Tokyo Skeptics Question Auto Deal Benefits for US

Article excerpt

AS observers here see it, the auto pact that the United States and Japan announced last Wednesday in Geneva was a transparent defeat for US President Bill Clinton's oft-proclaimed intentions to break open the protected Japanese auto market.

But the deal does provide an opening for the US auto industry in Japan, if it chooses to exploit it. And the Japanese auto industry will have more of an excuse to move more jobs out of Japan, where a mighty yen has driven production costs sky high.

The addition of about 520,000 vehicles per year in new Japanese transplant manufacturing abroad will shave a few billion dollars off the Japanese trade surplus with the US, as the Japanese will export fewer cars and buy more US-made auto parts locally.

Masami Iwasaki, chairman of the Japan Automobile Manufacturers Association, underlined how nebulous these numbers are at a press conference in Tokyo last Thursday. "Global programs disclosed by major Japanese carmakers early today are not commitments," he said.

Analysts in Tokyo said that the market-opening measures included in the agreement were almost laughable. "If they hadn't made such a fuss over the deal, people would just hoot and haw," said Peter Boardman, an auto analyst with UBS Securities in Tokyo.

The Japanese agreed to some minor tinkering with regulations covering repair garages and auto parts including struts, shocks, power steering, and trailer hitches. Analyst Matthew Ruddick, with James Capel (Pacific) in Tokyo, points out that the market for trailer hitches in Japan is non-existent.

In order to help US car makers expand their dealer networks in Japan, the Ministry of International Trade and Industry agreed to send a letter to all Japanese auto dealers assuring them that they were free to carry US products.

Whether MITI's letters will convince Japanese dealers and repairmen to buck their "keiretsu" ties with Japanese carmakers to take on foreign companies is anybody's guess. …