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Big Tokyo question: Will US ask that curbs on autos be extended?

By Nobuko HashimotoSpecial to The Christian Science Monitor / February 28, 1985



Tokyo

The question that is being asked most frequently around Tokyo these days is, ``Will the United States ask Japan to extend its voluntary restraint on auto exports after its expiration on March 31?'' Almost everyone here expects not, but nobody wants to say exactly what will happen after the curbs are removed. Automakers, naturally, are against any curbs. Shoichiro Toyoda, president of Japan's largest auto manufacturer, Toyota Motors Corporation, said in a recent interview with the Monitor that there was no need for an extension of the restriction on auto exports to the US.

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His reasons: Unlike four years ago when the restraints started, the unemployment rate in the US has fallen sharply and the American car industry has shown remarkable recovery. The Big Three automakers have posted record results in the last couple of years. Besides, Mr. Toyoda adds, the auto curbs have resulted in price hikes which are ``undesirable.''

``Our duty is to sell good products at a low price,'' the Toyota president says. ``For this free competition is needed, and each automaker has to make the effort to produce products at a lower price,'' he said recently.

The smaller carmakers, dissatisfied with existing export quotas to the US, have even more to gain from the removal of auto curbs. Kenichi Yamamoto, president of Mazda Motor Corporation, the fourth-largest Japanese carmaker, said recently that ``the current quota is unfair, benefiting only Toyota, Nissan, and Honda [the top three Japanese auto companies].''

Since export quotas are aligned with the scale of a company's exports, larger Japanese auto companies are at an advantage, since they export proportionately fewer cars than small auto companies. Mazda, for instance, stands to benefit from the relaxation of curbs, says Kelvin Kuniyaki of Merrill Lynch in Tokyo. Mazda has reintroduced at its Hiroshima plant the Familia model, branded the ``Great Little Car'' in the US, which has already gained popularity in America.

If the export curbs are removed, will Japanese cars start flooding the US market, as a lot of Americans fear? Possibly, according to presidents of the Federation of Economic Organization (Keidanren) and the Japan Chamber of Commerce. Both the Keidanren president, Yoshi Hiro Inayama, and Chamber of Commerce president, Noboru Goto, have expressed concern that Japan-US trade tensions could worsen if Japanese carmakers are allowed to export freely to the US.

Mr. Inayama, formerly a head of Teh Steel Industry, recently told the press that ``there is no political reason for the US to ask Japan to continue the restraints . . . but we cannot offset the trade imbalance simply by buying more [American] cars.''

The Japanese also fear the US government will use this auto-restraint issue to gain more access to other sectors, such as the Japanese telecommunications and electronics markets.

The export quotas are now limited to 1,850,000 units a year. When the restraints are removed, exports could increase to about 2.15 million or even 2.2 million units a year, according to a senior analyst at Nikko Research Center.

The general view in auto industry circles, however, is that even after the car export restrictions are lifted, Japanese carmakers will continue to practice some sort of self-restraint or ``self-policing.''

Takashi Ishihara, head of the Japan Automobile Manufacturers Association and president of Nissan Motor Company, told a press conference last week that even if there is a temporary surge in Japanese car exports to the US, it will only be to maintain inventories at a ``proper'' level after the curbs are lifted as of April 1. This surge would not last very long, Mr. Ishihara said.

The Japanese Ministry of International Trade and Industry (MITI) is keeping a careful watch over the situation, even though its officials are reluctant to say anything at the moment. Industry analysts predict that what is most likely is that the Japanese government will let the auto industry export without any official restraints. But when export volume starts to increase too rapidly, MITI would probably step in to intervene to give ``administrative guidance,'' as it did before restraints began in 1981. That would be ``sort of arm-twisting to remind the carmakers not to go overboard,'' a foreign car industry analyst based in Tokyo says.