Published July 23, 2013
WASHINGTON – A senior lawmaker on Wednesday urged the Obama administration to push for tough trade rules on Japan autos in a proposed free-trade agreement in the Asia-Pacific region.
Representative Sander Levin, the top Democrat on the House of Representatives' Ways and Means Committee, said the United States needed a three-decade phase out of its 2.5 percent tariff on cars and 25 percent tariff on trucks to ensure that Japan really opens its own market to U.S. autos.
He also said the U.S. needed enforceable rules against currency manipulation.
The tough demand shows the difficulty President Barack Obama could face getting the proposed Trans-Pacific Partnership, or TPP, pact through Congress unless he responds to concerns about the agreement from fellow Democrats in Congress.
Levin, echoing the views of the Detroit Three auto makers, argued Japan uses a variety of tax policies, regulations and other "non-tariff" barriers to keep out U.S. autos even though the country has no tariffs on auto imports.
"Imports from all countries combined account for a total of just 6 percent of the Japanese auto market, making Japan the most closed automotive market in the developed world," Levin said in remarks prepared for delivery at the Peterson Institute for International Economics.
Japan's auto makers also often get help from Japanese government efforts to depress the value of Japan's currency, making it important that the Trans-Pacific Partnership also contain enforceable rules against currency manipulation, Levin said.
"We need to take the disciplines that have been developed at the IMF, build upon them and subject those disciplines to binding dispute settlement," similar to other commitments in trade pacts, he said.
The United States has not included currency rules in previous trade pacts, and the White House has been noncommittal about addressing the issue in the TPP talks, which it hopes to finish this year.
Levin's speech came as Japan is preparing to join negotiations on TPP just before the conclusion of the 18th round of talks on the pact, which are wrapping up this week in Malaysia.
The Obama administration in April struck a deal with Japan on the terms of its entry into the negotiations, including a commitment that U.S. tariffs on Japanese autos and trucks would not be phased out any sooner than the longest tariff phase out for any other product covered by the pact.
Levin, who is from the Detroit area, said that approach was insufficient. Instead, he outlined a plan to phase out the tariff over 30 years, but allow for quicker elimination if Japan's total auto imports rise to at least 20 percent of its domestic market.
However, the plan would maintain a 1.25 percent auto tariff and a 12.5 percent auto tariff in year 30 if Japan's import penetration in year 25 is less than half the average rate for developed countries, which is currently about 30 percent.
(Reporting by Doug Palmer; Editing by Neil Stempleman)