Big 3 pleads for car cap, Japan says U.S. exec denies explicit request

March 09, 1993|By Knight-Ridder Newspapers

DETROIT -- The Big Three auto executives requested yesterday that Japanese automakers limit sales to an unspecified share of the U.S. market, said Takakazu Kuriyama, Japan's ambassador to the United States.

Unlike previous attempts to limit Japanese imports, such an action would cap the number of cars their Japanese competitors sell in the United States regardless of whether the cars are made here or in Japan.

Mr. Kuriyama said the request was made during a private, 30-minute meeting with Jack Smith and Harold (Red) Poling, the chief executives of General Motors Corp. and Ford Motor Co., and Robert Lutz, president of Chrysler Corp.

Tom Hanna, president of the American Automobile Manufacturers Association, disputed that, however, saying that the issue arose during discussions about the U.S.-Japan trade imbalance.

"There was not an explicit request that the Japanese limit their market share," said Mr. Hanna, who was present at the meeting. "It was pointed out as one of the reasons there was less penetration in Europe" by the Japanese.

Japan's ballooning trade surplus with the United remained the focal point of the meeting, which followed Mr. Kuriyama's address to the Detroit Economic Club.

Agreeing to limit the number of cars the Japanese companies can sell in the United States would be similar to the limitations they agreed to in Europe.

Under an agreement between Japan and the European Community, Japanese automakers will be limited to 16 percent of the European auto market share by the year 1999.

In the United States, under the Voluntary Restraint Agreement that went into effect in 1981, the Japanese automakers are now restricted to importing 1.65 million cars and trucks to the United States. The ceiling does not include cars built by Japanese plants in the United States.

While the Japanese market share of cars and trucks in the United States has risen steadily, it has lost points in recent months with the upturn among domestic automakers. For the first two months of this year, Japanese share of cars and trucks was 22.4 percent, down 2.2 percent from the same period last year.

The Washington Post has reported that Big Three executives have asked U.S. officials to limit Japanese market share in the American auto market.

Quoting unnamed auto industry sources, the Post also said that in return for this action, the Big Three would strongly endorse the Clinton administration energy tax and overall economic plan.

A Ford spokesman denied that such a request, to the government or the Japanese ambassador, had been made.

"What they have said is that some attention should be paid to how the Europeans reached an agreement whereby Japanese penetration is limited to about 15 percent," said Al Chambers.

Mr. Kuriyama did not say how the Japanese would react to any request to further limit car sales in the United States.

But a Japanese car company representative said he was not surprised by the possibility that the Big Three had requested market share limits.

"The chairmen of the Big Three don't [care] about the trade imbalance," said Jim Olson, a vice president at Toyota's American headquarters in California. "They just want to limit Japanese market share."

Pointing to the Big Three's recent contemplation of filing dumping charges against the Japanese automakers, until GM's apparent pullout, Mr. Olson added, "They're feeling that they have an opportunity to get a lot with the new administration."

Meanwhile, the Big Three have been pressing the Clinton administration to reclassify minivans as trucks so they would be subject to a 25 percent tariff, up from the usual 2.5 percent on cars.

Mr. Kuriyama said the Japanese had not decided how to respond if such tariffs were imposed.

In his speech to the Detroit Economic Club, Mr. Kuriyama called for a global partnership between the United States and Japan.

He said problems exist in both countries, such as Japan's restrictive rice market, but he added that negotiations could smooth over differences.

Pressed on Japan's 1992 trade surplus of $49.4 billion with the United States, Mr. Kuriyama pointed to Japanese consumers who, hit hard by the bursting of Japan's "bubble" economy, have eschewed spending on American imports.

But he predicted that the trade deficit would start shrinking once Japan emerges from its recession.

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