Today I received the following E-mail from Senator Debbie Stabenow of Michigan, with the text of a letter she sent to President Obama, complaining of unfair trade practices in the implementation of “cash-for-clunkers” programs in Japan and Korea:
Earlier today, Senator Debbie Stabenow sent a letter to President Obama urging him to call for Prime Minister Yukio Hatoyamaof Japan and President Lee Myung-Bakof South Korea to follow their WTO obligations at the upcoming G-20. Both countries have continued to discriminate against American automakers at great cost to businesses and workers across the country.
Full text of the letter is below:
September 18, 2009
President Barack Obama The White House 1600 Pennsylvania Avenue, NWWashington, DC 20502
Dear President Obama,
When we put together the CARS Program (more commonly known as “Cash for Clunkers”), we followed international law and made it apply to allcars sold in the United States – not just American cars, which is what I and most of my constituents would have greatly preferred.
Instead, we followed the law, and the CARS Program was written to abide by our international agreements. That is why it is so outrageous that Japan and Korea would have the audacity to implement similar programs that discriminate against American automakers.
In Japan, a tangle of complicated paperwork keeps American cars from being eligible. Cars purchased in their program must get “Type Approval” to qualify, but importers commonly use a different method of certification, known as the Preferred Handling Procedure. Cars with this PHP certification are not eligible for Japan’s program, thus excluding almost all American-made cars.
In Korea, any car that is 10 years or older can be turned in for a tax incentive toward the purchase of a new car. This sounds great – except that in Korea, imports face numerous non-tariff trade barriers effectively capping all foreign imports at 5 percent, meaning that American cars are essentially disqualified from the purchase program.
When you meet with Prime Minister Yukio Hatoyamaof Japan and President Lee Myung-Bakof South Korea at the upcoming G-20, I strongly urge you to remind them of their obligations under the WTO. Over the years, you and I have worked together to hold countries accountable who ignore their trade agreements. We cannot allow other countries to violate trade rules and harm American Businesses and American workers, who are the backbone of our middle class.
I look forward to working with you to truly create a level playing field on trade.
Senator Debbie Stabenow
The following was my response to Senator Stabenow:
The real problem with our trade policy is that it fails to account for the role of population density in driving huge trade imbalances. Of course the Koreans and Japanese exclude American cars from their markets. Their markets are so emaciated by over-crowding that even their domestic manufacturers have trouble selling cars there.
The ONLY way to restore a balance of trade and stop the parasitic predation of the American market is to abandon the WTO and return to a system of tariffs that will assure the restoration of balance.
How long will we continue to pursue this failed free trade model? What will it take to force a change? Apparently a cumulative trade deficit of $9.5 trillion, compiled over the past thirty-three years of consecutive trade deficits, still isn’t enough to do the job.
I’m afraid there’s no hope for our economy as long as our lawmakers allow the rest of the world to play us for fools.
Pete MurphyAuthor, “Five Short Blasts”