Should foreign car imports be limited?
The United Auto Workers and the Ford Motor Company charge that serious injury to the automobile industry has been caused by imports and accordingly petitioned the International Trade Commission to propose to the President that import restraints be enacted. If the commission concurs that imports have in fact been a substantial cause or threat of serious injury, it may recommend higher import duties and/or import quotas. The President, however, is empowered to substitute his own findings and recommendations for those of the ITC, subject to the approval of the Congress.
The outcome of this case is one in which the whole nation has a huge stake.
Most imports at present are of the smaller, fuel-economy models. Such cars have for long been made abroad, particularly in countries where the tax-paid prices of gasoline have been much higher than in the United States. Even when gasoline prices in the United States began climbing, they were not per se a major deterrent to the sale of "gas guzzlers." But when car owners were obliged not only to pay inflated prices for gasoline but to wait in line at filling stations to secure it -- and often only in uncertain or limited amounts, and/or only on the "even" or "odd" days of the month -- the US demand for small, fuel-efficient cars promptly skyrocketed.
Since American manufacturers were not equipped to meet much of the demand, those buyers who were no longer content to purchase "gas guzzlers" had no choice other than to postpose the purchase of new cars or turn to possible foreign suppliers. Makers in Italy, West Germany, and more especially Japan all took great pains to cater to the tastes of American consumers and succeeded in doing so. Faced with these new market realities, US manufacturers finally tooled up for large-scale production of small, fuel-efficient, high-quality automobiles.
Although not a party to the ITC proceedings, the public will be much the biggest "winner" or "loser" in the case, depending upon its outcome. The principal and intended effect of restricting imports under present circumstances would be to raise prices of both imported and domestic cars, and thus contribute further to the country's already staggering inflation.
It may also be observed that for some time wage rates in the automobile industry have been higher and have risen more rapidly than those in most other industries, and have thus operated to bolster still higher the national inflation rate. The present wage rate in the automobile industry averages about to the very heavy lay- offs in it.
Whatever the ITC's findings and recommendations, domestic industry must recognize that some of its own practices have contributed in some measure to the predicament in which it finds itself today. It ought, for example, to reexamine whethe there is any longer warrant (if there ever was) to engage in major retooling annually in order to make principally cosmetic changes so that the "latest" models can readily be distinguished form earlier models and from cars made by some competitors.
A leading German manufacturer of high- quality cars has found it advantageous both to the firm and to customers to offer "new" models only when they actually incorporate some significant new feature -- not, for example, the substitution of a digital clock for a conventional clock, neither of which is or need be a very precise time-keeper.
Above all, the industry should refrain from attempting to mislead the public by, for example, perpetuating such timeworn myths as appeared in a full-page advertisement (paid for by the UAW) in key cities across the country recently: "Every ship bringing foreign- made cars to America carries a hidden cargo. Unemployment. For each foreign car sold here, one of our workers gets laid off. . . ." The advertisement also mentions an irrelevant poll published in the New York Times in June stating that 71 percent of Americans would rather forgo "cheaper foreign goods" than accept "higher unemployment."
Imports of cars from, say, Japan creat nom unemployment in the US, least of all among workers now employed in automobile factories. These plants have no problem in selling all of the small, fuel-economy cars they can make with the production facilities at their disposal. The cars that Japan sells in the US, on the contrary, create employment in this country, such as int the production of soybeans, cotton, tobacco, wheat, and numerous other articles we produce more efficiently than Japan can. For the time being, however, Japan is able to produce small cars more efficiently than we can -- not by having resorted to unfair tactics but by having had keener foresight.
Unless the ITC finds that imports of cars have caused or threatened serious injury to the domestic industry, there would not appear to be any valid reason to limit such imports at this time, except possibly for compelling national security reasons -- which have yet to be offered.
Domestic managers of automobile plants may be displeased with ofjections to their various proposals for restrictions of imports of cars for "temporary" but substantial periods. No one, however, need have misgivings for refusing to be guided by their judgment. If any plant managers feel offended by lack of the fullest confidence in their assessment of the industry's problems and needs not only by many of their employees and stockholders but also by a large segment of the public, possibly it is because they deserve to feel that way. What did they accomplish for the industry during the last few years when they were in complete control of it?