Japan needs to reduce the size of its auto industry before joining free trade talks, says Ford

Article by Christian A., on May 6, 2012

A top Ford Motor Co. official thinks that Japan has to make its auto industry smaller before it could be permitted to enter regional free trade talks with the countries in the Asia-Pacific region, including the U.S. When interviewed by Reuters, Steve Biegun, Ford's vice president for international government affairs, said that the market in Japan is the “most protected automotive market in the developed world."

Biegun said that while Ford is strongly supportive of the proposed Trans-Pacific Partnership pact, the automaker hopes to guarantee that just “the right members” are included in this agreement and that they achieve a good quality free trade pact.

He added that Japan’s auto industry is “hugely overweight” and would heavily rely on massive exports unless it restructures. Two days before Biegun was interviewed, President Barack Obama met with Japanese Prime Minister Yoshihiko Noda to talk about Tokyo's interest to join the TPP talks. Japan had first expressed its interest six months ago.

Ford’s protest to permitting Japan to enter the talks is indicative of the challenges that Obama faces, particularly those posed by presumptive Republican presidential nominee Mitt Romney in Michigan and Ohio. It’s likely that the outcome of the November election would be influenced by what goes on in these two U.S. auto-producing states. In 2011, Japan built around 9.3 million cars and trucks.

The Japanese Automobile Manufacturers Association website said that it has around 4.6 million total exports, including 1.5 million to the U.S. The U.S. is one of the most open markets in the world, with only a 2.5% tariff on cars. Biegun said that maintaining this tariff is vital for its small-car production in the U.S. to stay profitable. [source: Reuters]

Topics: japan

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