By The Hill Staff - 04/04/07 02:57 PM EDT
The influence of the “Big Three” — Ford, GM and DaimlerChrysler — can be seen in legislation introduced last week by Sen. Debbie StabenowDebbie StabenowDem sen: Clinton 'focused and prepared to keep us safe' Tim Kaine backs call to boost funding for Israeli missile defense Dems to GOP: Admit Trump is 'unfit' to be president MORE (D-Mich.) that directs the administration to work with Japan to increase the value of the yen, which would make it more costly for Japan to export vehicles to the United States.
U.S. automakers also succeeded in getting the issue a prominent position in the Democratic trade policy announced last week by Ways and Means Chairman Charles Rangel (D-N.Y.). That policy calls for immediate administration action on China and Japan currency manipulation.
While charges against China currency manipulation have been building for years due to pressure from a broad range of manufacturers, the rising profile of the Japan currency issue is almost solely the work of the auto industry, sources said.
Representatives of the auto companies and their trade group, the Automotive Trade Policy Council (ATPC), discussed the currency issue with Stabenow after she became a member of the Finance Committee this year. They also have been meeting with members of the House Ways and Means and Financial Services committees.
The efforts have won the attention of groups representing Japanese car manufacturers, who are stepping up their own efforts on the issue. “We continue to work to present our case to members of Congress,” said Paul RyanPaul RyanTrump steals the spotlight at Democratic convention Spokesman denies that Trump invited Russia to hack Clinton Speaker Ryan to Russia: Stay out of election MORE of the Association of International Automobile Manufacturers, whose members include Toyota, Honda and Nissan.
Critics see the Big Three’s efforts on currency as a transparent effort to divert Congress and the administration from thinking the auto industry is responsible for its own problems. They also say the industry’s efforts were boosted enormously by the Democratic takeover of Congress, which landed Stabenow on Finance, gave Rep. Sandy Levin (D-Mich.) chairmanship of the Ways and Means trade subcommittee and gave Rep. John Dingell (D-Mich.) chairmanship of the Energy and Commerce Committee.
“We certainly see what’s going on and remain worried about that,” Ryan said. “We do see these kinds of allegations surface on occasions when the Detroit companies are struggling to hold on to market share, so it’s not surprising to us.”
The goal of the Big Three is to increase congressional pressure on the administration to take diplomatic action against Japan. For example, Stabenow’s bill would direct the Treasury to work with Japan’s government to come up with a plan to lower Japan’s reserves of U.S. currency. It also directs the Treasury to work out a multiparty agreement with European countries and the International Monetary Fund to deal with the “destabilizing effects” of Japan’s currency.
The industry is not supporting legislation that would make currency manipulation a subsidy, according to ATPC President Steve Collins. However, some critics of the industry said support for that legislation would fall if the auto industry opposed it.
U.S. automakers are particularly critical of the Treasury, which so far has taken the position that Japan is not manipulating its currency. In February, despite calls from the auto industry, Rangel and Dingell, the Treasury declined to press for currency manipulation to be included on the agenda of a G-7 meeting of finance ministers.
Collins said it is “extremely disappointing” that the Treasury’s response so far has been one of “benign neglect.”
Collins and other representatives of the Big Three also have criticized the Treasury for looking the other way earlier this decade when Japan did intervene to lower the value of the yen. In doing so, they have zeroed in on comments former Treasury official John Taylor made in his recent book, Global Financial Warriors: The Untold Story of International Finance in the Post 9–11 World.
Taylor, a Treasury undersecretary from 2001 to 2005, said in the book that he did not object to intervention by Japan earlier this decade, although he did say it should be kept at a minimum. By failing to register stronger objections, he said the U.S. effectively allowed it to happen.
Collins said the turn of events represented U.S. acquiescence to the biggest currency manipulation in history. “It was a laser beam directed at Detroit,” he said. U.S. automakers say Japanese government officials continue to talk down the yen, keeping it artificially low by suggesting Japanese intervention would take place if the currency’s value rose.
While more than half of the Japanese vehicles sold in the U.S. are manufactured here, imports also rose last year, which the U.S. industry attributes to currency values. The ATPC said the lower currency value gives Japanese cars an average $4,000 price advantage over U.S. cars — an advantage that can go up to $10,000 for higher-price sport utility vehicles.
While no one would argue that currency values have an impact on company bottom lines, Ryan and other sources close to the Japanese industry argued Japanese market share in the U.S. is increasing due not to currency, but to the quality of Japanese vehicles.