February 25, 2014 at 4:24 pm

U.S. makes 'some' progress on Japanese auto trade issues

U.S. Trade Representative Michael Froman said Tuesday the 12 nations negotiating a proposed Pacific free trade pact are making significant progress, but not as much on Japanese auto issues.

Froman spoke to reporters by phone from Singapore where he said the 12 nations “made further strides toward a final agreement.”

On the contentious auto issues with Japan, Froman said the U.S. has made “some progress in those discussions but we’re not in conclusion yet and we’re continuing to press on the remaining issues.” He reiterated that the U.S. is not raising currency issues in these talks, but in other international forums, despite repeatedly pushes from many in Congress to address currency.

The proposed Trans-Pacific Partnership trade pact is facing strong opposition from U.S. automakers and the United Auto Workers union. And in recent weeks the top two Democrats in Congress both said they oppose fast-track legislation that would allow for a quick up or down vote on an agreement without changes.

The U.S., Japan, Mexico, Canada and eight other nations have been negotiating a Trans-Pacific Partnership (TPP) that would create a free trade zone accounting for 40 percent of the world’s economy. Australia, Brunei, Chile, New Zealand, Malaysia, Peru, Singapore and Vietnam are also part of the talks.

Froman downplayed a report in the Japanese press that said a deal could be reached without Japan among the other 11 nations.

“All of the countries around the table are focused on trying to get that deal done with all 12 countries as part of it,” Froman said.

The nations said in a statement that while “some issues remain, we have charted a path forward to resolve them in the context of a comprehensive and balanced outcome. ... We will invest the considerable level of effort that is required to deliver such an agreement, which will create jobs for our citizens, opportunities for our businesses, and economic growth and development in each TPP country.”

The countries had hoped to reach a final deal by year’s end but missed the deadline. They said Tuesday they “are committed to concluding as soon as possible an agreement.” There is speculation that the countries hope for a deal before President Barack Obama visits Japan in late April. “We’ve made clear that substance of the negotiation will determine the timetable,” Froman said.

U.S. automakers have repeatedly said they will oppose the deal unless significant changes are made, and said the U.S. should not drop tariffs on imported Japanese vehicles for decades.

The automakers want to keep tariffs on Japanese vehicles in place in order to assure that Japan opens its market to more U.S. vehicles.

“U.S. tariffs on imports of Japanese motor vehicles must be phased out over no less than 25-30 years. We understand the United States has already secured this commitment from Japan in order to allow Japan to demonstrate that it is fulfilling its TPP commitments and has opened its market to U.S. auto imports,” said the Matt Blunt, president and CEO of the American Automotive Policy Council, the Detroit Three trade group, last year.

Dropping the tariffs immediately “will reward them with nearly $1 billion in annual tariff savings and allow for a massive loophole to remain in place by not preventing currency manipulation,” Blunt said. According to the Center for Automotive Research, this could lead to the loss of nearly 100,000 American jobs.

The Japan Automobile Manufacturers Association wants a speedy phaseout of tariffs on imported vehicles to the U.S., which is a 25 percent import tariff on pickup trucks and other light trucks, 2.5 percent tariff on cars and auto parts.

Japanese automakers have invested $35.4 billion in U.S. manufacturing plants since the early 1980s and directly employ 81,000 Americans in vehicle manufacturing, R&D and distribution.

The Obama administration has refused to raise currency as an issue in the talks — arguing that other international forums, such as the G-20, are a better tool — despite the prodding of automakers and many Democrats in Congress and some Republicans such as Sen. Lindsey Graham of South Carolina.

Obama said in his State of the Union address he wants Congress to pass fast-track authority so he can reach agreements on the Pacific zone as well as a separate proposed trade deal with Europe.

In November, Michigan congressional Democrats met at the White House with Vice President Joe Biden and Froman to make the case that the Trans-Pacific Partnership needs protections against currency manipulation — especially in reference to Japan and Japanese automakers. They also worry that without protections, China could one day join the treaty and use its ability to manipulate its currency to undercut U.S. auto production.

UAW Secretary Treasurer Dennis Williams — who is the likely next president of the UAW — said the president is wrong to push trade agreements. The UAW is sharply opposed to the current version of the Trans-Pacific Partnership. “He’s wrong on this issue,” Williams said.