Dingell Joins Colleagues in Opposition to Japan Entering TPP

[alp227]

Source: Office of Rep. John Dingell

Today, Congressman John D. Dingell (D-MI12) joined a number of his House and Senate colleagues in sending a letter to President Obama opposing Japan’s entry into the Trans-Pacific Partnership (TPP) until they first open their markets to American goods.

“For far too long, Japan has maintained some of the most closed markets to American goods,” said Dingell. “This is particularly true in the case of foreign-made automobiles, which make up only five percent of the market in Japan. I categorically oppose Japan’s entry into TPP until that country has opened its markets to American imports and allow them fair market access. Free trade cannot be one-sided. For trade to work, it must be fair.”

Dingell and his colleagues called on Obama to give due consideration to American businesses and workers as negotiations with Japan continue.

“We can’t afford another one-way trade agreement that puts our American businesses and American workers at a further disadvantage, but that’s precisely what Japan’s involvement will amount to if they don’t play fair and give our folks access,” added Dingell. “Any trade deal that puts our workers at additional disadvantage and does nothing to fuel American exports is unacceptable. I look forward to working with the Obama administration to fix these flaws and do right by the American people.”

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Full text of the letter can be found below:

March 14, 2013

President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, D.C. 20500

Dear Mr. President,

As the Japanese government considers the question of whether, and under what terms, to seek entry into the Trans-Pacific Partnership (TPP) negotiations, we too must consider our own workers and businesses. Japan's significant, long-standing, and persistent economic barriers put in place to block our exports and support theirs have hurt American workers and businesses for decades.

Nowhere is the closed nature of Japan's markets more evident than in the auto sector, where Japanese policies and practices have been carefully honed - over generations - to keep out American and other foreign cars and parts. Consider the following facts:

· Japan's Auto Market Is Closed. Despite being the third-largest auto market in the world, Japan ranks last among OECD members in terms of auto market import penetration, at 5.9 percent in 2012. By comparison, other OECD countries with major auto sectors typically have an import market share of more than 40 percent (including the United States). The barriers in Japan have included: currency manipulation; a discriminatory system of taxes; onerous and costly vehicle certification procedures for imported automobiles; a complex and changing set of safety, noise, and pollution standards, many of which do not conform to international standards and add significant development and production costs for automobiles exported to Japan; an unwillingness by Japanese dealerships to carry foreign automobiles and insufficient enforcement of competition laws to address anti-competitive practices; zoning restrictions that make it difficult, if not impossible, to establish new dealerships in important markets; government incentives to purchase Japanese-made kei cars; and exclusionary consumer preferences shaped by decades of government policies directed at promoting the national car companies.

· The Very Structure of Japan's Industry Depends on Protection at Home and Exploitation of Foreign Auto Markets: Japan's auto sector is already producing over 11 million automobiles despite having only a 5 million automobile domestic market. As its population ages and shrinks, this export pressure will only increase. Moreover, it appears that Japanese auto producers have been able to sell some products in Japan at high prices - and then to use the proceeds of those high-priced sales to sell into the U.S. market at low prices. For example, the current price of a Lexus IS 350 is $50,037 in Japan, but only $40,220 in the United States.

· The Impact on the U.S. Trade Deficit - and U.S. Jobs - Is Profound and Perpetual. Japan is the second-largest source of the U.S. trade imbalance after China, and, in 2012, automotive products accounted for more than two-thirds of the deficit. In fact, over the past five years, for every automobile that America exports to Japan, Japan exports over 120 automobiles to the United States. Trade in auto parts is equally imbalanced. These deficits are longstanding and growing. Twenty years ago, our automotive deficit with Japan was $31 billion. Last year it was $53.5 billion (including an auto parts deficit of $15.5 billion, compared to $9.8 billion 20 years ago).

· Negotiations to Open the Market Have Repeatedly Failed. Our experience with Japan has been unambiguous - namely, that the barriers to American autos in the Japanese market are deeply structural, shifting, and impervious to American negotiating efforts. This near-complete closure of the Japanese auto market has been the status quo for decades, notwithstanding the elimination of Japanese auto tariffs in 1970s or the repeated negotiation of agreements to eliminate barriers to American autos in 1980s and 1990s - including in the Market-Oriented Sector-Selective talks in 1986, the Structural Impediment Initiative talks launched in 1989, and the 1995 U.S.-Japan Auto Agreement. None of these agreements has resulted in barriers coming down and American exports going up.

While some have compared this challenge to the one we faced with Korea, the Japanese auto market is more impenetrable, the history of formidable barriers and imbalanced trade is longer, and the magnitude of the problem is far greater than with Korea. Indeed, our trade deficit with Japan is more than four times as large as our deficit with Korea.

