WASHINGTON -- The Big 3 call Japanese car companies tough competitors that don't need or deserve unfair help from Japan's government.
But that is what those companies get when Japan buys hundreds of billions of dollars on global currency exchanges and thereby artificially weakens the yen, the Big 3 and their allies assert. Japanese-brand automakers dispute the claim.
The alleged currency manipulation means that Japanese companies can sell their vehicles at lower prices here and that American-made cars and trucks cost more in Japan, U.S.-based automakers say. The practice also means that every dollar Toyota, Honda or Nissan makes in the United States is worth more in yen at home -- either as profit or money to invest in product development and promotion, U.S. executives contend.
"It's a free check -- a windfall lottery check for exporting to the United States," says Steve Collins, president of the Automotive Trade Policy Council. The council represents General Motors, Ford Motor Co. and the Chrysler group on trade issues.
Japanese companies assemble more than 3 million vehicles a year in the United States. The currency advantage also helps them export more than 1.7 million cars and trucks a year to this country, the council says.
The Association of International Automobile Manufacturers considers the manipulation charge "a ridiculous claim based on bad math," AIAM President Tim MacCarthy told Automotive News. The association's members include the U.S. subsidiaries of the Japanese companies.
The manipulation charge is not new. But in an era of relative trade peace between the United States and Japan, the currency issue has become the focal point of Big 3 claims of unfair competition.
The U.S. government is devoting most of its currency attention to the Chinese yuan. But the Big 3 and their allies may be making headway with their yen arguments.
Collins says Bush administration jawboning has curbed Japanese intervention in currency markets. After buying more than $450 billion between 1999 and 2004, Japan has made no purchases this year.
But critics say the yen remains too weak. It traded at more than 114 to the dollar late last week. Collins and others say it should trade at about 90 to 100 to the dollar.
The U.S. House of Representatives has passed a bill that would define more clearly when currency intervention is an unfair trade practice. Its fate in the Senate is uncertain.
Last month, the House Committee on Ways and Means held a hearing on U.S.-Japan trade relations.
Mustafa Mohatarem, GM's chief economist, told the committee: "Japan's artificially weak currency provides a significant per-vehicle cost advantage that amounts to an outright annual subsidy of $3,000 for a small car to $12,000 for a luxury sedan or SUV for every vehicle exported to the United States."
You may e-mail Harry Stoffer at [email protected]
|The Big 3 say Japans currency interventions keep the yen artificially weak and indirectly subsidize Japanese automakers. Bad math, the Japanese companies respond. Here are data the sides use to bolster their arguments.|
|purchases||Yen-dollar||vehicles imported||vehicles built|
|Year||of dollars||ratio*||into U.S.||INU.S.|
|1999||67 billion||113.8||1.7 million||2.2 million|
|2000||30 billion||107.8||1.8 million||2.4 million|
|2001||26 billion||121.6||1.8 million||2.4 million|
|2002||32 billion||125.2||2.0 million||2.5 million|
|2003||191 billion||115.9||1.8 million||2.8 million|
|2004||138 billion||108.2||1.7 million||3.0 million|
|*Larger number means weaker yen|
|Source: Automotive Trade Policy Council; Association of International Automobile Manufacturers|