US automakers continue clash with Japan over free trade (Pt. 2)

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Free trade areas are a difficult subject. It is impossible to map all the existing free trade agreements on one map, and still make it readable. Here are presented FTAs with three or more participants.

Ford argues that Japan has no intention of engaging in free trade with the U.S. (Photo Credit: Public Domain/Emilfaro/Wikipedia)

Is Japan interested in an even-Steven free trade agreement with foreign powers? Ford Motor Co. and a group of U.S. Democratic senators don’t think so. CLICK HEREif you missed the beginning of this article. Try this if you’re looking for a great auto loan bank rate.

A yen for conflict

According to the above senators, 70 percent of the United States’ $63 billion trade deficit with Japan is tied directly to Japanese auto exports. This is such an issue because while foreign automakers account for 55 percent of vehicle sales in the U.S., only 5 percent of vehicle sales in Japan come from foreign automakers.

“Japan has previously made concessions, including the elimination of tariffs on automobile imports. However, new barriers to trade have arisen to replace the old,” the senators wrote. “We are particularly worried about the impact that Japan’s inclusion will have on American car makers and their workers.”

William Duncan, head of the Japanese Automobile Manufacturers Association in the U.S., sees the issue as more of a cop out on the part of larger U.S. automakers who have struggled in the Japanese market.

“The notion that the Japanese auto companies have not done the hard work to compete globally is absurd. The fact is that Ford has chosen to essentially withdraw from the Japanese market and refuses to seriously compete there,” he said.

Duncan went on to reiterate what has most commonly been heard from the heads of Japanese automakers, that fluctuations in the value of the yen make Japanese exports from Japan to the U.S. quite expensive. However, if automakers are able to offshore production of more of their vehicles, the economic disparity should be mollified somewhat. If the yen drops considerably, however, it won’t be nearly the issue that it is at present for Japan.

Currency manipulation and unfair trade

By sidestepping trade regulations as they exist, Japan would be doing what amounts to currency manipulation and unfair trade practice, according to the conglomeration of U.S. automakers led by Ford. Japan has countered with claims that foreign import sales are rising in the country, and that U.S. automakers should consider producing vehicles more in tune with the preferences of Japanese consumers.

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Sources

Detroit Free Press

The Detroit News

Philadelphia Inquirer

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