The Reagan administration's top trade official has called for a third year of limitations by Japan on its auto exports to this country to maintain protection for American auto makers, according to a letter released yesterday.
The position of U.S. Trade Representative William E. Brock was disclosed in a letter to Sen. John C. Danforth (R-Mo.), chairman of the Senate subcommittee on international trade.
"I believe a third year of voluntary auto export restraint by the government of Japan is needed," Brock said in the Oct. 8 letter.
The U.S. auto industry, suffering through its worst sales year since 1958, has been pressuring the administration to persuade Tokyo not only to extend the current export restraints but to accept deeper limitations.
"The Japanese are seeking 35 to 40 percent of the American market," Chrysler Corp. Vice Chairman Gerald Greenwald said in an interview, predicting that the Japanese would reach that goal within two years if the current limitations are allowed to lapse next March. "We will lose the war," he said.
Imports accounted for 32 percent of car sales in August, the bulk of them Japanese, compared to a 24 percent share for all imports last year.
Brock's position is sure to upset the Japanese government at a time when its domestic politics are in turmoil following the unexpected resignation of Prime Minister Zenko Suzuki in the midst of a damaging economic downturn. Furthermore, it is under increasing pressure from the United States to restrict exports of other goods here and to open its markets wider to American products.
Danforth, locked in a tight reelection campaign against Democrat Harriett Woods in a state where auto manufacturing is a major industry, released the Brock letter yesterday.
The first-term senator is in political trouble for refusing to endorse local-content legislation that would force foreign cars to be 90 percent made in America, the prime legislative objective of the United Auto Workers union.
"While the Japanese measures [on limiting imports to the United States] have been working," Brock said in his letter, "the domestic automotive industry continues to suffer because our economy has not yet recovered from the current recession."
The letter represents Brock's personal belief, but a spokesman for the trade representative said he expects the Reagan administration to adopt it as U.S. policy before the new year.
The initial voluntary limitation was adopted after a sharp debate with the Reagan Cabinet between a faction seeking to aid the U.S. auto industry and a second group that opposed limits as a step toward protectionism.
In May, 1981, Japan agreed to a two-year limitation on exports to the United States, facing the threat of legislation introduced by Danforth and Sen. Lloyd Bentsen (D-Tex.) that would have placed three-year ceilings on the shipment of Japanese cars to the United States.
Using that bill as leverage, Brock obtained a reduction of about 7.7 percent a year for two years starting in April, 1981. Now Brock wants the limits to continue through March, 1984, which Danforth said means "the industry's efforts to get on its feet won't be throttled by a sudden surge of Japanese cars."
The curb cut Japanese imports to 1,680,000 passenger cars a year compared to the 1,820,000 it shipped before the voluntary restraints went into effect. Japan estimated that it could have sold 1,920,000 cars in the United States in 1981 if it had not curbed its exports.
Even with the voluntary restraints, the Japanese share of the American auto market has increased because domestic auto sales have declined. And imported cars are becoming more economical to buy here because of the strong dollar.