Japan has spent over 460 billion in U.S. dollars to intervene in currency markets since 1998, keeping the yen artificially low against the dollar. This reduces the cost of Japanese exports and the vehicles made by Japanese firms here in the U.S. These companies can collect their U.S. sales in overpriced dollars, while paying much of their expenses in Japan using underpriced yen. The result is an unfair cost advantage of $4,000 to $14,000 per vehicle.
The United States, meanwhile, is the most open automotive market in the world, but U.S. companies face tariffs, regulations and other trade barriers when trying to sell American-made vehicles overseas.
All Bush had to do was aggressively enforce international trade rules by filing complaints with the World Trade Organization; instead, the president remarked that the struggling U.S. automobile industry should make a more "relevant" product if they want to increase sales.
Thankfully, our Michigan Democrats found some backbone and decided to stand up to Bush according to Booth Newspapers.
Michigan Democrats are urging the Bush administration to get tough with South Korea on automobiles as officials begin negotiations to establish a free-trade agreement between the two nations.
Gov. Jennifer Granholm and Democratic members of the Michigan congressional delegation said Monday that the administration has ignored questionable South Korean trade practices too long and any new agreement must give U.S. auto companies a decent shot at selling vehicles in South Korea.
"If (the president) is really interested in making good on the promise to level the playing field, ... this is an opportunity to stand up for the U.S. automotive sector," said Granholm, who sent a letter to U.S. Trade Representative Rob Portman, encouraging him to include automobile and auto parts in any agreement...
"We've got to keep the pressure on (the president), even though we can't say we've turned them around to date," said Sen. Carl Levin, who has written a letter with GOP Sen. George Voinovich of Ohio to encourage Portman to include automobiles and auto parts in the South Korean negotiations. "We hope to change them through this kind of public pressure. It is an election year and maybe they'll respond to that."
One interesting fact came to light in this article that I wasn't aware of:
Rep. John Dingell of Dearborn said that along with eliminating unfair tariffs and taxes in the trade pact, the administration should look to end a few unusual trade-blocking maneuvers used by the South Koreans.
"The (Korean) IRS will investigate you if you buy an American car," said Dingell. "Hardly fair competition. Koreans test American automobile windshields (for safety) with a hammer."
The question just begs to be asked: Why hasn't the Bush administration done something about this problem? We're talking about American manufacturers and American jobs. I realize Michigan is a blue state, but we are all one nation, and this problem touches all of us, as these figures indicate:
The Big Three, meanwhile, still employ nine out of 10 American auto workers, manufacture three out of four American-made cars and trucks and buy 80 percent of U.S.-made auto parts.
There's a problem with the claim that all the new investment in the U.S. auto industry comes from non-Big Three companies: It isn't true. Between 1980 and 2002, Ford, GM and what is now DaimlerChrysler provided 85 percent of the new investment in U.S. auto plants. That's $176 billion, compared with $27 billion from Asian and European manufacturers.
This isn't a regional issue because the Big Three employ advertising, design, engineering, manufacturing, sales and service workers all over the country. The failure of any one of these companies would be a disaster.
Let's hope it doesn't get that serious - the Bush administration has a poor track record when it comes to disasters.
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