Study sees US auto job losses if Japan joins trade pact

Wed Aug 22, 2012 2:48am IST

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* Ford Motor Co paid for study

* Job losses could be greater if yen depreciates significantly

* USTR says pressing Japan on auto market barriers

By Doug Palmer

WASHINGTON, Aug 21 (Reuters) - A study released on Tuesday warned the United States could lose 2,600 auto industry jobs and thousands more in the broader economy if Japan is allowed to join a proposed free trade pact at the center of President Barack Obama's trade agenda.

"We firmly believe a free trade agreement with Japan will lock in one-sided trade benefits that Japan enjoys today at the expense of U.S. auto jobs," Matt Blunt, president of the American Automotive Policy Council, told reporters.

"It will deliver a blow to America's auto industry and auto workers at really at critical juncture in our recovery," said Blunt, a former Missouri governor.

The study was paid for by Ford Motor Co, which has led the U.S. auto industry charge against Japan joining talks on the proposed Trans-Pacific Partnership pact. It was prepared by the Center for Automotive Research in Ann Arbor, Michigan.

The TPP talks currently include the United States, Australia, New Zealand, Vietnam, Malaysia, Singapore, Brunei, Chile and Peru. Canada and Mexico will formally join the talks in coming months.

Countries will hold their 14th round of negotiations next month in Virginia, but a final deal could be a year away.

Japan, which exported about 1.5 million cars to the United States in 2011, has no tariffs on auto imports.

But Ford contends the Japanese government maintains a number of regulatory and other "non-tariff barriers" to keep out most foreign cars and in the past has intervened heavily in currency market to help its auto companies compete.

The study estimated eliminating the current 2.5 percent U.S. tariff on Japanese auto imports would boost Japan's exports to the United States by 105,000 units, resulting in "a loss of 2,600 direct U.S. automotive manufacturing jobs."

It estimated another 9,000 jobs would be lost among manufacturing and services companies that supply U.S. auto firms, and an additional 14,900 jobs would be lost in the broader U.S. economy because of lower income.

Direct U.S. auto industry job losses from the pact could swell to 9,120 if the Japanese yen were to depreciate significantly against the dollar, with additional job losses of 82,394 among suppliers and the broader economy, the study said.

Japan last year signaled its interest in joining negotiations on the Trans-Pacific Partnership, but has been pressed by the Obama administration to first make progress on a number of trade irritants, including auto market barriers.

"The Administration shares the concerns of U.S. auto companies and workers about the lack of a level playing field in the Japanese automotive market. That is why we have made clear to Japan the need to address long-standing concerns in this sector, among others, as we consider Japan's interest in joining the TPP," Nkenge Harmon, a spokeswoman for the U.S. Trade Representative's office, said in response to the study.

Bill Duncan, who heads the Japanese Automobile Manufacturers Association's office in Washington, questioned the study.

""Something is clearly either wrong or incomplete here. Japanese makers produce 70 percent of their U.S. sales in North America, the bulk of which are in U.S. plants with U.S. workers," Duncan said.

Japanese automakers are increasingly exporting cars from the United States and "lowering barriers through a comprehensive trade agreement with Japan and other Asian trading partners can only serve to further encourage this trend and increase U.S. jobs," Duncan said.

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