U.S.-Japan Trade Agreement Has Not Met Objectives

Autoparts Report,  July 5, 2000  

• E-mail
• Print
• Link

Japan maintains "trade distorting" barriers in auto and auto parts trade, according to an industry group. The U.S. Auto Parts Advisory Committee (APAC), an advisory group formed to examine auto parts and auto trade issues, said it concurs with the U.S. government conclusion in the 1999 Trade Barriers Report that there has been a "lack of progress" toward achieving the objectives of the U.S./Japan 1995 Frame-work Agreement on Autos and Auto Parts.

In its report to the U.S. government, APAC has issued recommendations to the U.S. Department of Commerce, Office of the U.S. Trade Representative, and Congress calling for continuation of a U.S.-Japan trade agreement through 2005. The current accord - the U.S.-Japan Automotive Framework Agreement - expires on Sunday, Dec. 31, 2000.

APAC believes that the central objectives of the 1995 agreement have not been achieved. There has not been significant expansion of U.S. industry's sales oppor-tunities and market access that resulting in increased purchases of U.S. auto parts in Japan and in the United States and other world markets by Japanese vehicle manufacturers, APAC said.

William C. Duncan, General Director, JAMA USA said "The APAC recommendations seem to have missed the sea change taking place both in Japan's auto market and globally. Multinational investments and joint ventures have revolutionized both strategies and opportunities. The key to success for U.S. auto parts companies will be in taking advantage of these new dynamics."

U.S. parts exports to Japan declined in 1998-1999, and Japanese government deregulation actions stalled after initial progress. The U.S. auto parts trade deficit with Japan rose in both years, reaching $10.9 billion in 1999, after declining in the early years of the Framework Agreement. APAC projects this deficit could reach $13 billion this year.

Committee members, including associations representing a broad cross-section of U.S. manufacturers of original equipment, aftermarket, and specialty automotive products, note that earlier momentum toward expanding U.S. exports and global sales to Japanese vehicle builders has been lost.

The recommendations include proposals that the United States and Japan enhance the terms of the present agreement in a new agreement that would remain in effect from 2001 through 2005. The APAC recommendations cover proposals for expanding trade and opening Japan's original equipment, original equipment service, and independent aftermarket parts and accessories markets to U.S. automotive product suppliers.

Among the recommendations are proposals for the Japanese automakers to issue new foreign parts purchasing plans, continuation of current parts purchasing reports through the Japan Automobile Manufacturers Association (JAMA), further deregulation of the aftermarket in Japan, and opening of Japan's market to foreign investment.

The recommendations cover market opening measures for Japan's domestic market, as well as more open purchasing by Japanese vehicle producers' overseas subsidiaries and affiliates in North America, Europe, and emerging automotive markets throughout the world.

APAC members emphasize that they do not seek local content requirements, export targets, or any other form of managed trade with Japan. Rather, the Committee believes that a new agreement should include appropriate quantitative and qualitative indicators of business expansion that both governments and industries can refer to as they assess future progress.

With the dramatic changes occurring in the global automotive industry, a new U.S.- Japan agreement based on the APAC's recommendations will help ensure that American parts manufacturers and their employees have full, free, and fair market access in Japan and in other world markets where Japanese automotive companies have a major presence, APAC said.

COPYRIGHT 2000 Ron DeMarines
COPYRIGHT 2008 Gale, Cengage Learning