Japan's cars are ahead because they're better

James Bovard

January 08, 1992|By James Bovard

WHEN PRESIDENT Bush arrived in Japan this week with an entourage of frustrated American businessmen, he demanded that Japan buy more American autos -- and pressured the Japanese government to further restrict Japanese auto sales in the U.S.

For the Americans, the $30 billion U.S.-Japan auto trade deficit is a result of Japanese unfairness rather than superior competitiveness. In June, Robert Mosbacher, the secretary of commerce, asserted that "in virtually all cases [U.S. auto parts] have been shown to be just as good as" Japanese auto parts.

American car experts disagree. When Road and Track magazine announced its 10 best cars of 1991,nine were Japanese and one was German. A 1991 Consumer Reports survey gave the highest reliability ratings to Japanese autos. Nearly all the cars with a poor reliability rating were made by the Big Three: General Motors, Ford and Chrysler.

When the Japanese don't buy sufficient numbers of relatively low-quality American cars, the U.S. government responds by making it more difficult for American citizens to buy relatively high-quality Japanese cars.

Rep. Richard Gephardt, D-Mo., introduced legislation last month to penalize Japan for its trade deficit with the U.S. Michigan congressmen are licking their chops over the prospect of new restrictions on Japanese auto imports.

The assault on these imports is also being fueled by the Commerce Department's recent preliminary finding that Toyota and Mazda have been selling minivans at unfairly low prices, "dumping" them in the U.S.

Sen. Donald Riegle, D-Mich., declared that the minivan case "is an illustration of the systematic pattern of trade cheating by Japan that must be stopped."

But the findings prove only the absurdity and unfairness of the U.S. dumping law. The Commerce Department found Toyota guilty of selling its minivans for roughly one percent less than the department approved, largely because Toyota was not sufficiently bureaucratic. The U.S. dumping law actually penalizes foreign companies whose administrative costs are less than 10 percent of their production costs.

Mazda was found guilty of a 7.19 percent dumping margin largely because the government arbitrarily compared the price of 470 vans sold under special circumstances in Japan with the price of 30,000 vans sold by Mazda dealers in the U.S.

The Japanese were not selling their minivans at a loss or for less than they sold them for in Japan. If American companies had done what the Japanese companies did, they would never have been penalized. The dumping laws make a mockery of U.S. demands for a level playing field.

Japanese auto exports to the U.S. have been restricted by quotas since 1981, when President Reagan pressured the Japanese into reducing their exports. A 1987 International Monetary Fund study estimated that the subsequent artificial shortage of cars for sale in the U.S. cost American consumers $17 billion between 1981 and 1984, resulting in an average increase of $1,650 for new car prices (domestic and import) in 1984. Between 1980 and 1989, the cost of a new car rose from 18.7 weeks of the median household's earnings to 24.7 weeks.

The Japanese government last month reportedly ordered a further reduction in the number of cars exported to the U.S. Tokyo has successfully pressured companies to buy more American auto parts, even if those parts are of lower quality, and is expected to make further concessions during the president's visit.

The U.S. auto industry is not a victim of unfair play but rather of its own incompetence. If 10 years of protection did not close the U.S.-Japan auto quality gap, further protection will simply be extortion of American consumers. Neither President Bush nor Congress should be able to nullify the freedom of Americans to choose the best auto they can buy.

James Bovard is author of "The Fair Trade Fraud."

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