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http://www.detroitnews.com/article/20130314/AUTO01/303140478/1361/Members-of-Congress-concerned-about-Japan-joining-free-trade-talks

March 14, 2013 at 5:30 pm
Members of Congress concerned about Japan joining free-trade talks

By David Shepardson
Detroit News Washington Bureau
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Washington - More than 48 members of Congress, including nine  
senators, said allowing Japan to join free-trade talks with 10 other  
nations could lead to more Japanese auto imports and fewer American  
auto jobs.

Their letter to President Barack Obama comes as Japanese media reports  
suggest Prime Minister Shinzo Abe could formally ask as early as  
Friday to join the Trans-Pacific Partnership talks, after meeting with  
Obama last month.

The United States and 11 other nations — including Canada and Mexico —  
have been in talks since 2011 aimed at creating a massive free trade  
zone that would eliminate all tariffs and barriers among the nations.  
But Japan has so far has stayed out of the talks.

Abe's ruling Liberal Democratic Party approved letting Japan join if  
the world's third-largest economy can keep in place tariffs on key  
agriculture products, including rice, wheat, beef and sugar.

In the letter sent Thursday, the members of Congress, including  
Michigan Sens. Carl Levin and Debbie Stabenow, and Reps. Sander Levin  
John Dingell, John Conyers, Dan Kildee, and Gary Peters, raised  
concerns about allowing Japan to take part, but stopped short of  
formally calling on him not to let Japan into the talks.

"American automobile companies and workers — those at the forefront of  
today's economic recovery — have been forced to compete for decades on  
a fundamentally unlevel playing field," the letter said. "A flawed,  
one-way trade agreement that benefits Japan at the expense of the  
United States businesses and workers will not help strengthen this  
vital relationship."

The Obama administration faces heavy pressure from Detroit's Big Three  
automakers and the United Auto Workers union, who fear that dropping  
U.S. tariffs could lead to the loss of thousands of jobs if Japan  
doesn't do more to open its market to imports.

The letter noted that if the U.S. agreed to drop car and truck tariffs  
on Japanese exports under a free trade deal, it "would be a major  
benefit to Japan without any gain for a vital American industry,  
leading to more Japanese imports, less American production, and fewer  
American jobs."

On Wednesday, U.S. Trade Representative Ron Kirk said the countries  
are making progress as the talks "shift into a higher gear." Obama  
said in his State of the Union address he wants a deal by the end of  
the year. The next round of talks is set for May 15-24 in Lima, Peru.

Last month, the Obama administration said Japan needs to do more to  
address concerns raised that its market is largely closed to auto  
imports, but didn't rule out letting Japan join the talks.

Japanese automakers note the auto imports to Japan have been rising  
and question whether U.S. automakers are offering the right types of  
vehicles to meet Japanese consumer preferences.

A study released in August by the Center for Automotive Research  
partially underwritten by Ford says Japanese vehicle exports to the  
United States would increase by 105,000 units or $2.2 billion — up 6.2  
percent — if the 2.5 percent car tariff was eliminated. The study  
argues that U.S. vehicle production would fall by 65,100 units, which  
the study estimates would result in a loss of 2,600 direct U.S.  
automotive manufacturing jobs. An additional loss of U.S. supplier  
jobs is estimated at 9,000 and the loss of spin-off jobs at 14,900.

The Obama administration notes trade investment in Japan already  
supports a million U.S. jobs. The U.S. has the world's largest economy  
and Japan the world's third largest.

The letter said Japan has purposely kept most auto imports out.

"Nowhere is the closed nature of Japan's markets more evident than in  
the auto sector, where Japanese policies and practices have been  
carefully honed — over generations — to keep out American and other  
foreign cars and parts," they wrote. "Japan's significant, long- 
standing and persistent economic barriers put in place to block our  
exports and support theirs have hurt American workers and businesses  
for decades."

The letter said Japan — the third-largest auto market in the world —  
ranks last among developed nations in terms of auto market import  
penetration, at 5.9 percent last year.

The U.S. Trade Representative's Office said "through our extensive  
congressional and stakeholder outreach, we are well aware of concerns  
expressed regarding Japan and TPP. We are working to address these  
concerns in our bilateral TPP consultations."

The American Automotive Policy Council, which represents Detroit's Big  
Three automakers, opposes Japan's entry into the talks.

"To date, Japan has not indicated a willingness to change its decades- 
long practice of maintaining a closed automotive market. Given the  
systemic trade imbalance and lack of willingness to reform, a U.S.  
free trade agreement with Japan would only lock-in the already one-way  
trade relationshipJapan's closed auto market has created," said AAPC  
president Matt Blunt. "Japan's inclusion wouldsignificantly delay, if  
not prevent,proceeding with a high-quality TPP trade agreement with  
other more compatible trade partners in the important and rapidly  
growing Pan-Pacific region."

U.S. automakers have long insisted that Japan is building too many  
cars at home.

"Japan's auto sector is already producing over 11 million automobiles  
despite having only a 5 million automobile domestic market. As its  
population ages and shrinks, this export pressure will only increase,"  
the letter said. "Moreover, it appears that Japanese auto producers  
have been able to sell some products in Japan at high prices — and  
then to use the proceeds of those high-priced sales to sell into the  
U.S. market at low prices. For example, the current price of a Lexus  
IS 350 is $50,037 in Japan, but only $40,220 in the United States."

Japan is the second-largest source of the U.S. trade imbalance after  
China, and, in 2012, automotive products accounted for more than two- 
thirds of the deficit, the members said.

The letter noted the auto trade deficit has jumped from $31 billion  
two decades ago to $53.5 billion in 2012.

The members say other trade deals with Japan have failed to open the  
market to U.S. exports.

They note Japan's elimination of auto tariffs in 1970s or the repeated  
negotiation of agreements to eliminate barriers to American autos in  
1980s and 1990s —including the Market-Oriented Sector-Selective talks  
in 1986, the Structural Impediment Initiative talks launched in 1989,  
and the 1995 U.S.-Japan Auto Agreement. "None of these agreements has  
resulted in barriers coming down and American exports going up," they  
wrote.

dshepardson at detroitnews.com

(202) 662-8735



 From The Detroit News: http://www.detroitnews.com/article/20130314/AUTO01/303140478#ixzz2NYgflcII
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