Section 5. New Developments in Japan-U.S. Trade Issues
Item 1. International Cooperation Program Based on Increasing Imports
As a result of the voluntary restraints on export of Japanese passenger cars to the United States that were imposed in 1981, America's "Big Three" automakers began to recover in the mid-1980s. The trade imbalance between Japan and the United States, however, remained a source of trade friction between the two countries, and the issue of increasing imports into Japan and encouraging local procurement once again came to a head. As a result, the Ministry of International Trade and Industry (MITI; now Ministry of Economy, Trade and Industry) asked automakers, the largest export industry to the United States, to increase imports.
In response, TMC established the Import Expansion Committee with Vice President Hiroyasu Ono as its chairman in May 1985 to investigate the issue with 11 other group companies. At the same time, proposals from within the company were collected and organized, and an import plan for 1985 and 1986 was submitted to the MITI in September. The plan proposed a variety of measures including the importing of automotive materials and parts such as carpet fabric, headlights, and tires as well as of helicopters and machine tools and the selling of various commodities at the Toyota Consumers' Co-operative. Under the plan, imports for 1985 were to be 60 billion yen, 13 billion yen higher than in the previous year, and 70 billion yen in 1986, and TMC made efforts to expand imports at a pace exceeding the plan.
New talks between the Japanese and U.S. governments were commenced in August 1986 with the aim of expanding parts procurement by Japanese manufacturers. The U.S. side selected industries where higher exports to Japan could be expected, and the Market Oriented Sector Selective (MOSS) talks were conducted intensively. Automotive parts were raised in the talks. The intergovernmental talks extended for one year, concluding with a final report in August 1987 that provided for the Japanese side to report to the U.S. Department of Commerce on imports of American parts and local procurement amounts every six months for five years starting with the current fiscal year. It was a modest agreement that did not set any target amounts, but for the Japanese manufacturers, it created a situation in which they could not avoid having to expand procurement at plants in America and imports to Japan.
It was against this backdrop that TMC announced the International Coordination Program in October 1989. To expand imports of parts and a wide range of other products, TMC made a public commitment by setting a target of increasing global imports by 2.5 times from the 1988 level to 300 billion yen by 1992. The main points of the program were as follows: 1) import of completely built units (fully manufactured vehicles), mainly right-hand drive vehicles manufactured by TMM (now TMMK), 2) increased imports of materials, equipment, and parts including 100,000 engines manufactured by TMM annually, and 3) expanded imports of new products such as aircraft manufactured by Piper. TMC included in the program a plan to establish the Corporate Citizenship Activity Committee at the end of 1989 with President Shoichiro Toyoda as its chairman in order to fulfill TMC's social responsibility as an international firm.
Imports in 1992 were 301.5 billion yen, exceeding the target set in the International Coordination Program, and in December 1991, TMC announced the New International Coordination Program that raised that the import target for fiscal year 1994 (ended March 1995) to 400 billion yen. The new program included a plan, through a new agreement with Germany's VW, which was producing small trucks with Toyota, to import and sell VW and Audi vehicles starting in 1992.
A key feature of the New International Coordination Program was the effort to build long-term and close trading relationships with overseas suppliers. Specific measures included a "design in" approach that allowed suppliers to participate during the product design and development stages and a focus on individual support activities for improving quality and productivity. Also, TMC held the first North American Import Suppliers' Meetings in Nagoya and Toyota City in 1990, and the plan called for these meetings to be continued and held not only in Japan but in the United States as well.