U.S. Automakers Push To Exclude Japan From Pacific Rim Trade Pact

The nation's top three automakers are pressing the Obama administration to leave Japan out of ongoing negotiations on an Asia-Pacific trade agreement unless it loosens restrictions on the industry. U.S. automakers argue that at this juncture Japan has to open up its auto-imports market in advance of getting a seat at the negotiating table, and their addition to the talks could delay the completion of an agreement and weaken any deal.

"The U.S. has been trying to open the Japanese auto market for decades," said Matt Blunt, President of the American Automotive Policy Council (AAPC), which includes Ford, GM, and Chrysler. "There were very earnest efforts and lots of commitments but no action," Blunt said.

Blunt said he doesn't believe that letting Japan join the talks on the Trans-Pacific Partnership (TPP), a pact designed to eliminate trade barriers in the Pacific Rim, will help spur the changes automakers say are needed. "That's the only way to know if Japan is really serious about opening the market and behaving like the rest of industrialized world," he said.

But Bill Duncan, General Director of the Japanese Automobile Manufacturers Association, argued that any trade deal in the Pacific Rim should consider who is involved over the speed of completion, emphasizing the importance of adding Japan, the world's third largest economy. "TPP and Japan's inclusion in it is a bold initiative welcomed by the Japanese automobile industry," Duncan said. "It will create jobs and lift the economies of all participants. The negotiations should move forward and not be delayed on the basis of unfounded or undefined allegations regarding the Japanese auto market."

He said European car companies have had success in Japan and that the Detroit companies can as well, if they focus on "market strategies based on Japanese consumer needs."

But Blunt said the United States has tried to gain more market access on several occasions without success. "We'd love to have the opportunity to sell cars there but it will take a change in their approach," he added.

The issue could get an airing on Capitol Hill soon when U.S. Trade Representative Ron Kirk discusses the trade agenda before the House Ways and Means Committee. While there is a long list of issues to cover, lawmakers haven't had a chance to discuss the advancement of the TPP and share their thoughts on whether Japan, along with Mexico and Canada, should be added to the nine-country core.

Currently the deal is between the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. Canada, Mexico, and Japan said last year they would like a seat at the negotiating table. Participants reached a broad framework on a deal late last year and are aiming to complete the agreement as early as the summer.

While the automakers support TPP moving forward, they also argue that including Japan in the mix could stall U.S. job growth in the auto industry, Blunt said.

Japan is the third-largest auto market in the world, after China and the United States, but ranks last out of the thirty Organization for Economic Cooperation and Development (OECD) member countries in access for imported autos, AAPC said. In 2010, total auto imports into Japan from the world was 4.5 percent, or 225,000 vehicles, out of an auto market of nearly five million annual sales, the group said.

Meanwhile, U.S. and Japanese trade officials will meet in Tokyo soon. After several meetings this month between the USTR and Japan's Ministry of Foreign Affairs, the nations have agreed to continue negotiations over Japan's bid to join the talks.

The Obama administration has expressed support for Japan, Mexico and Canada joining the TPP talks but no decisions have been made. The issue is expected to be discussed when the nine core nations meet at a trade summit next month in Australia. Despite the dispute, there is little argument by most U.S. businesses and trade advocates that adding Japan would have a much more significant economic effect.

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