Learning lessons in the lift


Ryutaro Hashimoto, Japan's formidable Minister of International Trade and Industry, had a nasty experience in Canada the other week. Arriving for a round of tense discussions with Mickey Kantor, the US trade negotiator, Mr Hashimoto and his 16-strong entourage climbed into a hotel lift; the lift was made to take 12.

Between floors it came to a halt, and for 20 sticky minutes, Japan's finest economists and deal-makers stood shoulder to shoulder making nervous small talk with their glowering minister. The incident received little coverage in the West, but in Japan it suggested a valuable lesson. For this was no ordinary hotel lift. As the Kyodo news agency pointed out: "The elevator was of US manufacture."

Luckily, the Japanese and Americans were in Canada to talk about US cars not lifts, but the incident symbolised the issues which have clogged their talks over the last 20 months. Throughout the 21,000 man-hours of talks, the US has been repeating three principal demands: more Japanese dealerships in foreign cars, greater US access to the domestic replacement parts market and increased purchases by Japanese manufacturers of US auto-parts.

Exasperated by Japan's failure to come up with any specific goals, Mr Kantor insisted that Japanese manufacturers spell out targets for increased purchases of foreign parts. The targets would be "voluntary", he insisted. But when Mr Hashimoto failed to volunteer them, the talks stopped, a complaint was lodged with the World Trade Organisation and sanctions were promised. They are likely to be published in detail in the next few days.

On their own terms, the Americans have a watertight case. Japan's trade surplus with America is $65.9bn (£41bn), 56 per cent of which is accounted for by vehicles and auto parts. "Over the last 25 years, Japan has sold over 40 million cars to the US, while we sold only 400,000 cars to Japan," a senior US official said in Tokyo last week. "Our market is the largest open market in the world, and it's been indispensable to the growth of the Japanese economy. Japan's market is the largest closed market in the world: it needs to be opened up. These are not opinions, they are facts. Somebody is right, and somebody is wrong."

But several things about this tough approach grate on the Japanese. For a start there is the inherent contradiction in demanding managed export quotas to bring about "free" trade. Then there is the timing of the demands which could hardly come at a worse moment. Japanese exporters in all sectors have been struck hard by the surging yen.

Analysts calculate that the 11 Japanese vehicle makers have the combined capacity to build 14 million cars and trucks a year, around 4 million more than global markets can sustain. Since the bursting of the bubble, painful measures have been taken to improve efficiency and streamline production - but any profits have been swept away by the yen's rise. Toyota recently hinted that it may have to lay off workers, a traumatic step in a country dedicated to lifetime employment.

Above all, Japan refuses to accept the US's right-and-wrong analysis. In theory, the government accepts that it does not import enough and the need for reform. In the 1993 Economic Framework agreement, the two agreed to "a significant expansion of purchases of foreign parts by Japanese firms". There are plenty of reasons for believing that this is taking place.

Quite apart from the slowing down of Japanese exports, total car imports increased by 10 per cent last month against the previous April. The increase for 1993 was 50 per cent. The US points out that, although the percentages have risen, the actual figures are still small. But sceptics cite another reason for Kantor's relentlessness: the fact that, although Japanese consumers are buying more foreign cars, they are less inclined than ever to buy American. British car sales to Japan rose 15 per cent in April to 2,186 units.

But US sales rose by only 4.7 per cent to 7,165, and among the Big Three American auto-makers, the loudest critics of Japan, only Ford's figures were up.

The Americans insist that free trade is their goal, not simply a bigger market share for US companies. "If it's free and open, we're prepared to lose," insisted an official last week. But the European sales figures suggest the problem lies not with Japan's unwillingness to admit foreign competition so much as in America's failure to make cars Japanese consumers want. The vehicles most popular here are saloons. Japan, like Britain, drives on the left but the Big Three offer no right-hand drive model in that saloon category.

To many in Tokyo, the US position is pure arrogance, based on the assumption that, if the Big Three can't make it in Japan, then the markets must by definition be closed.

The European Union, and its Commissioner Leon Britton, have been conspicuous by their failure to offer any explicit support to the US: European carmakers, after all, have a bigger share of Japan's market than they do of America's - 4.9 per cent as opposed to 3.2 per cent.

Since the post-war American Occupation, the US share of Japan's imports has shrunk, as that of Europe and Asia has increased. America's traditional importance as Japan's global "big brother" has dwindled in the post-Cold War vacuum.

America no longer seems to offer the ingredients valued above all by Japanese consumers: quality and after-service.

For that, they turn to their own brands - and if the rest of the world is buying Japanese, why shouldn't the Japanese?

Justly or not, US cars are seen as uneconomical and unreliable. Just like American lifts.

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam