BY ROBERT MILLER
NEWARK, New Jersey - The U.S. government has sharply escalated its trade confrontation with Tokyo by announcing moves to impose steep tariffs on more than $5 billion of imported goods. If the 100 percent tariffs on 13 luxury cars from Japan go through, this would be the largest punitive levy ever. On May 10, the Clinton administration said it was also filing a legal challenge to Tokyo's trading practices with the newly formed World Trade Organization (WTO). This double-barreled gun pointed at U.S. capitalists' rivals in Japan, however, involves a high-risk strategy that could backfire.

Washington is demanding that Japanese car manufacturers announce "voluntary plans" for future purchases of U.S.-made auto parts and the expansion of dealerships in Japan that sell cars produced by U.S.-owned manufacturers. Autos and auto parts accounted for more than 55 percent of Washington's $66 billion trade deficit with Japan last year. Trade negotiations broke off May 5 in Canada.

The "Big Three" U.S. auto bosses rallied around President Bill Clinton's offensive. We "support whatever further action the Clinton administration takes concerning Japanese trade," said Chrysler chairman Robert Eaton.

The Wall Street Journal, though, editorialized that "there is a perverse quality to the Clinton team's argument that bringing out the sanctions club is a way to foster free trade with Japan." The Journal added, "This is a delicate moment for the global trading order, and a peculiar one for Washington to launch a game of chicken." London's Financial Times termed Clinton's demands "ill-judged" and the policy "misguided."

Clinton ups the ante
The Clinton administration move ups the ante in the trade skirmish between the property-holding classes on both sides of the Pacific. In previous trade disputes, what the Journal termed "innocuous" goods were targeted for penalties.

This time the targets are high profile luxury automobiles like the Toyota line of Lexus cars and Nissan's Infiniti. The threatened 100 percent tariffs on these vehicles would choke off sales altogether.

According to one trade analyst cited by the Journal, the Japanese carmakers are "losing money in sales to the U.S. anyway," referring to the yen's 16 percent increase in value against the dollar since the beginning of the year. "Now that's a double whammy. So, the Japanese might compromise," he said.

The sanctions take effect May 20, but will be rescinded if an agreement is reached by June 28. This schedule is aimed at putting maximum pressure on Japanese prime minister Tomiichi Murayama, who will attend the next Group of Seven - heads of industrialized nations - meeting in Halifax, Nova Scotia, June 15.

Taking his cue from the White House, ultrarightist presidential candidate Patrick Buchanan wrote on the op-ed page of the May 10 New York Times, "The hour of the economic nationalist may be at hand." Arguing that 100 percent tariffs on $1 billion of Japan's exports "doesn't even qualify as a spanking," Buchanan bellowed that toward "predators like Japan and China, it is time for hardball." He called on Congress to impose a tariff of 10 percent on all Japanese imports.

Tokyo is digging in
Tokyo, however, is digging in its heels. "I don't think this will be resolved under pressure," said Yoshihiro Sakamoto, vice minister of Japan's ministry of international trade and industry. He warned that if U.S. officials believed Tokyo would follow the traditional script and compromise at the last minute, they were mistaken. While the U.S. auto giants recorded record profits in 1994, the flagship industry of Japanese capitalism has been weakened by a sluggish economy after a 3-year recession and a rising yen, which puts the squeeze on profit margins on export sales.

Tokyo plans to go to the WTO charging that U.S. penalties violate world trade rules by imposing sanctions before going to the trade forum.

Japanese vehicle exports to the United States have fallen by half since 1986, from 3.4 million to 1.6 million in 1994. Toyota, Honda, Nissan, and Mazda plants now operate in the United States, and Japanese cars account for 24 percent of the U.S. market.

The 11 Japanese car manufacturers also face a squeeze on profit rates and are preparing to slash the workforce. Hiroshi Okuda, a vice president of Toyota, told the Financial Times the company may shut at least one plant.

The May 7 New York Times stated, "The fact that Tokyo has not caved in so far to U.S. demands is remarkable, and somewhat puzzling to American negotiators." The business editor of the Financial Times wrote May 11, "If Japan calls the administration bluff and continues to stand firm, the ploy could rebound embarrassingly."

Robert Miller is a member of United Auto Workers Local 980 in Edison, New Jersey.  
 
 
Front page (for this issue) | Home | Text-version home