American automobile companies and workers - those at the forefront of today's economic recovery - have been forced to compete for decades on a fundamentally unlevel playing field. Japan's participation in TPP threatens to make matters worse. In an industry with razor-thin profit margins, the elimination of the 2.5 percent car tariff (as well as the 25 percent truck tariff) would be a major benefit to Japan without any gain for a vital American industry, leading to more Japanese imports, less American production, and fewer American jobs.

Confidence building measures and promises of a level playing field in the future do not address the basic concern how, under any circumstances, a TPP agreement could be sufficiently equipped to address the necessary transformation of the Japanese market. These long-standing, economically harmful practices are not susceptible to cursory negotiation at this stage, three years into the U.S. involvement in the TPP negotiations and close to the Administration's target date of concluding talks by the end of this year.

The United States and Japan are, and will remain, close and important allies. A flawed, one-way trade agreement that benefits Japan at the expense of the United States businesses and workers will not help strengthen this vital relationship.

We look forward to working with the Administration on this critical issue.

Sincerely,

Rep. Robert E. Andrews
Rep. Xavier Becerra
Rep. Robert A. Brady
Rep. Julia Brownley
Rep. Judy Chu
Rep. W.M. Lacy Clay
Rep. Steve Cohen
Rep. John Conyers Jr.
Rep. Danny K. Davis
Rep. Rosa DeLauro
Rep. John D. Dingell
Rep. Mike Doyle
Rep. Gene Green
Rep. Brian Higgins
Rep. Marcy Kaptur
Rep. Dan Kildee
Rep. John Larson
Rep. Sander Levin
Rep. John Lewis
Rep. Daniel Lipinski
Rep. Dave Loebsack
Rep. Mike Michaud
Rep. George Miller
Rep. Jerrold Nadler
Rep. Charles B. Rangel
Rep. Gary Peters
Rep. Bill Pascrell
Rep. Mark Pocan
Rep. Tim Ryan
Rep. Linda Sanchez
Rep. Jan Schakowsky
Rep. Allyson Schwartz
Rep. Louise M. Slaughter
Rep. John Tierney
Rep. Pete Visclosky

Sen. Sherrod Brown
Sen. Robert P. Casey Jr.
Sen. Joe Donnelly
Sen. Kirsten Gillibrand
Sen. Carl Levin
Sen. Charles E. Schumer
Sen. Debbie Stabenow
Sen. Sheldon Whitehouse

Read more: http://dingell.house.gov/press-release/dingell-joins-colleagues-opposition-japan-entering-tpp

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Copied in full, as source is a work of the federal government thus in the public domain.

[Left Coast2020]

1. Good post Alp

Don't forget China as they dehumanize their workers--as we saw in %47 vid with Bain Capital. Or the workers who committed suicide at the Foxcomm plant near Shanghai. Plus the fact China is stealing our tech stuff because they don't have the people to create stuff themselves.

This, I believe would be horrible for our economy and jobs. We need to fight it.

[dwilso40641]

2. The TPP

should be rejected in whole. It will be a massive mistake

[Union Scribe]

5. Big +1 there

It's disturbing that our leaders are talking about how to get screwed less, rather than trying not to get screwed at all by this thing.

[Art_from_Ark]

3. I would like to ask Mr. Dingell if he has ever driven on Japanese roads

There are many reasons why American cars don't sell well in Japan, the main one being that most of them *aren't designed for Japanese roads*. I've seen some Hummers over here, for example, that would take up both lanes of the narrow road that I have to travel every day. In fact, I once encountered a Hummer on that road while riding my bicycle. There was about a 3-foot drop-off on one side of the road, and a raised incline on the other. I actually had to get off the road very gingerly to let that idiot pass. Even standard-size American cars would have problems navigating that and many, many other Japanese roads.

Another problem is the cost of operating American cars. What is the smallest size engine used in an American-made car? 4 liters? The annual tax for owning a vehicle in Japan is based on engine displacement. The cars with the yellow license plates have the smallest engines (less than 1 liter), and are taxed accordingly. My tax for a yellow plate is about $75/year. If it were just a 2-liter engine, with the same age, the tax would be about 6 times higher.

There's also the rigorous bi-annual inspection that costs big bucks. For my small car, it can run from about $700 on up. For a 2-liter car, it would start at about $1000.

How about gasoline? I drive very sparingly, have a reasonably fuel-efficient car, and still pay about $60/month for gas. The fuel efficiency of a typical American car would probably be about half that of my car, on these Japanese roads, so if I had an American car, I would end up burning twice as much gas, and paying twice as much, to go to the same places.

