When it comes to selling U.S. parts to Japan, the current state of U.S.-Japanese trade relations could have been described by Dickens: It is the best of times; it is the worst of times.
To keep up with booming U.S. vehicle sales, Japanese automakers are buying record amounts of U.S.-built parts for their North American assembly plants. Meanwhile, a stagnant Japanese economy is squeezing American parts exports to Japan.
This month, the Japan Automo-bile Manufacturers Association reported that its members bought $28.3 billion worth of U.S. components for the most recent fiscal year. That's up more than 13 percent from the previous year. Japanese assembly plants in North America accounted for most of those purchases.
However, U.S. exports of auto parts to Japan fell in the fiscal year ending March 31. American component exports to Japan totaled $3.7 billion, a decline of $200 million from the year before.
Even though U.S. trade officials call the numbers 'very troubling,' the trend may reveal more about the U.S. market than it does about Japanese parts procurement.
Four years ago, the U.S. parts industry was so frustrated at its lack of progress in exporting parts to Japan that it persuaded President Clinton to declare a 100 percent tariff on imported Japanese luxury cars. The punishment was avoided when Japan agreed to begin deregulating its vehicle aftermarket and ease import restrictions.
Two weeks ago, U.S., Japanese, Canadian, European and Aus-tralian trade officials met in Vancouver, British Columbia, to examine how much progress Japanese automakers have made since the 1995 U.S.-Japan auto agreement. The agreement will expire at the end of 2000. Japanese officials are more than ready for it to expire, while the Americans are keeping their options open.
After the Vancouver meeting, a senior U.S. trade official said they had not discussed an extension of the agreement. Over the past four years, American negotiators have pressed Japan to promote the import of U.S. parts and to ease Japanese regulations of aftermarket parts.
'The agreement has not fully achieved its objectives,' one U.S. trade official said. 'We still believe there is much the Japanese government can do to improve market access and the competitive environment in the Japanese market.'
MORE VEHICLES, CONTENT
But according to JAMA's U.S. director, William Duncan, the conflicting recent trade numbers reflect the difference in the U.S. and Japanese auto markets.
Vehicle sales in Japan continue to lag as that country's economy stagnates. In the United States, Japanese automakers are not only building more vehicles - they are also sourcing more content here.
For example, Toyota Motor Corp. has opened a new Corolla engine factory in Buffalo, W.Va., that uses U.S.-built components. Meanwhile, Honda Motor Co. is building vehicles here that have more than 90 percent local content.
The results are a rise of more than $8 billion in U.S. parts purchases since fiscal 1994.