Japan

U.S. automakers call for currency provision in trade deal with Japan

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American automakers and workers called Monday for the inclusion of a provision to prevent currency devaluations in a trade agreement the United States is eager to strike with Japan as part of efforts to pry open its "closed" automobile market.

Speaking at a hearing on bilateral trade negotiations that President Donald Trump's administration intends to start as early as in mid-January, they also urged Japan to remove nontariff barriers including what they refer to as a practice of not accepting vehicles build to U.S. safety and environmental standards.

Matt Blunt, president of the American Automotive Policy Council — which represents General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles — said the envisaged trade deal should prevent Japan from manipulating the yen because it "has a history of manipulating its currency."

In the hearing in Washington by the Office of the U.S. Trade Representative, Blunt hailed the administration for including a provision to address currency manipulation in the revamped trilateral trade pact with Mexico and Canada, and urged it to pursue stronger currency disciplines in a deal with Japan.

Similarly, Desiree Hoffman, international representative for the United Automobile, Aerospace and Agricultural Implement Workers of America International Union — also known as the United Automobile Workers, or UAW — accused Japan of artificially devaluing the yen to give its exports an unfair trade advantage.

While acknowledging Japan imposes no tariffs on foreign cars, Hoffman claimed Tokyo has instead used nontariff barriers to "insulate" Japanese automakers.

However, despite calls from the American auto industry, senior Japanese government officials have said they have no plans to include a currency provision in a Japan-U.S. trade deal.

Citing the fact that Japanese monetary authorities have not intervened in foreign exchange markets over the last seven years, the officials dismissed the view that Japan has guided the value of the yen lower against the dollar.

Blunt, meanwhile, said regulatory barriers such as safety and fuel standards have left U.S. automakers struggling to compete in the Japanese market.

Aside from the inclusion of "strong and enforceable" currency disciplines, he pushed Japan to accept vehicles certified to U.S. safety and environmental regulation standards as sufficient for sale in Japan.

Blunt and Hoffman urged the administration to maintain U.S. tariffs on Japanese cars, parts and trucks so as not to exacerbate the trade imbalance.

"As U.S. and Japanese officials embark on bilateral trade negotiations, it is imperative that Japanese open its market in a meaningful way to U.S. cars and trucks," Blunt said.

"We recommend the administration avoid making any concessions that would further open the U.S. market to Japanese imports unless and until there is evidence that Japan is truly committed to opening its auto market to U.S. vehicles."

Trump regards automobiles as a symbol of the trade imbalance with Japan, apparently because automobiles and auto parts accounted for about 75 percent of the U.S. deficit with the country as of 2017.

The U.S. goods trade deficit with Japan totaled $68.85 billion in 2017, making it the third-largest generator of such deficit after China and Mexico.

© KYODO

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