WASHINGTON – The head of a U.S. auto trade group is criticizing Japan’s repeated exchange-rate intervention as “currency protectionism” to provide an unfair competitive edge to Japanese automakers by keeping the yen artificially weak against the dollar.
“I do not accept (that) the yen is overvalued,” Stephen Collins, president of the Automotive Trade Policy Council, said in an interview with Kyodo News.
“I think the Bank of Japan has taken action repeatedly and extraordinarily in the last couple of months to ensure that the market rates don’t prevail,” he said.
The Washington-based ATPC said it represents the common international economic, trade and investment interests of General Motors Corp., Ford Motor Co. and DaimlerChrysler AG.
Collins said the intervention to stem the yen’s rise is a “very public policy” supported by Prime Minister Junichiro Koizumi.
Japanese currency authorities used a record high 4.61 trillion yen in the April-June period to intervene on the foreign-exchange market, according to statistics released earlier this month by the Finance Ministry.
Collins said the dollar should be traded at a range of 100 yen to 105 yen, given Japan’s trade surplus with the United States and the dollar’s recent depreciation against the euro.
“The dollar has declined against the euro by 15 percent to 20 percent over the last year . . . the same thing would have happened against the yen except the intervention has constantly come in to stop it,” he said.
The dollar has been at around 117 yen in recent trading.
Collins said Japan’s repeated intervention has been having a “devastating” impact on U.S. automakers.
The current yen-dollar rate means cars made by Japanese automakers are given a 20 percent subsidy when they enter the U.S. market, he said.
Collins said his group will urge the Bush administration to press Japan to stop its dollar-buying, yen-selling market intervention.
“We do strongly present views to the White House and the Treasury Department that we believe what the Bank of Japan is doing with the support of the government . . . is wrong, it’s unfair under trade law, it should not be tolerated, it should be countered, and that it has a harmful effect on our industry,” he said.
Collins characterized remarks by Finance Minister Masajuro Shiokawa calling for China to let the yuan go up against the dollar as “trying to divert attention to China.”
Shiokawa has repeatedly said China, which keeps the yuan pegged to the dollar, should allow the exchange rate to fluctuate “in a more flexible manner.”
Collins also said there is still a “structural imbalance” between Japan and the U.S. in auto trade, voicing dissatisfaction with sales by U.S. automakers in the Japanese market.
“The import segment in Japan has never changed in terms of penetration. For a mature, developed economy, this has never been accepted as normal,” he said.
Japanese automakers have meanwhile continued to expand production in the U.S. as well as their exports to the U.S., Collins said.
“The original promise was that while Japanese companies would build plants in the U.S., that would replace the exports from Japan,” he said. That’s not occurring.”