Letter to President Donald J. Trump - Address Japan's Unfair Trade Practices in Auto Sector

Letter

Dear Mr. President:

We write in advance of your meeting with Japan's Prime Minister Shinzo Abe. We greatly appreciate the strong and lasting U.S. relationship with our ally. However, we urge you to make Japan's longstanding unfair trade practices in the auto sector a priority for the bilateral meeting. In particular, we urge you to address currency manipulation and auto-related non-tariff barriers.

Japan's auto market is the third largest in the world, but it is also the most closed among developed countries. In 2015, foreign autos accounted for only 6.7 percent of Japan's market share as a result of non-tariff barriers that make it impossible for foreign automakers to compete. Currency undervaluation has been one of Japan's most effective trade barriers. In the last 30 years, Japanese authorities regularly intervened in their currency markets to weaken the value of the yen against the U.S. dollar. In addition, the government has mandated onerous and complex testing and certification procedures for foreign automakers.

The effectiveness of Japan's unfair practices is clear: America has a nearly $70 billion annual trade deficit with Japan, 70 percent of which is related to motor vehicle trade. According to the U.S. Department of Commerce, in 2015 Japan exported over 4.5 million passenger or commercial vehicles globally. Nearly 1.6 million of these units were exported to the United States. In the same year Japan imported 285,000 vehicles, only 20,000 of which came from the United States.

The U.S.-Japan auto-trade relationship hurts American companies and workers and should be addressed with urgency. In any bilateral talks with Japan, the U.S. should secure reform of Japan's practices that hurt U.S. automakers, including currency manipulation, and achieve significant access to Japan's auto market.

Thank you for your consideration, and we look forward to working with you on this important matter.