Obama: ‘Doesn’t make any sense’ few U.S. cars in Japan

David Shepardson
Detroit News Washington Bureau

President Barack Obama defended a bill proposed Thursday that would allow for a “fast track” vote on a 12-nation free trade deal accounting for 40 percent of the world’s economy, saying it “doesn’t make any sense” that there are few U.S. vehicles in Japan.

Detroit’s Big Three automakers, the United Auto Workers union and many Democrats are strongly opposed to the fast track bill and to the Trans-Pacific Partnership, a trade deal under negotiation for more than four years including Japan, Canada, Mexico and other countries.

“Being opposed to this new trade agreement is essentially a ratification of the status quo, where a lot of folks are selling here, but we’re not selling there. Japan is one of the negotiators in this deal. Now, the last time I checked, if you drive around Washington, there are a whole bunch of Japanese cars. You go to Tokyo and count how many Chryslers and GM and Ford cars there are. So the current situation is not working for us. And I don’t know why it is that folks would be opposed to us opening up the Japanese market more for U.S. autos, or U.S. beef. It doesn’t make any sense,” Obama said at a news conference Friday. “So I’m going to be able to make a strong case.”

But the free trade agreement is not just about U.S. access to Japan’s market — but about tariffs on imported U.S. vehicles.

Automakers say a trade deal must prevent Japan from being able to manipulate its currency valuation, which makes U.S. exports more expensive in Japan and Japanese exports cheaper in the United States in their respective currencies.

Obama referenced currency in his remarks. But Rep. Sander Levin, D-Royal Oak, the top Democrat on the panel overseeing trade, said the fast track measure needs to go further on currency. The Obama administration has refused to raise currency in trade talks. He called the fast track bill “a major step backwards” on trade talks.

“We strongly support the inclusion of enforceable currency rules in (fast track) and in all future trade deals. The current language does not sufficiently address the most significant trade barrier manufacturers face,” said Ford spokeswoman Christin Baker.

A trade group representing Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles NV said “we look forward to working with lawmakers to include strong and enforceable currency manipulation language in all future trade agreements."

Nick Merrill, a spokesman for Democratic presidential candidate Hillary Clinton, said Friday that any “new trade measure has to pass two tests: First, it should put us in a position to protect American workers, raise wages and create more good jobs at home. Second, it must also strengthen our national security. We should be willing to walk away from any outcome that falls short of these tests. The goal is greater prosperity and security for American families, not trade for trade’s sake.

The Trans-Pacific Partnership is a cornerstone of the Obama administration’s economic policy agenda. The administration argues that by dropping barriers and tariffs with fast-growing economies it will support millions of U.S. jobs through higher exports. And they argue it will strengthen the U.S. alliance with Japan — a key counterbalance to China’s rising influence.

Automakers worry that foreign governments like Japan's will be able to weaken their currency to undercut U.S. vehicle production.

The U.S. auto industry is worried a deal will be reached that doesn't do enough to open the Japanese auto sector to American products. Japan has historically imported very few foreign automobiles. The auto sector accounts for more than 70 percent of the U.S. trade deficit with Japan. "Right now Japanese cars are abundant in America. American cars are virtually nonexistent in Japan — and when you talk about that, you talk about opportunity," Perez said.

American automakers fear if Japan intervenes to weaken its currency, its automakers eventually will be able to dramatically undercut them, especially when U.S. tariffs are phased out — 25 percent on light trucks and 2.5 percent on cars. Automakers want the tariffs kept in place for at least 25 years or more. And China could seek to enter the free-trade agreement under the same rules down the road.

Japanese automakers argue that U.S. automakers haven’t build enough small cars that Japanese consumers want and haven’t made a serious attempt to sell cars in Japan.