US Carmakers Hope for Help From Clinton Administration In Limiting Japanese Imports
WILL the Clinton administration help the United States auto industry slam the door on the Japanese?
The Big Three US automakers certainly hope so. They are asking Washington to raise tariffs, limit imports, and may soon ask for billions of dollars in penalties as part of a lawsuit alleging the Japanese have systematically underpriced their products in order to grab a bigger share of the American market.
"The question is whether foreign manufacturers are selling vehicles here for less than they are selling them in their home market," says Tom Hanna, director of the domestic industry's trade group, the American Automobile Manufacturers Association. "If they are, that's dumping, which is illegal under both American and international trade law."
The Lexus LS400 is an example Big Three executives often cite. The luxury sedan carries a US sticker price of around $45,000. But in Europe the same sedan costs about $30,000 more.
For the moment, Mr. Hanna refuses to confirm that AAMA's "ongoing investigation" will lead to any action, but industry insiders say a "huge" case will be filed late next month, targeting virtually every Japanese product line.
Walter Huizenga, head of the American Import Automobile Dealers Association, says the allegations "are unwarranted, unnecessary, and unconscionable ... and signal the Big Three want the government to give them a monopoly share they can't earn themselves."
If and when the charges are filed, it will be up to the Commerce Department to determine their validity. If the department rules there was dumping, then the International Trade Commission (ITC) will have to estimate if that resulted in any damage to American carmakers.
The two-step review is no easy process - as the Big Three have already learned. In 1991, they accused the Japanese of dumping minivans. Though Commerce ultimately agreed, the ITC ruled there had been no damage, since the Big Three dominate the American minivan market. It took the government more than a year to rule on the minivan case. Resolution of new dumping charges could take years, observers warn.
"The Big Three may really be trying to convince Clinton to accept a cap on the Japanese market share," speculates Toyota Motor Company vice president James Olson. Quotas don't cover vans
While Japanese passenger-car imports are subject to a "voluntary" quota of 1.7 million units a year, that does not include vehicles built here in the United States - nor minivans, pickups, and other light trucks.
Ford Motor Company chairman Harold Poling has repeatedly called for a mandatory quota that includes all vehicles carrying a Japanese nameplate. Until recently, government officials turned a deaf ear, but suddenly there appears to be a "new era of cooperation" between Washington and Detroit, Mr. Poling said recently.
Shortly before his inauguration, President Clinton invited the chief executive officers of Ford, General Motors, and Chrysler to Little Rock. They outlined the issues most troubling to the domestic auto industry.
The CEOs made it clear they need some help. A national health-care program could sharply reduce their own medical costs, currently averaging as much as $900 a car - nearly triple what the Japanese spend. Along with new quotas, they want the administration to raise the tariff on Japanese minivans and sport/utility vehicles.
In one of the more confusing twists of logic, the Bush administration ruled these vehicles could be classified as "passenger cars" in order to qualify for a duty of just 2.5 percent. But the same vehicles are listed as "trucks" on another government form, allowing them to meet less-stringent safety and fuel-economy standards. Are vans really trucks?
If these vehicles were reclassified as "trucks" for customs purposes, the duty would jump to 25 percent, and that would almost certainly result in a sales decline.
Rising prices have already translated into trouble for the Japanese - even if, as the Big Three contend, prices haven't kept pace with the declining value of the dollar. After years of steady gains in the American marketplace, Japanese automakers watched their share of the US market slip by 1.5 percent last year. They've been forced to offer costly sales incentives.
Clark Vitulli, Mazda's top American executive, is confident the new administration "is [not] going to take sides too quickly or lean one way or the other. I have faith that they're going to look at all sides first."
But the publicity alone may do the damage, cautions Toyota's Olson. "The more times they throw spaghetti against the wall, the more sticks to us and makes us look dirty ... whether they win or not."