JAPAN'S GOVERNMENT HAS now served notice that it wants to end the quota that limits its exports of automobiles to the United States. The reaction from Congress is likely to be a roar of indignation. But the question for congressmen to ask is why the American automobile manufacturers, after a third year of these quotas, would still need protection from Japanese competition.
The present quota will expire next spring--not only in an election year, but in a year when the United Auto Workers will renegotiate their wage contracts. The Japanese are now the only effective competitors of the American producers, and a tight lid on Japanese imports is an invitation to a substantial wage boost to be passed through to the consumer in higher prices. Labor compensation in the auto factories, counting the fringe benefits, is already close to twice the average for all American manufacturing.
The recent troubles of the auto makers have been profound and by no means all of their own making. The tens of thousands of unemployed auto workers deserve special sympathy. But it's not easy to show that the past two-plus years of quotas have actually helped them much. By holding down the numbers of cars that the Japanese could ship, the quotas have probably speeded up the Japanese companies' shift from the lower end of the market into the much more profitable middle. The quotas have held down the Japanese manufacturers' volume, but not their revenues.
With the economic recovery that is now gathering force, automobile sales are rising rapidly. The time to peel off the quotas is when the market is expanding and employment is stable. Perhaps there is a case for doing it in stages, over a couple of years, to avoid a sudden great surge of imports. In principle that's a slightly dubious expedient, but in practice it offers the industry a measure of reassurance and would perhaps keep the issue of automobile protectionism out of the presidential campaign.
The one thing that you can say for these year-to- year quotas is that they are certainly preferable to permanent protectionist legislation like the domestic content bill, which would require nearly every car sold in this country to be, in some proportion, manufactured here. Although that bill is not very likely to be passed by Congress, and even less likely to be signed by President Reagan, it is a genuine menace. Temporary quotas, expanding over time, would not be an intolerable price to pay for diminished pressure to enact a far more damaging alternative. But the goal that best serves the American economy and American consumers is a return to an unrestricted market.