Section 5. New Developments in Japan-U.S. Trade Issues

Item 2. Japan-U.S. Structural Impediments Initiative Talks: Rising Trade Friction Between Japan and U.S. Concerning Autos

In 1989, international political circumstances changed drastically with the fall of the Berlin Wall and the end of the Cold War. In terms of the economy, markets started becoming borderless on a global scale. Trade fiction remained the biggest political issue between Japan and the United States, and the two governments began the Japan-U.S. Structural Impediments Initiative (SII) talks in September of that year. The talks represented a new approach to economic negotiations in that each side was to point out structural problems in both countries that prevented the normalization of the external trade imbalance and work to correct them.

The U.S. side presented six structural issues concerning Japan, including exclusive trading practices, and mentioned auto parts as one specific area. Although the issue of expanding procurement by Japanese manufacturers of auto parts made in the U.S. seemed to have been resolved during the MOSS talks in 1986 and 1987, the U.S. side again raised the issue in the SII talks.

In February 1990, the United States presented at the SII talks 13 items, including correction of corporate group transactions, as improvement measures regarding the sales barriers in Japan that U.S. auto parts manufacturers were facing. At that time, the U.S. new car market had declined for three consecutive years, and the auto industry was about to again experience a business slump, causing an intensification of Japan-U.S. auto trade friction, in the fashion of a replay of the early 1980s.

In January 1992,U.S. President George Bush, who aimed to be re-elected to a second term, visited Japan with representatives of the Big Three and held a summit with Prime Minister Kiichi Miyazawa to discuss auto parts purchases from the United States and other issues. Within the "Tokyo Declaration" (Global Partnership Action Plan) announced at the summit was a target for Japanese automakers to make greater efforts to purchase parts.

Numerical targets, which had not been set by the MOSS talks, were established as a voluntary plan, with Japanese manufacturers aiming to increase procurement by their local plants in the United States and imports to Japan to a total of approximately 19 billion U.S. dollars in fiscal year 1994 fiscal (ended March 1995). Actual results in fiscal year 1990 (ended June 1991) were approximately 9 billion U.S. dollars, so this target was a somewhat more than twice as high. The declaration also included the encouragement of design-in activities by Japanese automakers, an expansion of R&D bases in the United States, and greater efforts to build long-term business relationships with U.S. parts manufacturers.

Starting in 1990, TMC worked to increase contacts with North American parts manufacturers such as by holding the North American Import Suppliers' Meeting and also established the Supplier Support Center in the United States in accordance with the Tokyo Declaration. The Supplier Support Center opened in Lexington, Kentucky, the site of TMM, in September 1992 and began providing support activities to raise manufacturing quality and improve costs. Initially, a staff of 14 was assigned to the center, and a board of directors was established with members including TMM President Fujio Cho and NUMMI President Osamu Kimura to cooperate with improvements by North American suppliers and general manufacturing businesses.

To top of page