Japan announced today that it will extend its voluntary restrictions on automobile shipments to the United States for a sixth year in an attempt to dampen trade frictions arising from its $49.7 billion trade surplus with this country.
Minister of International Trade and Industry Michio Watanabe told a Tokyo press conference at noon, "Based on various factors surrounding U.S.-Japan trade and economic relations, MITI [the trade and industry ministry] has decided to extend for one year the same measures for fiscal 1986 as those of fiscal 1985." As a result, the auto restraints will remain at their present level of 2.3 million cars until March 1987.
The Reagan administration and key congressional leaders were told about the Japanese government's decision yesterday afternoon, in advance of the announcement.
The Japanese decision comes as the government of Prime Minister Yasuhiro Nakasone seeks to smooth strains in its relations with the United States, its major political ally and largest trading partner, to avoid embarrassment during a planned visit here by Nakasone within the month and the economic summit scheduled for Tokyo in May.
It was unclear last night how the administration will react to the Japanese decision to continue restraints on auto sales, which runs against the ideological free-trade orientation of President Reagan.
But the White House reportedly is concerned that lifting the restraints would add to protectionist pressures in Congress, where lawmakers in both parties have grown increasingly vocal over job losses and factory closings because of America's record trade deficit of $148.5 billion in 1985. Lifting the restraints could add at least $4.5 billion to that deficit.
As a result of the differing views within the administration, sources said last night there may be no official reaction to the Japanese announcement.
The Nakasone government, however, was reported to have received assurances that it would not face administration criticism, as it did last year, for continuing the restraints.
Owen Bieber, president of the United Auto Workers, said the union was "relieved that Japan has decided not to further erode America's industrial base by allowing new increases" in auto shipments. He said "thousands" more auto-related jobs might have been lost in the United States had Japan increased its shipments.
Bieber said the decision indicates that the Japanese government "heard loud and clear" the protests of the union and its congressional allies that an increase above "last year's 25 percent jump would be intolerable." Despite the restraints, he added, Japan's market share "is far too high. . . . "
Members of Congress, informed of the Japanese decision last night, praised the continuation of the limits.
Sen. John C. Danforth (R-Mo.), who told Nakasone during a trip to Tokyo last month that restraints should be continued until Japan imports more manufactured goods from the United States, said he was "pleased" with the Japanese decision.
"It appears to signal a recognition on the part of Japan that trade is a give-and-take proposition. Until Japan learns to take more imports from the rest of the world, it cannot continue to flood the world with its exports," continued Danforth, chairman of the Senate Finance Committee's trade panel.
The decision also was praised by Sen. Dan Quayle (R-Ind.), one of 13 senators who wrote Nakasone in December seeking a continuation of the restraints. Quayle said Japan should limit its auto sales until U.S. exports increase, disputes over allegations of Japanese unfair trade practices are resolved and the trade imbalance between the two countries improves.
American auto makers appeared divided over the Japanese decision. General Motors Corp. wanted Japan to increase the quotas for cars from two companies partly owned by GM, Isuzu Motors Ltd. and Suzuki Motor Co. Ltd. GM will market their cars as its small car in the United States.
Chrysler Corp., however, commended Japan and said keeping the export restraints "is an appropriate decision. This could be a step toward resolving the trade imbalance between the United States and Japan to the betterment of both countries."
Ford Motor Co. called the Japanese decision "constructive."
Even with the restraints, Japan in 1985 supplied one of every five new cars sold in the United States, a 1.8 percent increase over 1984. In all, imports took 25.7 percent of the U.S. market last year.
The auto restraints were blamed by Brookings Institution economist Robert Crandall last year for costing the American consumer $26.6 billion, adding $2,500 to the price of a Japanese car and increasing the cost of domestic models by $1,000.
The decision to retain the quotas was a complex one for Japan, which was forced to balance concerns of worsening trade frictions with the United States and demands from its domestic auto industry, which wanted higher sales. Toyota, for example, is afraid that its U.S. sales will fall behind those of its major Japanese competitors who manufacture cars in this country.
Japan also wanted to avoid the criticism it received from all sides last year when it decided to continue the restraints but increased the number of car shipments allowed.
The administration criticized the Nakasone government for disregarding Reagan's specific call that Japan end restraints and lift its barriers to American products in a spirit of free trade. Congress and the American auto makers blamed Japan for setting their shipments at too high a level.
The auto restraints started in 1981, when the Reagan administration reacted to pressure from Congress over mounting imports and negotiated a three-year agreement with Japan. Although the agreement was called "a voluntary restraint arrangement," Japan had little choice but to limit its sales or face congressional action that would place even stiffer restrictions on it. These restraints were continued in 1984 for a fourth year.
As of last year, however, the restraints became voluntary on the part of the Japanese government.
The first agreement limited Japanese car shipments to 1.68 million units from 1981 to 1984, when they were raised to 1.85 million cars.