Japanese let US off car-import hook
The top actors in the Japanese car drama have been taken off the hook, but the one likely to pay is the American consumer. This sums up the aftermath of Japan's decision -- under pressure from Washington -- to cut its car shipments to the United States for at least two years, possibly three.
Now President Reagan and Japanese Prime Minister Zenko Suzuki can confer in Washington this week without the major irritant of an unsolved trade problem.
Bill Brock, the top US trade negotiator, whose guiding hand helped to shape the agreement, says the cutback should have little effect on prices of new cars in the United States.
"The car market is very soft," said Mr. Brock May 3 on "Issues and Answers" (ABC-TV). "It is hard to raise prices and maintain competitiveness."
Other sources -- including some highly placed Reagan aides -- dispute that conclusion, claiming that strong consumer demand for a smaller number of Japanese cars is bound to push their prices up.
Whatever the outcome of that argument, President Reagan has achieved his main goal -- avoiding passage by Congress of a bill slapping tight quotas on Japanese car exports to the US.
Such a bill would have presented Mr. Reagan with a no-win situation:
* If he vetoed the bill, he would have angered the powerful United Automobile Workers (UAW), the US car manufacturers, and many of their supporters in Congress.
* Signing the bill, however, "would have caused an enormous sea change in US trade policy," said a top Reagan aide, sliding the United States down the slippery slope of protectionism.
Another effect of the import curb on US consumers was described by Robert M. McElwaine, president of the American International Automobile Dealers Association, in a telephone interview. He said there will be a "change in the mix" of Japanese cars coming to the US -- more of the luxury models, fewer of the smallest and most basic Japanese cars. If Mr. McElwaine is right, lower-income Americans will be hardest hit.
Just before the import agreement was announced, General Motors and Ford boosted prices on their domestic models, bringing the average sticker price of GM cars to $10,200 and that of Ford cars to $8,817.
Major credit for the import agreement belongs to Mr. Brock, who helped break an impasse that was "heading up to be Congress against Japan," said a US source.
American officials credit the Suzuki government with skill and tenacity in persuading reluctant Japanese car makers to "voluntarily" cut their shipments to the US.
In its fiscal year, which began April 1, Japan will reduce passenger car exports to the US by 7.7 percent -- a total of 1.68 million cars, compared with 1.82 in 1980. This is a drop of 140,000 units.
In the second year, beginning April 1, 1982, Japan will be allowed the ceiling of 1.68 million, plus 16.5 percent of any growth in the US market.
If car sales should spurt in that period, in other words, the Japanese would be allowed 16.5 percent of the increase. Last year Japan's share of the total US market was 21 percent.
During a third year, according to American officials, "monitoring" of the situation would continue and "consultations" on an appropriate import level would take place.
Excluded from the agreement are vans, station wagons, and trucks, as well as passenger car shipments to Puerto Rico.Restraints on vans and wagons may come later.
The agreement does little to solve Detroit's basic problems, experts agree, although it may give the floundering US industry a bit of breathing space.
Brock rejects the argument that Detroit's problems were caused by Japanese imports. "This problem was created right here at home," he said, by too much absenteeism, bonuses paid to managers when not justified, high interest rates, and other factors.
Somehow, General Motors, Ford, Chrysler, and American Motors must persuade American consumers that they can build -- and are building -- fuel-efficient cars comparable in quality and style to those of Japan. US carmakers need to raise billions of dollars to retool, modernize plants, and otherwise finance the transition.
At Chrysler, still hovering close to bankruptcy, workers have agreed to forego pay increases and cost-of-living adjustments until the company turns around. So far, however, the UAW leadership refuses to consider doing the same at GM and Ford.
Experts foresee a much smaller US car industry in the future, with a great many workers having to seek jobs elsewhere. Already robots are replacing humans in some tasks, such as welding, in the most advanced plants.
Parts made abroad are expected to become more common, especially if US manufacturers merge, or otherwise associate, with foreign carmake rs. Chrysler has just announced a long-term relationship with Mitsubishi Motors of Japan.