'Car war' calls US-Japan alliance into question

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In a significant escalation of the current "car war" between the two countries, the US yesterday warned that failure to settle its trade disputes with Japan could weaken the imposing security guarantees it has extended to Tokyo since the end of the Second World War.

In words whose meaning was only thinly veiled by the leaden diplomatic phrasing, the White House spokesman Mike McCurry declared that "an impediment" in one area of Washington's comprehensive ties with Japan "will over time prevent the full benefit ... from developing across the broad spectrum of the bilateral relationship".

Translated, Mr McCurry was saying that if steps were not taken to reduce Japan's $66bn annual trade surplus with the US, then America might reconsider its nuclear guarantees and the 1960 Mutual Security Treaty. This treaty in practice banishes the spectre of a non-aligned Japan again seeking military and political domination of East Asia.

His remarks were part of the heavily choreographed build-up here to the imminent publication of a list of Japanese imports - expected to be headed by luxury cars - that will be subject to swingeing US tariffs. But they betray genuine exasperation that more than two years of talks on opening up Japan's domestic markets to US cars and car components have yielded no result.

In Toyko, a senior US official made the same point, warning of the possible "corrosive" effect of the ever-widening trade gap. "None of us want that," the official was quoted as saying, "but the huge current account and trade surpluses Japan has cannot be continued." The US accounts for around half of Japan's overall annual surplus.

The aggressive US approach reflects adminstration frustration that after 20 months of negotiations, the two sides remain far apart on the main US demands.

The United States wants Japan to open access to car dealers and to its tightly-controlled replacement parts markets. Washington also wants Japanese manufacturers to renew so-called "voluntary" agreements that spell out how they plan to boost purchases of US-made parts for their factories.

In a letter to members of Congress, Nissan North America officials said they would not bow to US demands. "We are determined to resist accepting arbitrary purchasing quotas that could ultimately force us to choose between sourcing from less competitive US suppliers or being subjected to retaliation for failing to fill our politically inspired quotas," the letter said.

But the row could yet be defused before a shot is fired in earnest. At least 30 days must elapse after the list is published and before sanctions begin.