A controversial "domestic content" bill headed for a House vote aims to hang "made in America" tags on the most popular models of foreign cars sold in this country by 1986 in an attempt to restrict automobile imports and increase employment.
The bill requires any automaker who sells more more than 100,000 cars a year in the United States to use a substantial amount of American parts and be assembled largely by American workers.
The domestic content requirement would be on a sliding scale, depending on the number of cars sold in this country. A company selling 100,000 cars would be required to meet a 10 percent content requirement; similarly, a company selling 900,000 cars would face a 90 percent domestic content requirement.
The bill is aimed at Japan, which this year captured around 25 percent of American auto sales, and its impact would be felt mainly by two Japanese firms, Toyota and Nissan, the largest exporters of cars to the United States.
Nissan, maker of Datsun, exported 584,487 cars and light trucks to the United States in 1981. Assuming that Nissan could maintain that sales level, it would have to show by 1986 that 58.4 percent of the cost of those cars -- both parts and labor -- was spent in the United States.
To meet the bill's requirements, a Congressional Budget Office study said, both Toyota and Nissan would be forced to move a significant part of their production capability to the United States -- the major aim of the bill, which follows the philosophy of "sell in America, buy in America."
However, Toyota and Nissan contend they could not maintain their sales at current levels if the bill passed.
And Nissan indicated that passage of the bill could cause it to cut, not increase, its U.S. production. Nissan spokesman James A. Young said the legislation would jeopardize Nissan's plans for the $500 million truck plant it is building in Smyrna, Tenn. "There is no way that we can meet the domestic content requirements of that bill and start producing trucks by August," Young said. Most of the parts for that plant will come from Japan.
Toyota, with 1981 sales of 714,000, would face a domestic content requirement of 71.4 percent if it maintained that sales figure. It is negotiating with General Motors Corp. to take over an idle GM plant, presumably in California.
Honda, which last month opened a $250 million plant in Marysville, Ohio, to build its popular Accord model, is likely to slip in with only minor increases in production there.
Just in case, however, Rep. Clarence J. Brown (R-Ohio) plans to introduce a "Honda bailout" amendment to reward that company for opening its American plant. Under that proposal, any company that built an American plant between Jan. 1, 1980, and Dec. 31, 1982 -- which just happens to include Honda -- requires a lower percentage of American parts and labor.
Volkswagen of America, which also has a plant in this country, is likely to escape the penalties in the bill without much trouble since its sales last year were less than 170,000 and its U.S.-produced Rabbits exceed 60 percent U.S. content.
The Big Three American car makers -- Ford, General Motors and Chrysler -- and the smaller American Motors Corp. would easily escape any domestic content requirements even though some parts of their cars are made overseas.
Foreign car makers get one break in the bill: The amount they spend in the United States on advertising, transportation, raw materials and accessories qualifies as part of the domestic content of an automobile. The CBO estimated that this could total 15 percent of the value of a foreign car.
The CBO estimated that foreign car makers could boost their percentage of American-made goods without much trouble to 25 percent by purchasing additional components.
The United Auto Workers, prime proponents of the bill, claim it will create one million jobs both in the auto industry and among their suppliers.
But opponents dispute the job creation effects of the bill. The CBO study acknowledges that auto workers' employment will increase as a result of the bill, but says it will be more than offset by job losses caused by retaliation by America's trading partners.
The CBO also said the bill would raise the cost of new cars and light trucks by an average of $333 each, thus fueling inflatation and possibly lowering the demand for vehicle purchases.
A White House Council of Economic Advisers study predicted Japanese car sales would drop to 500,000, from two million, but the average price of all cars sold in the United States would increase by $1,000. That study placed a $100,000 price tag on each auto worker job protected by the bill.
And a lobbying group opposing the bill, whose advertisements appeared in major newspapers this week, cited estimates that car prices would rise by $3,000 if the legislation succeeds.
But its proponents, including House Speaker Thomas P. "Tip" O'Neill, see it as sending a strong message to Japan that the American people are serious in their demands for equal access to Japanese markets.
It is likely to sail through the House during the present lame duck session of Congress on the strong wave of protectionist feeling, but will probably not be taken up by the Senate this year.
Other congressmen, such as Rep. Sam Gibbons (D-Fla.), chairman of the House Ways and Means Committee's trade subcommittee, worry that other industries hurt by the recession will seek similar legislation for themselves.
"It could log roll," he said, "if you throw a few more things in there like steel and shoes and textiles. It would be unstoppable in the House and maybe could even pass against a veto."