Does Japan Manipulate The World Market To Benefit Their Automakers?
General Motors Chief
Economist G. Mustafa Mohatarem told three Congressional committees at a
unique tri-partite hearing today that the Government of Japan has
deliberately weakened the yen to promote its exports at the expense of U.S.
and other global manufacturers, providing billions of dollars in subsidies
to Japanese automakers.
"Over the past several years, the Government of Japan has engaged in at
least four strategies to keep the yen weak and thus to provide an enormous
subsidy to Japan's vehicle and auto parts exporters," said Mohatarem.
"These approaches include maintaining huge exchange reserves and
obtaining authority to purchase additional reserves as a signal to currency
traders of its intent to keep the yen weak; intervening massively in
currency markets, especially from 2002 to 2004; sending signals of possible
interventions to the currency markets -- so called 'jawboning'; and
purchases of dollar-denominated assets by quasi-public entities and private
investors spurred on by the government's commitment to a weak yen policy."
The hearing on "Currency Manipulation And Its Effects On American
Businesses And Workers" is conducted jointly by the House Committee on Ways
and Means, Subcommittee on Trade; the House Committee on Financial
Services, Subcommittee on Domestic and International Monetary Policy, Trade
and Technology; and the House Committee on Energy and Commerce,
Subcommittee on Commerce, Trade and Consumer Protection.
"Japan's policies provided anywhere from a $2,000 to $14,000 cash
windfall for each of the 2.2 million vehicles Japan's automakers exported
to the U.S. in 2006," continued Mohatarem. "This amounts in total to a more
than $13.5 billion annual subsidy on imported vehicles and parts used to
assemble vehicles in the U.S."
"This unearned windfall, which is documented in the profit reports of
Japan's auto companies, has been a major factor in the success of Japanese
auto companies in the U.S. It has contributed significantly to the loss of
hundreds of thousands of U.S. jobs in our auto and supplier industries; it
is a major source of the nation's nearly $90 billion U.S. trade deficit
with Japan; and it has contributed to the severe economic decline in my
home state of Michigan and in many other communities in America," said
Mohatarem.
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