[PEN-L:5165] Re: Trade Sanctions: Some US/Japan Auto Issues

[glevy@xxxxxxxxxxxxxxx]

Virtually every nation in the capitalist world has imposed restrictions
concerning the import of automobiles.  Most frequently, these limits
taken the form of a volume limit (a quota).  Sometimes the limit is
calculated in other ways.

Furthermore, most nations have some form of auto content regulations or
laws which require auto producers to manufacture a certain percentage of
the parts that go into the car in the market where it will be sold.

Clinton, I believe, is advancing the possibility of trade sanctions for
two basic reasons:

1) The US/Japan trade negotiations have been unproductive from the US
standpoint.  The possibility of sanctions against Japanese-produced
automobiles is most probably an effort (bargaining chip) to get the
Japanese government to take the US demands concerning accessibility of US
exports in Japanese markets more seriously.

2) sanctions on Japanese-produced autos would simply be an attempt by the
US government to do what most nations in the capitalist world economy
have already done, that is, to protect the domestic automobile producers
from excessive import penetration.

I think the issue ultimately comes down to free trade vs. protectionism.
Regardless of what one believes concerning the theory of comparative
advantage and free trade, the realities of the current world capitalist
economy suggest that protectionism is the norm rather than the
exception.  If other nations (including Japan) practice protectionism,
then the US government must also pass protectionist measures in an effort
to increase domestic employment and increase corporate profitability.