Looming in the background of Prime Minister Abe’s state visit to our nation’s capital today is a trade deficit that already threatens America’s middle class economy as storm clouds gather and current discussions could accelerate, not end, America’s trade imbalance with Japan.
This is a crucial time for middle class American manufacturing workers.
Japan keeps its auto market closed through deeply entrenched non-tariff barriers such as monetary policies designed to manipulate the value of its currency. Japan has the most closed auto market in the developed world and over several decades, countless efforts to open their markets have failed despite promises to the contrary. In 2013, our trade deficit with Japan reached $67.4 billion, and over 74 percent of that deficit is in the automotive sector.
The U.S. exports one vehicle to Japan for every 99 vehicles imported. We have an open auto market while Japan does not. If we are not careful, trade agreements could make this worse.
While we welcome Prime Minister Abe and we respect our Japanese allies and the Japanese people, policies designed to artificially devalue the yen gives foreign companies unfair profit advantages that result in a tremendous hardship for America’s automotive workforce. In the case of Toyota alone, the weakening yen adds $6,000 per car in profits for the average imported car in 2013. It is estimated with today’s yen that profit has increased to $11,000 per car over domestic automakers. In 2012 it was estimated to create an annual windfall of $4 billion to Honda and $5.2 billion to Nissan.
The members of the United Auto Workers take great pride in the fact that the American auto industry leads the country in manufactured exports today. President Obama deserves a great deal of credit for taking bold actions to save more than one million jobs in the auto sector during the economic crisis. But our country needs to build on this success and make sure future trade agreements do not undermine manufacturing and middle class jobs in the years ahead. We must fix America’s trade imbalance and restore fairness to American trade policies.
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