U.S., Japan Are Making ‘Some Progress' In Talks on Difficult Auto Issues, Cutler Says

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By Len Bracken  

June 10 — The U.S. and Japan are making “some progress” in bilateral negotiations on trade in automobiles being conducted on a parallel track with the Trans-Pacific Partnership (TPP) talks, acting Deputy U.S. Trade Representative Wendy Cutler said June 10 in an address at the Center for Strategic and International Studies.

“We are holding these auto talks this week, and we are making some progress but we still have a lot of work to do,” she said.

The June 9-10 negotiations in Washington, D.C., headed by Cutler and Takeo Mori, Japan's ambassador for economic diplomacy, are based on an April 2013 bilateral agreement that required Japan to commit to negotiations on nontariff barriers to trade in motor vehicles and other areas in exchange for U.S. support for Japan's accession to the TPP talks.

Cutler said since President Barack Obama's April 2014 visit to Tokyo, the two sides have been taking up the most difficult issues in the negotiations, including standards and financial incentives that pose nontariff barriers to U.S. auto exports to Japan.

She also said the two sides are discussing a dispute settlement mechanism for dealing with irritants to bilateral trade in motor vehicles. A source familiar with the talks told Bloomberg BNA that this element of the bilateral talks is well-advanced but not yet concluded.

The complete list of auto-related issues under discussion are outlined in the Motor Vehicle Trade Terms of Reference document that is part of the April 2013 agreement.

Cutler briefly discussed the “intense stage” of the TPP agriculture market access negotiations with Japan, saying the U.S. was trying to work with Japanese negotiators regarding sensitive products while trying to achieve the maximum possible access for U.S. producers.

Big Three Cite Currency

The American Automotive Policy Council (AAPC), which represents Chrysler Group LLC, Ford Motor Co. and General Motors Co. on trade policy issues, backs the technical work that is being conducted by the Office of the U.S. Trade Representative but contends that currency concerns are more important.

AAPC President Matt Blunt, the former governor of Missouri, told Bloomberg BNA June 10 that there are clearly technical issues that need to be addressed, but currency manipulation is the biggest impediment to free trade. AAPC and others contend that an artificially low yen acts as a price incentive giving Japanese car manufacturers an unfair advantage.

“It's critical that a high-aspiration agreement like the Trans-Pacific Partnership address currency with a meaningful, rules-based approach,” Blunt said. “The fact that it has not been raised by negotiators thus far is very discouraging for us and others in Congress who believe that currency has to be included if it is going to be a meaningful agreement.”

The AAPC president said Japanese statistics from the Original Equipment Manufacturers show that large profits can be traced to the lower yen, keeping Japan's markets closed while improving Japanese automakers' ability to reinvest. Currency manipulation affects the Big Three beyond North American markets, he said, in markets around the world.

To contact the reporter on this story: Len Bracken in Washington at lbracken@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

The terms of reference document can be found at http://www.ustr.gov/sites/default/files/Motor%20Vehicle%20TOR%20-%20Attachment%20to%20Amb%20Sasae%20Letter%204-12-13.pdf.