Trade issues between the United States and Japan, especially in the automotive sector, have struck a repetitive note for decades: our market is open to them, their market is effectively closed to us. Even though Japan doesn’t apply tariffs to cars we export there – whereas we tax Japanese passenger cars 2.5 percent and Japanese light trucks 25 percent – other barriers like Japan’s 2,000-unit cap in the Preferential Handling Program and regulatory hurdles have limited the amount of effective trade US companies can conduct there. In 2011 for instance, the US exported $1.5 billion in auto products to Japan but imported $41 billion in auto products from Japan. And it’s said that Japan sells 120 cars in the US for every car a US manufacturer sells there.
That’s why potential US approval of Japan’s request to enter the Trans-Pacific Partnership (TPP) is sending automotive criers out in the streets. The TPP is a series of long-running talks to open up trade between the US and 10 other nations (Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam). Last month, Japan asked to join the talks, and the TPP membership would need to assent to the request within 90 days of the next TPP meeting, scheduled for Peru in July.
It looks like the US will agree to let Japan in and that has some politicians and labor groups concerned, the fear being that Japan will get an even easier time of it here without truly eliminating hurdles over there. Talks between Japan and the US are said to be at “an advanced stage,” with the US trying to get some early agreements in advance in sectors like auto, insurance and agriculture before the July meeting.
The AFL-CIO is wary, just one of the labor groups worried about losing ground just when it’s said that American manufacturing is coming back. Ford, not a newcomer to being vocal about trade issues with Japan, is against Japan’s inclusion to the TPP talks, as is the American Automotive Policy Council. And certain members of Congress are hesitant to let Japan sit at the table, based on past and current unresolved issues. Nevertheless, it doesn’t look like the Obama Administration and a large pro-business lobby will turn away from the possibility of adding the world’s third largest economy to the proceedings, the US government having already unofficially welcomed Japan to the TPP talks.