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Clinton Turns Up Heat On Japan Administration To Impose Tariffs In Dispute Over Auto Market

Thu., May 11, 1995

President Clinton ordered an unfair-trade complaint filed against Japan with the new World Trade Organization and authorized publication of a list of punitive tariffs against Japanese automobiles and parts.

Clinton’s decision was announced Wednesday at the White House - the latest attempt to pressure Japan to settle a bitter trade fight by giving in to U.S. demands for increased sales of American cars and parts.

“Over the past 20 months, my administration has made every effort through negotiations to remove obstacles to Japan’s auto and auto parts market,” the president said in a statement released in Washington. “Unfortunately, those negotiations have not produced meaningful results.”

Clinton said the administration was finalizing a list of Japanese goods that could be subjected to U.S. trade sanctions and he had directed U.S. Trade Representative Mickey Kantor to file an unfair trading case against Japan with the WTO.

“I want to underscore my strong support for these actions,” Clinton said.

Kantor, at a White House briefing, told reporters that the United States could no longer tolerate a situation where Japan had 24 percent of America’s “wide open” auto market while the United States had “a meager 1.5 percent share in Japan.”

The administration’s tough talk followed collapse of negotiations last week in Canada. The administration said it would still prefer a negotiated settlement of the fight, which has dragged on for nearly two years.

But officials left no doubt they were prepared to retaliate. The United States will impose punitive tariffs on more than $1 billion in Japanese auto imports and seek a ruling from the 124-nation WTO that Japan has erected unfair trade barriers to protect its auto market.

The administration said its list of Japanese imports targeted for higher sanctions would be released early next week after Clinton returns from a trip to Moscow.

But congressional and industry sources, who spoke on condition of anonymity, said the targeted products were expected to include Japanese luxury autos, auto parts and possibly minivans.

The initial list is likely to include perhaps as much as $7 billion a year worth of imports from Japan. But after 30 days of public comment it would be reduced to between $1 billion and $1.5 billion of Japanese products that would be subjected to punitive tariffs as high as 100 percent - still the largest such sanctions case in U.S. history.

While U.S. auto executives applauded the trade threats, groups representing Japanese auto companies and foreign dealers in the United States said the tough talk would end up hurting consumers through higher prices. And they said it could spark a trade war if Japan decides to retaliate against U.S. products.

“If the United States imposes new tariffs in an attempt to enforce managed trade, the long-run cost to the U.S. economy could be substantial,” the Heritage Foundation and three other conservative think tanks said in a letter to Clinton.

But administration officials said the record $66 billion trade deficit with Japan - nearly 60 percent of it in autos and parts - left no choice but to take a hard line.

They want Japanese auto companies to pledge to boost purchases of American-made auto parts for their factories in the United States and in Japan by extending “voluntary plans” first put into effect in 1992.

The United States is also demanding an increase in the number of dealerships selling American cars in Japan and relaxation of safety rules that have blocked U.S.-made auto parts from being sold in Japanese repair shops.

The Japanese have blasted the U.S. efforts as managed trade, particularly the demand for voluntary purchasing plans.

A Japanese official who spoke on condition of anonymity denied there are any restrictions on any country’s auto shipments to Japan. He said Japan can make a good case before the WTO.

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