Speaking in Kyodo, Japanese Foreign Ministry officials recently said U.S. industries are generally supportive of Japan’s efforts to join the Trans-Pacific Partnership talks. Of the 113 comments sent to the U.S. Trade Representative during the public comment period, 104 were said to be “more or less in favor of Japan’s participation.”
The Trans-Pacific Partnership consists of Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States. Its goal is to “enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs.”
The American Automotive Policy Council (AAPC) is not one of Japan’s supporters; the AAPC went on record opposing including Japan in the negotiations.
The American Automotive Policy Council is a lobbying group with a grand total of three members: Chrysler, Ford and General Motors. Headed up by former Missouri governor Matt Blunt, the AAPC spent about $147,000 through November of 2011. That’s not much in the overall scheme of Washington pay-as-you-go politics but, considering the the size of the group and its limited focus, it’s probably plenty.
The entire text of the AAPC’s comments can be read here, but the goal is the continued exclusion of Japan from the TPP even as the partnership is opened to Brunei, Malaysia, New Zealand and Vietnam.
The Detroit Three continue to complain about Japan’s closed market and, looking at the relative handful of American cars sold in Japan, it’s easy to be sympathetic. According to the Japan Automobile Importers Association, Chrysler, Ford and General Motors sold a combined 11,300 cars and trucks in Japan in 2011, about 0.27 percent of the total market. To put it another way, Ford had sold as many vehicles in the U.S. by early afternoon of the first American selling day of 2011 as it did all of last year in Japan.
There’s little doubt the Japanese government works to favor its domestic automakers but instead of tariff barriers, it’s more of a “death by a thousand cuts” where currency manipulation and a multitude of regulations make it difficult to obtain a level playing field.
A closer examination of the facts indicates there is a factor even more important in determining why Japanese consumers buy so few U.S.-built vehicles: they don’t seem to want them.
The Japanese have said for a number of years that the reason for low sales of American cars and trucks is the vehicles themselves, an excuse the AAPC dismisses. However, sales of other vehicles exported to Japan shows the Japanese may well have a point.
Volkswagen AG sold 72,028 vehicles in Japan last year. The company even sold a pair of Bugattis. The Golf is one of the top 30 vehicles in Japan by sales volume with 26,125 sales in 2011. Other popular VeeDubs included the Polo, Passat and Sharan minivan. Volkswagen recently announced it is looking to sell 60,000 vehicles in Japan in 2012.
BMW sold 48,625 vehicles, including 14,430 Minis and 90 Rolls-Royces. 34,435 Daimler AG vehicles found homes in the Land of the Rising Sun. It’s not just German automakers: Volvo delivered 11,997 new cars and Peugeot sold 6,137 vehicles including 2,354 207s last year.
It’s easy to dismiss the Bimmers and Mercs, they’re aspirational marques almost everywhere in the world, but then there’s the Golf…and the Peugeot 207.
Imported vehicles still make up just a small fraction of total Japanese vehicle sales, 4.89 percent in 2011, up from 3.67 percent in 2010, but the fact that Detroit could only account for 5.5 percent of the total import volume says there’s more at work here than the government running interference for the home teams.
The AAPC presents American jobs as another reason to exclude Japan, but it’s difficult to see what kind of jobs are being discussed.
Looking at a couple of the other markets already in the TPP talks, one finds a higher percentage of American nameplates, most notably Chevrolet and Ford, but those sales don’t mean more jobs on the assembly lines in any American plants. The Chevrolets and Fords sold in Australia, New Zealand, Malaysia and Vietnam, for example, come from factories in the region.
The Chevrolet Sonic isn’t just built in Michigan; it’s also built in South Korea and China. The Chevy Cruze is built in Australia, Brazil, China, India, Kazakhstan, Russia, Vietnam, South Korea, Thailand, Venezuela and Vietnam. That’s in addition, of course, to the ones built at the Lordstown, Ohio, plant.
How about Ford? The Fiesta is built in Brazil, China, Germany, India, Portugal, Spain, Taiwan, Thailand and Venezuela. The ones for the U.S. come from Ford’s Cuautitlán plant in Mexico. Focuses come from the Philippines, Portugal, Russia, Spain as well as the Wayne Plant in Michigan. The Escape, Focus and Ranger for the region are all built in the Ford plant in Hai Duong, Vietnam. The Ranger sold in the Asia-Pacific region isn’t even offered in the U.S.
To sum up, whether Japan is excluded or welcomed with open arms wouldn’t seem to make any difference to the creation of the production jobs we need in America. In a number of cases, the development and engineering work for these vehicles was done outside the U.S., so those jobs are out, too. About the only obvious U.S. payroll expansion looks like it would be in management and the executive ranks.
The Detroit automakers do have valid points about the Japanese market: it is manipulated; it does rely heavily on exports and it is not nearly as open as markets elsewhere. But these factors don’t just impact Chrysler, Ford and GM and from the sales that other manufacturers are reporting, it’s obvious that what the AAPC really wants is for the Japanese government to somehow incentivize or coerce its citizens to buy more American-branded vehicles, whether they are American-built or not.
One more thing to consider: While the Japanese didn’t buy many American cars last year, they did buy 69,787 Japanese-brand cars that weren’t built in Japan, including thousands of vehicles built in the United States. And the Japanese manufacturers are expanding their U.S. production, which will create new American jobs.