Detroit automakers are urging President Barack Obama to reject Japan's bid to join talks on a regional free trade agreement, the head of an automotive group representing GM, Ford and Chrysler said on Thursday.
Adding Japan to the Trans-Pacific Partnership negotiations will lengthen those negotiations ... by years and perhaps keep them from ever coming to fruition, Matt Blunt, president of the American Automotive Policy Council, told Reuters.
While Detroit automakers support Obama's goal of creating a free trade pact in the Asia Pacific, they do not believe U.S. negotiators can dismantle non-tariff measures Japan has long used to keep U.S. autos out of its market, said Blunt, a former Republican governor of Missouri whose father is a U.S. senator.
As advocates for free trade, we're concerned about adding an economy like Japan, Blunt said, denying Detroit automakers were afraid of talks with Tokyo because the U.S. could have to eliminate remaining tariffs on Japanese cars.
We obviously compete with a lot of automakers here and for the first time (last year) since 1988, we gained market share. We're making a very competitive product now that we export all around the globe, Blunt said.
The Detroit Three's objections, many of which are echoed by the 12.2-million AFL-CIO labor organization, create a political problem for Obama, who is up for re-election this year and needs to do well in the industrial Midwest.
Obama has warmly welcomed interest from Japan, Mexico and Canada in the proposed Trans-Pacific Partnership, or TPP, but has not made a formal decision yet on whether to let the three countries join the negotiations.
The nine current TPP participants -- Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Vietnam -- hope to reach a deal this year.
They are expected to discuss Japan, Mexico and Canada's applications to join the TPP talks in Melbourne in March, but a formal decision might not come at that time.
Detroit's tough line on Japan will obviously get attention in the White House, said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics.
But this is a negotiating position with the U.S. government, aimed at ensuring Japan does as much to remove non-tariff barriers as South Korea is required to do under a recently approved bilateral pact, Schott said.
In a filing with the U.S. Trade Representative's office, Blunt's group also raised concerns about Tokyo's history of intervening in currency markets and said Japan ranked last in auto imports among the 30 industrial countries in the Organization for Economic Cooperation and Development.
In other words, Japanese automakers control more than 95 percent, or 4.7 million vehicles, of their domestic auto market. In contrast, all other OECD member countries with major auto sectors, except Korea, have an import market share of more than 40 percent, the Detroit auto group said.
A Japanese government source in Tokyo rejected Detroit's contention that regulatory and other hidden or structural barriers keep U.S. cars out of the Japanese market.
Japan has no tariffs on cars and our acknowledgment is Japan has no non-tariff barriers either, said the government source, speaking on condition of anonymity.
U.S. cars do not fit Japan's market or Japanese consumers' requirements because of size, high fuel consumption and higher prices. They need to have a line-up that suits Japanese consumers' preferences, the source added.
Japanese officials are expected to visit Washington next week to discuss what market-opening reforms it would be pressed to make in the negotiations.
Outside the auto sector, U.S. companies are generally eager to have Japan join the negotiations, but have tough demands in areas ranging from agriculture to financial services.
(Additional reporting By Kaori Kaneko in Tokyo; editing by Todd Eastham)