Europe, Britain is also angling for new investment from one of Japan's largest car manufacturer, Toyota, which wants a foothold in Europe for sales within the EC.

The aggressive marketing and investment strategies of the Japanese automobile industry is one of the most sensitive issues facing the EC. The French car industry in particular is under pressure from all sides. At a recent EC summit meeting, French President Fran,cois Mitterrand said that he had enough trouble with West German car imports and was not ready to take on the Japanese as well.

Europe's automobile industry is the region's largest and presents a major challenge as the EC tries to harmonize national policies on imports. France and Italy both have strict quotas for Japanese cars which, under EC rules, they must eventually scrap and accept whatever policy is adopted by the whole community.

``We don't want a `fortress Europe' concept, but, on the other hand, we don't want a market that is entirely taken up with imports either from Japan or the US,'' says EC spokesman Robert Elphick.

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