JAPAN'S "VOLUNTARY"--that is, involuntary -- agreement to hold down its exports of automobiles to the United States has been in effect half a year. Over these months the agreement has demonstrably done the American automobile companies no good whatever. There's some evidence that it has actually increased their troubles with foreign competition.
Last spring, as you doubtless remember, several of the American companies were banging desperately on the door of the White House to demand relief from the relentless pressure of imports--primarily Japanese imports. The administration needed to do something quickly, and trade restraint was what the American industry wanted. The industry's deeper ills--runaway wages, unpopular designs, occasional lapses in quality control--were all going to take far longer to correct.
With much pulling and hauling, the administration managed to extract from the Japanese government a pledge that its manufacturers would not ship more than 1,680,000 cars into the United States in the year beginning last April. The Commerce Department's figures show that in the first six months, through September, 964,000 cars came in from Japan. If that rate continued through the winter, the Japanese companies would be well over the limit. That's not likely to happen. The limit will be enforced, not by the agreement, but by the recession.
While the sales of imported cars are down, compared with this time last year, they aren't down quite as far as the sales of domestic cars. That leaves the imports with a larger share of the American market than they had a year ago. There's another recent difference, as well. The Japanese are shipping more expensive cars into this market. Perhaps the import agreement has nothing to do with it; moving up the price scale had been the Japanese companies' strategy for some time. But this response was widely predicted when the import restraints went into effect last spring. Whenever an import business is put under quotas, the importer is likely to move into more expensive lines and models to protect profit against a declining volume. The effect is to give the American manufacturers more severe competition in the middle range of the price scale, where they have traditionally looked for their own profits.
As the import agreement was originally stated, there was to be a second year of it with the precise numbers to be worked out later. Undoubtedly the American automobile industry will plead for even tighter controls of even longer duration. But present experience suggests that the administration would do the automobile companies a favor by abandoning the whole thing.