Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 22, 1995 TAG: 9506220037
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: SHANNON D. HARRINGTON STAFF WRITER
DATELINE: LENGTH: Medium
Across the Atlantic in Geneva, though, members of his native country's government and the United States will begin talks intended to prevent what many fear could become an all-out trade war between the two countries.
The United States is making three demands of Japan - ``voluntary plans'' from Japanese automakers to increase purchases of American-made auto parts; expansion of Japanese dealerships stocking U.S. cars; and liberalization of safety regulations that block sale of American-made replacement parts.
The Clinton administration is threatening to effectively ban Japanese luxury cars from the American market by imposing 100 percent tariffs on 13 models, including such popular sellers as the Toyota Lexus and Honda Acura.
"It doesn't bother me, personally," Nakajima said. Besides some concern for friends in Japan who could lose their jobs if a trade war erupts, he said he is not losing any sleep over the issue. Nakajima moved to Roanoke from his native Japan when he was 19.
Nakajima offered just one other opinion on the Japan-U.S. trade: "It's an automaker issue," he said. "The government cannot do it."
Nakajima's notion is valid, said Richard Wokutch, a management professor in Virginia Tech's Pamplin College of Business.
Wokutch and 16 of his students returned last Thursday from a three-week tour of Japan, which included visits to Japanese automakers as well as Japanese government and trade agencies.
Wokutch, who has researched the Japanese auto industry, said he believes the situation could be handled better if it were resolved by individual Japanese companies rather than government officials.
"In Japan, I did see the other side of the story and that it would be difficult for some individual firms to meet the requests of the U.S. government," Wokutch said. "Because of the recession they're in, their biggest concern is how can they commit to a number of purchases when they don't know how many cars they are going to sell in the next year," he said.
For example, he said, the Toyota Motor Corp. is in a better financial position to handle a trade war than the Mazda Motor Corp.
Toyota has built a $25 billion war chest and might be less willing to concede to U.S. requests. But some smaller companies, such as Mazda, are "on the ropes" economically and may be unable to meet the requests, Wokutch said.
Wokutch also said that, if Japanese automakers concede individually, it would be a face-saving measure for the Japanese government.
Tokyo newspapers have recently published stories suggesting that Japanese automakers were offering to compromise in order to escape trade sanctions. Wokutch believes there is a good chance that this will happen.
Some experts, however, feel this is a battle which the U.S. and Japanese automakers cannot handle on their own.
Carl H. Tong, a Radford University professor of marketing and international business, said the U.S. government will have to get involved because the Japanese economic system differs from America's.
In Japan, Tong said, "government officials and business leaders all work together to advance the country's economic position in the world. The goal of the Japanese government is to become the number-one world power," he said.
Unless the U.S. government is willing to take action, U.S. companies will lose, Tong said. "In history, that has been the case," he said.
The Associated Press contributed to this story.
by CNB