U.S. Automakers Protest Exclusion from Japanese Cash for Clunkers Program
December 22, 2009 - The Bureau of National Affairs (BNA) is reporting that assistant U.S. Trade Representative (USTR) Wendy Cutler recently complained to Japanese officials that General Motors, Ford and Chrysler nameplate vehicles do not qualify for the country's "Cash for Clunkers" program and called for the program to be modified to give incentives to all buyers who trade in U.S. made and other vehicles older than 13 years. According to BNA, Cutler, assistant USTR for Japan, Korea and Asia-Pacific Economic Cooperation, made her comments at a Dec. 10 meeting with Hideichi Okada, director-general of the Ministry of Economy, Trade and Industry Trade Policy Bureau.
The Japanese "Cash for Clunkers" program pays 250,000 yen ($2,840) to the owner of a car older than 13 years when the individual trades-in for a new vehicle that meets 2010 fuel consumption standards. A car buyer can receive 100,000 yen ($1,136) when they purchase a new vehicle that clears 2005 auto emissions standards and simultaneously 2010 fuel standards, plus 15 percent or more regardless of whether they have a used vehicle younger than 13 years to trade in or not. According to the Japanese government, no U.S.-assembled vehicles qualify for the cash incentive program.
The BNA report states that Okada told the USTR official that the agency could not respond to Culter's request unless the Detroit automakers obtained "type certificates" from the Ministry of Land, Infrastructure and Transport (MLIT) for their autos to be exported to Japan. The type certificate allows the MLTI to analyze fuel consumption performances for verification. Okada noted that European automakers have acquired type certificates and had their models examined by MLIT for mileage performances. Apparently, GM, Ford and Chrysler cars are imported to Japan without type certificates under a Small Volume Exemption (SVE), which was initiated in the 1990s in order to ease then U.S.-Japan trade tensions.
The USTR plea came as a result of a letter sent to the agency from the Automotive Trade Policy Council, a Detroit-based lobby representing the three U.S.-based makers complaining about the Japanese incentive programs. The Ministry of Economy, Trade and Industry (METI) official said that the Japanese government has no immediate plan to revise its cash and tax incentive program for autos, which according to the Japanese officials, would require extensive budgetary and tax reform work.