Did I mention rigorous inspections? Good luck finding a place that will inspect an American car. You would probably have to take it to the dealer you bought it from, which means more money.

Insurance for large cars is also much more expensive. I"m paying about $300/year for additional liability (limited liability insurance is included with the inspection). If I had a 2-liter engine, my insurance would be a couple hundred dollars extra.

Of course, there is also parking. My little car can barely fit into my driveway. There's no way I could squeeze a standard-size American car in there.

Then there's also the matter of steering wheel placement-- Japanese cars have the steering wheel on the right side, not the left side.

Of course, owner's manuals would have to be written in Japanese as well.

All in all, there would have to be an extremely compelling reason for me to buy an American car in Japan.

[Union Scribe]

4. Some things

1. I'm pretty sure the Hummer hasn't been made in 3 years. We do make things smaller than Hummers.
2. We make cars with far less displacement than 4 liters.
3. The difficulty in getting an American car inspected is part of the trade practices objected to in the letter from the OP.
4. American makers sell cars in other countries where the driver is on the right. That's no issue.
5. I think we could whip up some manuals in Japanese.

[Art_from_Ark]

6. It's not just the inspections

Inspections are priced based on the weight and engine displacement of the vehicle. It doesn't matter if the vehicle is American, German, Japanese, whatever-- the heavier the vehicle, the greater the engine displacement, the higher the base inspection price.

Insurance is also based in part on vehicle weight and engine displacement.

Are there any US-made cars with engines less than 1 liter? Less than 2 liters?

How about width? My mom's car definitely would not fit into my Japanese driveway. No way, no how, it's too fat.

And would you want to pay thousands of dollars extra a year to operate a vehicle in Japan? I sure don't. I just need a reliable car to occasionally take me from here to there, and back again, for a somewhat reasonable price.

And how much is an average new American-made car in the US? 30-some-odd thousand dollars now? Which means that the average sticker price would probably be close to 3.5 to 4 million yen in Japan. The average new car in Japan sells for much, much less than that. Mine, new, would have cost around $10,000.

With more than 60 million registered vehicles in a country the size of California, exporting cars to Japan is like exporting coals to Newcastle. What kind of convincing argument could you give a Japanese consumer to convince them to buy an American car, when there are 6 or 7 domestic makes to choose from?

[csziggy]

7. If American manufacturers could sell cars in Japan

They would have an incentive to make smaller, more efficient vehicles. maybe that would push them to not just make smaller, more efficient cars for the export market but also sell them domestically.

Ages ago, Ford made car models for sale in Europe - Escort and Cortina. They was smaller and much more fuel efficient than anything Ford sold in the US. In the 70s when fuel prices increased in the US, Ford used those models as prototypes to develop a smaller, fuel efficient car, the Fiesta, to sell in the US and in Europe.

The original Fiestas had small engines and were very efficient. Over time their motors have gotten larger as have the bodies of the vehicles. http://en.wikipedia.org/wiki/Ford_Fiesta

American car manufacturers are not incapable of making small cars, they just have no motivation to as long as the market for them is restricted and Americans don't buy them. But the success of the Mini Cooper shows there is a market in the US for smaller cars so manufacturers need to explore them again.

[Art_from_Ark]

8. Among American companies, Ford has the biggest share of the Japanese market

But once again I ask, as someone who is living in a country the size of California but which has 60 million+ registered vehicles already (one for every two people), and 7 domestic car manufacturers (Toyota, Honda, Nissan, Subaru, Suzuki, Isuzu, Mazda) that all make cars that can last for 10+ years of Japanese use, what compelling reason would I have to buy an imported car?

[John2]

9. If there is no

compelling reason for the consumer, then why the restrictions? Either you satisfy the consumer or your product want sell. There is no need for the Government to have restrictions.

[Art_from_Ark]

10. Are there real restrictions?

Or is it that there is no real market for such cars (coals) in Japan (Newcastle), so why even bother to import them?

Once again, give me a compelling reason, as a potential car buyer, why I should select an American car over one of the numerous models made by the 7 domestic Japanese manufacturers.

Some more things to consider:
Japanese speed limits--
24mph or less in residential areas and some semi-open areas
30mph on most open two-lane roads
36mph on some divided highways (unless marked as 30mph)
60mph on tollways (all expressways in Japan are tollways, and yellow plate cars get a discount for the toll)

So you don't need, and can't really use, a muscle car in Japan.

Also, most cars in Japan are traded in long before their usable life is over, so it is easy to buy a very nice used car, cheap, and it even comes with a guarantee.

