Allies of the American auto industry, brought to power in last week's elections, are set to challenge the Bush administration to level the playing field for U.S. manufacturers.

Led by lawmakers from Michigan, newly empowered Democrats said they would press the Bush administration to help pry open the Korean auto market and go after Japan on currency issues. It's an approach that could put Asian automakers on the defensive in Washington at a time when they are clobbering Detroit in the U.S. marketplace.

"This administration has been insensitive to the need to make trade a two-way street," said Rep. Sander M. Levin (D-Mich.), who is likely to be the next chairman of the House Ways and Means subcommittee on trade. "Their basic assumption has been the more trade the better, regardless of its content or shape."

Trade issues are expected to be one of the key talking points when President Bush sits down today with the chief executives of Detroit's Big Three automakers: G. Richard Wagoner Jr. of General Motors Corp., Thomas W. LaSorda of DaimlerChrysler AG's U.S.-based Chrysler division, and Alan R. Mulally, recently installed at Ford Motor Co.

In the past year, Detroit automakers have steadily tried to raise alarms in Washington about the industry's deterioration. They have been calling for more federal incentives to increase the number of alternative-fuel stations, the cutting of tariffs on steel imports, and government initiatives to curb the escalating cost of health care.

But with the change of power in Washington, automakers want more attention on trade concerns.

Overall, the Bush administration has been sensitive to such issues as taxes, prescription drugs, tort reform and energy use, automakers said. But Detroit automakers have had trouble being heard when it comes to foreign trade.

Specifically, Detroit auto officials say the artificially weak yen gives Japanese automakers a windfall of $3,000 to $9,000 per vehicle. Automakers say the Japanese government is maintaining a weak yen artificially to give its manufacturers that edge.

They're also concerned about a trade pact with South Korea being negotiated by the Bush administration. Detroit automakers want government negotiators to help them gain a foothold in the Korean market.

"We basically sell more cars out at Jerry's Ford in Northern Virginia than we do in all of Korea, and that's because Korea is a closed market to all imports, not just U.S. autos," said Ziad Ojakli, Ford's vice president of corporate affairs. "The statistic is less than 3 percent market penetration for foreign product. What's wrong with this picture?"

But auto executives will continue to have trouble winning over Republicans.

An administration official said there had not been evidence of Japanese intervention in currency markets since March 2004. There is zero correlation between the yen's strength and Detroit's slide in profitability and U.S. market share, said the official, who spoke on condition of anonymity because he isn't authorized to speak publicly on those issues.

"There's just no empirical evidence between the value of the yen and the profits of Big Three automakers," the official said.

Many Republican lawmakers have been philosophically opposed to government interference in the industry. U.S. automakers have also been confronted by influential

Republicans from such Southern states as Tennessee and Alabama, where foreign automakers have opened factories over the past two decades.

Still, Detroit automakers see a more promising political environment now that Democrats are about to take control. Sen. Carl M. Levin (D-Mich.) said his party could put pressure on the White House by invoking laws that require the administration to file complaints with the World Trade Organization when U.S. companies hit trade barriers in Asia. Additionally, Sen. Debbie Stabenow (D-Mich.) said she would continue to push for the creation of a U.S. trade prosecutor's office to focus on trade violations.

"Our manufacturers are not competing against foreign companies, it's foreign countries they are up against," Sen. Levin said. "They can't be the bad cop. They can't slap the other countries in the face when they are trying to persuade the countries to let them in. The administration has to be the enforcer."

In the House, Rep. John D. Dingell (D-Mich.) is set to become chair of the Energy and Commerce Committee, and he has said the committee will hold hearings on trade and currency issues affecting the U.S. auto industry. Rep. Levin said Democrats would defeat a Korean trade agreement if it does not address concerns of the auto industry and other U.S. manufacturers.

"We've made that clear for months, and now we are in a position to follow through," Rep. Levin said.

Japanese automakers have repeatedly pointed to the construction of more U.S. factories as a way to head off trade fears and unexpected currency swings. But their rapid sales growth in the United States will continue to be viewed as a threat to the health of U.S. companies, said Masaki Taketani, director of Asian vehicle forecasting at CSM Worldwide. He said Japanese automakers will have to expand production in North America at a faster pace to ease trade friction in Washington.
 

(####)

Home Page  |  In the News