U.S.-Japan Auto Trade Pact Expires
By Jack Nerad
Driving Today
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As the U.S.-Japan trade agreement on autos reaches expiration, the Japan Automobile Manufacturers Association (JAMA) is trying to strike a conciliatory tone. The Auto Framework Agreement, which expired Dec. 31, came as the result of one of the most intense trade disputes of the last two decades. Now JAMA in its year-end edition of Japan Auto Trends, has urged the U.S. auto parts industry to move beyond what it called "the old-style confrontation that led to the dispute five years ago."

"Artificial targets and commercial mandates are contrary to free markets and would threaten the cooperation and globalization that have changed the world’s automobile industry," said William C. Duncan, general director of JAMA USA. "These changes include Japanese investment overseas, recent major equity investments by U.S. companies in Japanese auto manufacturers, growing investment by U.S. auto parts companies in Japan, global parts purchasing by Japanese auto firms and new vehicles distribution methods in Japan."

The JAMA journal pointed out that the transformation of the U.S.-Japan auto relationship reflects the decision five years ago to retreat from market-distorting mechanisms aimed at arbitrarily reducing trade deficits. The automobile industry, be it in America, Canada, Europe or Japan has moved far beyond the national boundaries that defined it even five years ago.

Among the major changes in the last five years are the Ford Motor Co. acquisition of Mazda, Daimler-Benzís heavy investment in Mitsubishi, and Renaultís acquisition of a big stake in Nissan. In the same span Japanese manufacturers like Honda and Toyota have continued to increase their investments in U.S. manufacturing facilities, hiring more American workers and using more American-based suppliers. At the same time, import-badge vehicles have been gaining in market share, while the U.S. domestic manufacturers have been reporting lackluster sales in the U.S. market. Given this background, the results of the imminent trade negotiation should be interesting.

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