Top United Auto Workers union officials yesterday defended before the International Trade Commission their claims that imported cars -- not high gas prices and finicky car buyers -- substantially caused the auto industry's current problems.
But a General Motors Corp. vice president, David Potter, testified last night that the auto industry was hurt by a sudden shift in customer preferences, the recession and government regulation, according to a GM spokesman. When an ITC commissioner noted that Potter didn't mention imports as a principal problem, Potter said "that is correct." He also said the U.S. and Japanese governments should agree on more prudent trade practices.
Earlier, UAW President Douglas Fraser told the commission that, although gasoline prices had hurt the nation's auto industry, the biggest culprit was Japanese imports.
The ITC commissioners questioned the union on the public's belief that American workers are not productive but earn high wages and that high gas prices and low-quality American cars are to blame for 300,000 auto workers being out of jobs and a slump in U.S. car sales.
Yesterday was the first of at least three days of hearings on the request by the UAW and Ford Motor Co. to cut nearly in half the number of foreign cars, mostly those from Japan, entering the United States. The UAW also has requested that duties on imported cars be raised from 2.9 percent to 20 percent and that the 25 percent import duty on trucks be maintained.
The Japanese automakers, who are scheduled to testify later in the week, have argued that the downturn in the economy and the fuel shortage are to blame for Detroit's sales and profit slump.
The auto workers claim the industry needs relief from imports until 1985 so they can retool their plants and produce more small cars to compete effectively with foreign models.
The auto workers also said that they would prefer that the Japanese voluntarily restrain exports to the United States or build plants here. But when a lawyer for the Japan Automobile Manufacturers Association Inc., asked Fraser if his union would stop strikes as an incentive for foreigners to build plants here, Fraser retorted, "You can get away with that in Japan. American workers are not going to give up their constitutional right to strike."
However, the Federal Trade Commission staff yesterday released a study saying that quotas and tariffs would hurt consumers and not add many jobs. The tariff would raise import prices by about $1,160 per car, and a quota would lead to price increases from $527 to $838 per car, the FTC report said.
While the quota would reduce imports this year by 700,000 units, the tariff would reduce imports by about 1 million cars, the report said. "Domestic sales will not increase as much as import sales will fall under the quota or the tariff," the report added.
With the quota, no more than 380,000 more American cars would be sold, and two-thirds of those sales would be of small cars. The quota could lead to an increase of between 70,000 and 190,000 large car sales, the report said.
The results of quotas and tariffs would be "to improve the auto firms' profitability," the report said. The increase in gross revenues would range between $1.9 billion and $5.2 billion, according to the report.
However, the quota would cost consumers brtween $2.9 billion and $4.9 billion, and the tariff would cost from $5.6 billion to $6.6 billion, the report said.
"The cost to consumers would probably outweigh the gross profit benefits to producers by at least $1 billion," with the difference going to "importers, tariff revenues for the government, increased costs of domestic automakers and costs of administering the quotas," the FTC claimed.
In addition, the quota would result in 6,000 to 32,000 jobs being added to the industry, while the tariff would result in 8,300 to 69,200 jobs being created in the U.S. auto industry. The FTC report also said that trade restrictions, "while helping domestic producers, could have serious anti-competitive effects" and cause "major repercussions not only in the U.S., but internationally. The international effects, such as in-kind retaliation from other countries, could reduce the competitiveness of American exports abroad."
The report suggested the government might want to grant the auto industry other relief, such as additional loan guarantees, accelerated tax depreciation, aid to individual auto manufacturers and aid to workers and their families.
Fraser said in response to ITC questioning about the report that the FTC has no expertise in investigating the case. He added that the report was not endorsed by the FTC commissioners.
The appearance by the FTC staff was a rebuff to the UAW, which was one of the agency's few allies during the congressional attack on the agency this year. FTC Chairman Michael Pertschuk said there was no political pressure on the agency from the UAW. "There were no threats," he said.
Pertschuk said that he and senior agency officials did change the initial FTC staff statement, which he called a "more extreme" critique that questioned whether imports had anything to do with the auto industry's problems. The original statement wasn't sufficiently documented, he said.
Except for the FTC, the Carter administration was silent during the hearings. At White House instructions, the Justice Department and the Council of Wage and Price Stability, who reportedly were prepared to criticize the industry and oppose quotas, did not testify. The Transportation Department also was kept from testifying, although it would have defended the automakers' position.
Pertschuk said the White House didn't try to block an appearance by the FTC. But in testifying, another agency official said, the FTC was clearly sticking its neck "way, way out, with no potential rewards for us except to our professional integrity."