EVERYBODY AGREES that it would be best
for the United States and Japan to settle the automobile import quarrel before President Reagan's trip to Japan. He is scheduled to land in Tokyo on Nov. 9. But not everybody can agree how large those quotas should be.
The present quota agreement expires at the end of March. Under it, Japan ships 1,680,000 cars a year to the United States. Most of the American automobile industry--there's one gigantic exception --wants an indefinite extension of the status quo. One argument is that the overpriced dollar, and the underpriced yen, give the Japanese manufacturers an advantage that no possible cost-cutting or gains in productivity in American plants can match. That's not a frivolous point. The Japanese government, as you would expect, wants the quotas ended but is willing to extend the agreement for another year if the quotas are expanded.
The Reagan administration is against import restrictions in principle--and that principle is correct. But at this point you would probably be right in assuming that its first choice is a year's extension to get through the election, at whatever level draws the least protest from the companies and the United Auto Workers. Here things get complicated, since the American industry is not unanimous.
General Motors wants to bring in some 300,000 Isuzu and Suzuki cars annually, beginning next summer--very small cars, some capable of 60 miles to a gallon of gasoline. GM says that it cannot possibly compete with imports among the smallest and least expensive models. Its strategy is to import little cars from its Japanese affiliates to put into Chevrolet showrooms to attract young buyers who, if they follow the familiar pattern, will come back in several years for larger and more expensive replacements--this time American-built Chevrolets.
If the import quotas remain at the present level, Toyota's and Nissan's sales will have to be scaled down to make room for GM's Isuzus and Suzukis. Toyota's and Nissan's American dealers don't think that's fair. But if GM's cars are added on top of the present quota, there will be vehement protests from GM's American competitors. Chrysler says that, for its part, it is holding up the tooling for its next generation of small cars until it sees what happens.
The auto quotas are no longer a simple dispute between an American position and a Japanese position. The shoving and elbowing on each side of the table is getting rougher. While the quotas will be extended for another year, they may not hold up a great deal longer than that. If they are not ended by the application of presidential open-market principles, the changing nature of competition in a turbulent industry may do the job.