The Auto Trade Policy Council (ATPC), whose members include Daimler Chrysler, Ford and General Motors, called on G7 finance ministers to use the opportunity of its April 13 meeting in Washington, DC to address the artificially weak yen.
Japan’s weak yen policy has forced U.S. automakers to contend with an average $4,000 subsidy on vehicles that its Japanese competitors export from Japan to the U.S.
“There is a growing consensus around the world that Japan must take action to allow the yen to regain its true value,” said Stephen J. Collins, President of the ATPC.
“The U.S. government should join European finance ministers in insisting on a serious discussion with the government of Japan on a definitive plan and timetable to realign the yen to a level that represents its true economic value.”
Between 2000 and 2004, the Japanese government intervened in currency markets to weaken the yen, spending more than $400 billion, and has engaged in public ‘jawboning’ since then to ensure the yen remains low.
A recent Peterson Institute for International Economics study estimates the yen to be 25-30% undervalued.
The resulting ‘yen subsidy’ has facilitated a Japanese auto manufacturing resurgence; in 2006, more than half of all vehicles made in Japan were designated for export, exceeding fifty percent for the first time in 19 years.
“The weak yen heavily subsidizes Japanese auto exports,” continued Collins.
“The proof is clear: As sales of new cars has dropped sharply and steadily in Japan for almost two years, Japan’s auto companies are adding capacity to their Japan facilities to export even more vehicles to the U.S.
“Last year, almost half of all Toyotas sold in the U.S. were actually built in Japan, and Honda is planning to open its first new Japanese plant in 30 years.”
Senator Debbie Stabenow (D-MI) recently introduced the Japan Currency Manipulation Act, S.1021, that directs the Treasury Department to work with the government of Japan to design a plan to draw down Japan’s excessive levels of currency reserves, thus facilitating the proper realignment of the yen to the dollar.
The Automotive Trade Policy Council, Inc. (ATPC) is a Washington, D.C.- based non profit trade association that represents the common international economic, trade and investment interests of its member companies: DaimlerChrysler Corporation, Ford Motor Company and General Motors Corporation
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