Why would I even want to consider spending half a year's income or more on an imported car in Japan, when I can get a decent domestic one for one or two months' salary?

[John2]

11. That is my

point. Is it really about restrictions or their ability to compete? If it is really about restrictions, then Japan should give them what they want, as if it will do any good.

[Art_from_Ark]

12. How do you know Japan hasn't given them what they want?

After all, I have seen big, fat, gas-guzzling Hummers and Cadillacs here in Japan. There's even a Hummer parked in a lot not far from my house. It is huge-- it dwarfs all the cars around it, and makes my car look like a toy.

I took an informal count of the foreign cars I saw on a 15-mile road trip I took today. My city is considered to be one of the most internationalized cities in Japan. My destination was a bedroom community where half of the working men and a large percentage of working women commute to other places (mainly Tokyo). My trip took me through some heavily traveled areas with wide roads, and some semi-rural places with very narrow roads. There was a lot of traffic along some parts of the route. The foreign cars I saw were as follows:

7 Volkswagens (mostly Beetles, one Golf)-- small cars, but without out the advantages of a yellow license plate.
1 BMW
1 Mercedes-Benz
1 Mini Cooper (like the Volkswagens, a small car without the advantages of a yellow license plate.
1 Cadillac
2 Volvos

The Volvos and the Cadillac were the largest cars. I encountered one of the Volvos coming from the other direction on a narrow road. We both had to slow down to about 5 mph so we could pass each other without scraping each other. The width of my car is such that I can easily reach the front passenger door from the driver side. If my car had been much wider, it would have been really tricky to pass the Volvo coming from the other direction.

I should also note that nearly all foreign cars in Japan cater to niche markets. It is apparent to me the Volkswagen has the largest niche market around here, but I don't know who that brand would appeal to.

The BMWs and Mercedes-Benz cars appeal to people who want to flaunt their wealth. Mercedes-Benz is also popular among people who, how shall I put it, have a less than stellar reputation.

Mini Coopers appeal mostly to young people, particularly college students. There is a reason why the local Mini dealership moved from the downtown area to the university area.

Volvos seem to appeal mainly to the Japanese version of Yuppies. I knew one Japanese woman who had a Volvo and she was complaining about its lethargic acceleration. She was planning to drive it until it conked out because she didn't want to buy another car, but then the car was totaled, and she was happy about that because she could get a different make (Nissan).

Unfortunately for Detroit, large American cars in Japan have the reputation of being favored by troublemakers. And the absolutely worst driver I have ever seen in Japan was driving a Cadillac. In the half mile or so that I was driving behind him, he committed 5 different moving violations that I saw, including failure to yield to a pedestrian in a crosswalk, improper lane change, speeding, going straight from a turn-only lane, and running a red light.

One final comment-- a few years ago, I was standing on a sidewalk talking to a friend, and guy in a Ferrari came by, stopped at the light, and started revving the engine real loud. The car had a distinctive paint job. A couple of days later, I saw the same car, its driver-side door totally smashed in, on a flatbed tow truck. And there have been couple of incidents that I remember involving drivers of foreign muscle cars causing accidents on expressways, including the recent 12-car crash involving 8 Ferraris, 3 Mercedes-Benzes, and a Lamborghini.

[Art_from_Ark]

13. I was talking about this today with a guy connected with the automotive industry

He said that Detroit was complaining about the "yellow license plate" system in Japan as presenting an unfair barrier to American gas guzzlers and that one provision of the TPP calls for the elimination or severe curtailment of the "yellow license plate" system.

That really pisses me off. This system encourages people in Japan to buy environmentally-friendly cars by awarding high fuel-efficiency, low-weight, low carbon emission vehicles with a special yellow license plate that gets discounts for inspections, toll roads, and taxes.

Imagine that-- Japan, a country that has almost no oil resources to speak of and is already crowded with cars, has been trying to alleviate this situation by encouraging the purchase of smaller, environmentally-friendly cars. The nerve of them!

[Art_from_Ark]

14. Perhaps you'd like to browse the Ford Japan web site

http://www.ford-dealer.jp/

If I really wanted a Ford, I could buy one here in Japan, no problem.

[otohara]

15. Exactly - Teeny Tiny Cars in JP

and you have to prove you have a parking place in large cities. They don't fuck around either, they send someone to inspect the space.

Every year I struggle to buy something American for my Japanese family at Christmas. This year I was so determined to send made in USA - the gifts were probably somewhat of an odd choice, but I didn't care.

[Art_from_Ark]

16. Not just large cities, either

In small cities as well, when you buy a car, you have to prove you have a dedicated parking space that is close to your registered residence.