U.S. Government to Review 1995 U.S.-Japan Automotive Trade Agreement

Strategic Insights -

The U.S. government has announced plans to convene in San Francisco on October 29 to review the 1995 U.S.-Japan automotive trade agreement, marking the third annual bilateral review. This announcement comes on the heels of a new auto agreement between the U.S. and the Republic of Korea, which aims to boost the presence of imported autos in Korea. The U.S.-Japan automotive trade agreement has been a topic of concern, with Japanese market presence showing no improvement since the last government consultations one year ago. However, the recent strengthening of the yen and new Japanese economic and fiscal initiatives have given hope for a turnaround in the Japanese auto market's two-year slide and a new start for imported auto sales.

Key Takeaways:

  • The U.S. government will convene in San Francisco on October 29 to review the 1995 U.S.-Japan automotive trade agreement, marking the third annual bilateral review.
  • The new auto agreement between the U.S. and the Republic of Korea aims to boost the presence of imported autos in Korea, with two primary goals: increased market access for foreign automobiles and establishing conditions in which Korea's motor vehicle sector operates according to market principles.
  • Since the last government consultations one year ago, Japanese market presence has shown no improvement, but recent strengthening of the yen and new Japanese economic and fiscal initiatives have given hope for a turnaround in the Japanese auto market's two-year slide.
  • The "Global Automotive Trade Report" provides sales figures for imported autos in Japan and identifies new dealer outlets that have opened since the agreement was signed.
  • AAMA's analysis of both the U.S.-Korea trade pact and the U.S.-Japan automotive trade agreement can be found in October's special edition of the "Global Automotive Trade Report."

Statistics:

  • The 1995 U.S.-Japan automotive trade agreement stipulates that Japan's market presence will be reviewed every year.
  • Between 1995 and 2000, Japan's automotive market experienced a 2-year slide.
  • In 2000, the yen appreciated 10% against the U.S. dollar, signaling potential hope for imported auto sales in Japan.
  • Sources:
  • American Automobile Manufacturers Association (AAMA)
  • Chrysler Corporation (NYSE: C)
  • Ford Motor Company (NYSE: F)
  • General Motors Corporation (NYSE: GM)
  • "Global Automotive Trade Report" (October 2001)
  • "U.S. reaction to the Korean Auto Deal" (in the "Global Automotive Trade Report")
  • Quote from the "Global Automotive Trade Report": "With this agreement, we are taking the first step towards opening up Korea's market to foreign automobile manufacturers."