One of organized labor's prime legislative objectives--a bill to force the largest-selling foreign cars to be made in this country of mostly American parts--ran into rough sledding yesterday on Capitol Hill where it was opposed by two of the Big Three domestic automakers and its promise to create more than 1 million jobs was questioned by a key congressman.
At another congressional hearing, Chrysler Corp. President Lee A. Iacocca argued that Japan should be limited to 15 percent of American car sales until "some equilibrium is reached" in the country's record high trade deficit.
He said this would give Japan a "more generous" chunk of the American market than other countries allow and would be "far in excess of the Japanese share of automotive investments in America and in American jobs." About one-fourth of all cars currently sold in America are made in Japan.
The skeptical reception given yesterday to labor's plan to increase American jobs in the auto industry stood in sharp contrast to last year, when local content slid through the House Commerce Committee after less than three hours of hearings with hardly an objection and passed the House in the final days of the session--despite Reagan administration charges that it is the most protective bill since the Smoot-Hawley law of the 1930s.
But key congressional staffers said it appears that local content lost some of the steam it had last year, probably because of the upturn in the economy and the increase in domestic auto sales.
"It's on the back burner at the moment," said one House committee staff member who keeps a close eye on trade legislation. But he predicted it will gather steam by the end of the year and become a major trade policy issue as the 1984 election approached.
As an indication of the legislation's loss of steam, subcommittee Chairman James J. Florio (D-N.J.)--a cosponsor last year--said yesterday he is seeking a "mid-point position" that would increase the productivity of the domestic automakers without placing the curbs on the major foreign car makers.
Florio, who has not joined as a cosponsor this year, said he feared the bill will not produce the promised increase in jobs and told witnesses from the AFL-CIO that it is "an oversimplification" for them to insist the bill will resurrect the American automobile industry and create more than a million new jobs. Nonetheless, AFL-CIO legislative representative Stephen Koplan told the subcommittee that American industries--autos chief among them--have become "overwhelmed by foreign trade practices" that cost jobs. He said the local content bill would combat that by forcing the major foreign car importers--all Japanese--to make their products in this country, using American parts and workers.
But General Motors Corp. and Ford Motor Co. said the key to increasing American auto sales, and thereby producing more jobs for U.S. workers, lies in policies other than local content laws. Both said the strong dollar and weak yen give Japanese importers a substantial pricing advantage, while American exporters face tax burdens greater than their foreign competitors since they get tax breaks not given here for goods sold overseas.
Chrysler, on the other hand, told the subcommittee earlier this month that it prefers stiffer quotas on imports of Japanese cars, but would accept local content laws reluctantly if it is the only thing it could get to stem imports. Under voluntary restraints negotiated by the Japanese and American government, Japanese auto imports are limited to 1.68 million cars a year.
The three leading Japanese auto importers--Toyota, Nissan and Honda--were united in attacking the local content bill. Marvin T. Runyon, chief executive officer of Nissan Motor Manufacturing Corp. U.S.A., said it would "seriously jeopardize" his company's $600 million venture to produce cars and trucks in Tennessee.