LET'S SUPPOSE that the United Auto Workers are right about imported cars and the rules of fair play. Let's accept, for a moment, the proposition that a Japanese company -- we are talking about Nissan and Toyota -- that wants to sell cars to Americans ought to build them here and provide jobs for Americans. Doesn't that seem reasonable?
But if that's fair play, we can't limit it only to cars from Japan. How about the goods that Americans sell abroad? The same principle would have to apply to the computers, the telecommunications equipment, the oil bits and the turbines that American companies mmake here and export. If Japan buys an airplane from Boeing, should Boeing be required -- under the fair play rule -- to build it in a plant in Japan?
The protectionist arguments keep hitting that same rock and sinking there. You wouldn't know it from listening to the automobile and steel industries, but American exports of machinery and transportation equipment are far larger than imports. Last year the United States shipped $96 billion worth abroad, while imports in that same category --including cars--came to $70 billion.
The protectionists argue that Japan sells more in this country than it buys here. That's true, but irrelevant. The dollar that a Japanese company earns in the United States may well be spent for oil in the Middle East. The Middle Eastern oil producer spends it in Europe, and the European uses it to buy American machinery. The books balance.
The UAW is now pressing Congress fiercely to enact a bill that would set a local content requirement for imported cars. The more cars a foreign manufacturer sold here, the higher proportion of its value would have to be American-made. Fortunately, the local content bill is not likely to pass Congress this year. Although the House Energy and Commerce Committee is about to report it, from there it must go to the less friendly Ways and Means Committee; the end of the session is only a few weeks off. But the bill is certainly going to be back next year. It's important to acknowledge the real meaning of this kind of legislation.
Protectionist legislation can shift jobs from one company to another and from one line of work to another. But it can't increase the total number of jobs. If anything, it is likely to diminish the total. A local content rule can certainly keep foreign cars out of this country, and it can probably create, at least temporarily, some additional jobs in the American automobile plants. But it would create those jobs at the expense of other Americans' jobs, in the export industries. Is that fair?