WASHINGTON, D.C. - Ways and Means Trade Subcommittee Chairman Sander M. Levin (D-MI) issued the following statement, including an update on the status of an upcoming subcommittee hearing on Japanese and South Korean barriers to U.S. auto imports:
“I welcome the news from Ambassador Kirk that Japan is going to drop the complete exclusion of U.S. automobiles from their Cash for Clunkers program, but the problem of their closed market requires our vigorous and renewed focus, as increased exports must be part of our economic recovery and job creation efforts," said Trade Subcommittee Chairman Sander M. Levin.
“We are postponing the Subcommittee hearing on Japanese and South Korean Barriers to U.S. Auto Imports scheduled for this Thursday, Jan. 21, 2010 so we can examine the details and implications of Japan’s announced change to their Clunkers program. We will re-schedule the hearing to allow for a full review of past and current barriers, and the steps needed to ensure our automobile industry, which stands ready to compete in those markets, has the same access we have given Japanese and Korean producers in our market."
Background
In no sector has the lack of reciprocal market access been more apparent than in Japan’s and South Korea’s auto sectors, where market access barriers to U.S auto imports have led to significant auto trade deficits. In 2008, Japan exported 2,007,958 cars and light trucks to the United States, but imported just 12,181 cars and light trucks from the United States. Korea’s numbers are similar - in 2008, South Korea exported 616,000 cars and light trucks to the United States, but imported just 10,377 cars and light trucks from the United States. The result of this one-way trade: over 70 percent of our trade deficits with both countries is in autos, trucks and auto parts.
Both Japan and South Korea have for decades pursued tariff and regulatory policies specifically designed to shield their domestic producers from foreign competition at home. Japanese and South Korean manufacturers were able to leverage the profits made in their protected domestic markets to expand export sales and production in the open U.S. market. The extremely low levels of import market penetration in both countries - in 2008, imports (U.S., European or other country) were less than 5% of the 5 million vehicles sold in the Japanese market, and were just 5.3 percent of the 1.4 million vehicles sold in the Korean market - are a testament to the effectiveness of both governments’ actions. These are the lowest import market shares among all industrialized countries. By comparison, foreign market penetration is about 40 percent in the United States and 21 percent in the European Union.
The Japanese Cash for Clunkers program’s complete exclusion of U.S. auto imports crystallized the larger market access problem that U.S. automakers face in Japan. Even if Japan faithfully implements its announced modifications, it appears that, at best, because of existing caps, only several thousand American cars will be eligible for sale under the Japanese program, while Japan companies sold over 350,000 through the U.S. program. Moreover, these changes do not redress the significant and long-standing disparity in access U.S. automakers have to the Japanese market, compared to the access Japanese automakers have to the U.S. market. We must seize this opportunity to go further and fully open up the Japanese market.
