Japanese car exports

Press, 12 May 1981, Page 16

Japanese car exports

Until a few years ago the car was not only the symbol of the American way of life within the United States but in much of the rest of the world as well. American cars all but ruled the roads of the United States; exported Fords and Chevrolets and their foreign cousins had ample shares of the car sales in dozens of other countries. The 'American car industry is now having hard times and the United States Government has arranged with the Japanese Government for Japan to restrain its 'exports of cars to the United States. (Although the agreement, in a ritual nod to the principles of free trade, is called one of voluntary restraint, there was little that was voluntary about it. Had. Japan not agreed to curb its exports of cars, the American Congress would undoubtedly have legislated to see that imports into the United States were curbed.

Japanese car-makers have captured about 20 per cent of the market of the symbolic home of the motor-car. The agreement limits Japan to selling 1.68 million units to the United States in the coming year and to maintain a restraint for the two succeeding years. The Japanese accepted the curb reluctantly, arguing that the American market, having gone through a slump, was now on the mend. Time will demonstrate whether this is true. In the meantime, American car manufacturers have a chance to see what they can do when a greater proportion of the market is secured for them. They have been slow to adapt to the changed requirements, of carowners over the last few years and it will be interesting to see whether any lessons from the past have been read and acted on. Both Canada and the European Economic Community, impressed by the fact that the United States managed to get Japan to restrain its exports of cars, and alarmed by the possibility that the cars no longer destined for the United States will be diverted to their markets, have sought similar restraint agreements. Japan has shown little willingness to oblige. Some European countries already limit the number of Japanese cars that may be imported, which is a factor weakening the

whole of the bargaining position of the European Economic Community. Earlier this year Mrs Simone Veil, the President of the European Parliament, talking to journalists in Tokyo, gave a warning that various European industries were becoming distressed by the imports of Japanese goods, particularly photographic gear, cars, colour television sets, and machine tools. In the minds of all concerned about the exports of Japanese cars is the large number of unemployed in North America and Europe. In Europe the figure has reached 8 million. While unemployment benefits increase the capacity of societies to absorb the unemployed, the possibility of social upheaval cannot be ruled out forever.

The United States is a world leader in a variety of ways. Whether it has set a new trend remains to be seen. Talk of growing protectionism in trade has been about for a long time. The subject is important not only for the countries whose people find Japanese cars to their liking, but to the Japanese themselves. Is there any end to Japan’s capacity to survive some severe economic blows and then to bounce back with increased exports? Do the Japanese, in their trading strategy, set limits, or is the strategy over cars, for example, simply to take over the world market? The voluntary restraint agreement may cause Japan to rethink some of its trading strategies. If Japan does not meet consumer resistance to its products, it is meeting the resistance of governments which are concerned about the consumers on the employment front. If underdeveloped parts of the world increased in prosperity, the demand for cars and other vehicles might keep all the big motor manufacturers busy. Were it not for fuel problems, the developed world alone might keep them busy. Given the present circumstances of the world economy and trade barriers, much effort is going into sharing the market; the thought that the motor industry should tailor its supply and that production capacity should be turned elsewhere is not easily accepted when the curbs on growth may prove temporary.