UAW Says Japan Must Agree To Nine Steps Before End Of TPP Talks

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UAW Says Japan Must Agree To Nine Steps Before End Of TPP Talks
Posted: April 17, 2013

In anticipation that Japan will join the Trans-Pacific Partnership (TPP) talks, the United Autoworkers (UAW) late last week outlined a list of nine outcomes that it says the Office of the U.S. Trade Representative must secure from Tokyo before sealing a final TPP agreement that includes Japan. These demands go far beyond the commitments taken on by Japan thus far, which USTR last week said were sufficient to allow the U.S. to support Japan joining the talks. One labor source this week said it is doubtful that any of the initial measures unveiled by the U.S. and Japan last week would really improve the current lopsided nature of bilateral automotive trade. On the other hand, the list of outcomes last week is only a starting point, as the U.S. and Japan also announced that they would continue negotiating the specifics of a deal with Japan on autos in a separate "track" of the TPP negotiations. Among the list of UAW demands are that Japan immediately stop manipulating the value of its currency, even before it is permitted to join the ongoing negotiations. Moreover, UAW calls for "binding commitments" in TPP to guard against future manipulation and a "tariff snapback" mechanism that would increase U.S. tariffs facing Japanese exports if Tokyo restarted manipulation. The USTR announcement last week, by contrast, made no mention of currency at all. UAW also said Japan must agree to take on new commitments in the areas of competition and restructuring; labor standards; compliance with global business practices; maintenance of tariffs under certain conditions; elimination of non-trade barriers; removal of customs barriers; removal of distribution barriers; and non-discrimination for incentive programs, according to its April 12 press release. The major U.S. auto companies, which are represented by the American Auto Policy Council (AAPC), have offered a much less specific reaction in the wake of the USTR announcement last Friday (April 12) that it was supporting Japan's entry into the talks. But in an interview this week, AAPC President Matt Blunt signaled that the issues the UAW brings forward in their statement are similar to what U.S. auto companies would want from Japan. "I'm not prepared to endorse the entire list submitted by the UAW, but the types of concerns they raise are certainly the types of concerns we have about the marketplace in general and are the sorts of things that Japan ought to have to do before it enters into any free trade agreement," he said. That said, Blunt stressed that AAPC is still sticking to its position that a TPP deal should be closed with the current participants before Japan is allowed to join. In its April 12 formal reaction to the USTR announcement, AAPC simply urged the administration to reconsider its position on Japan's entry and argued that allowing Japan to join TPP at this time risks unraveling the entire free trade agreement and will certainly delay its completion. A formal endorsement from all TPP members of Japan joining the talks could happen as soon as this weekend at a summit of Asia-Pacific Economic Cooperation (APEC) members. On currency, the UAW notes that the Japanese yen has depreciated by 23 percent since October 2012. In addition to the snapback mechanism -- which would increase U.S. car tariffs that were lowered pursuant to a TPP agreement -- it proposes that any manipulation by Japan that occurs before those U.S. tariffs are lowered would mean that the U.S. delays the car tariff phaseouts for Japan to which the U.S. had agreed in the TPP negotiations. Currency is not addressed in the terms of reference for the bilateral U.S.-Japan auto negotiations that will take place parallel to the TPP talks. However, USTR did state that the U.S. could invoke some sort of snapback mechanism if Japan fails to comply with the outcome of the U.S.-Japan negotiations on automotive issues. UAW also argues that Japan needs to ensure that its automakers uphold international labor standards in their U.S. operations. Without providing any details, the labor union alleges that Japanese auto companies have violated global labor standards by blocking the ability of workers at U.S. plants to organize and bargain collectively. The Japanese government must intervene with Japanese automakers to guarantee that they will fully-honor labor standards set by the International Labor Organization (ILO), the Organization for Economic Co-operation and Development (OECD) and the United Nations Global Compact (UNGC), and allow a fair, democratic process for workers to decide on union representation, the UAW states.

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UAW Says Japan Must Agree To Nine Steps Before End Of TPP Talks

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The UAW and the IndustriALL Global Union, in a March 8 letter to Nissan's senior management, called into question the Japanese automaker's operation in Canton, Mississippi where it is allegedly discouraging the organization of workers by holding anti-union meetings, showing anti-union videos, interrogating pro-union employees and threatening that collective bargaining could lead to the plant becoming less competitive and shutting down as a result. The company is also allegedly refusing to allow the UAW to give workers presentations on the benefits of union organization. The labor unions argue that the behavior of the plant management is in direct violation of the UNGC and ILO standards, according to the letter. Labor standards are not among the issues specifically mentioned in the USTR terms of reference for bilateral talks with Japan on automotive issues. On tariffs, UAW stresses that any U.S. phaseout of auto tariffs must be preceded by a complete restructuring of the Japanese auto market. That restructuring, in turn, must demonstrate that Japanese auto companies can function without the active protection of the government, and Japan must show a multi-year record of opening its domestic market before U.S. tariffs are decreased, the labor union argues. On this point, the UAW also argues that prior to any tariff reductions, importers should have a transitional period to build distribution networks in Japan of similar scale to what Japanese automakers have developed in the United States. In its announcement last week, USTR said U.S. auto tariffs would be phased out in accordance with the longest period for tariff phaseouts under a final TPP deal, but did not mention restructuring the Japanese market. Fourth, UAW also calls for an "aggressive competition policy" to account for the fact that Japanese brands control almost 95 percent of the market and "have a well-known relationship with supplier networks," although the union does not provide specific suggestions as to how this could be addressed. The UAW also wants Japan to enact legislation that would fully implement the anti-bribery convention of the Organization for Economic Cooperation and Development (OECD) and other relevant international commitments against corruption and bribery. The UAW calls this an essential improvement for Japan and the U.S. to collaborate on achieving the highest standards of compliance in global business practices. The UAW's demand on non-trade barriers center on the requirement that the Japanese government should recognize U.S. safety and environmental standards as compliant in the Japanese market, with a snapback of duties in the event of non-compliance. While USTR is seeking to address issues related to non-trade barriers in its parallel talks with Japan, it has not said that Japan must recognize U.S. safety and environmental standards as equivalent. In the terms of reference paper, for instance, both governments agreed to further recognize the importance of bilateral cooperation to harmonize standards for motor vehicle environmental performance and safety. The UAW's seventh demand calls for full review and elimination of any customs or port barriers and the establishment of a bi-national oversight body within the TPP to ensure enactment and enforcement on this issue. The U.S. and Japan agreed that customs issues could be among other issues either side could raise in bilateral auto negotiations and include in those talks if both sides agree. Eighth, the labor union calls for a full review and elimination of any barriers to the establishment of a robust distribution network for vehicles imported to Japan. In the bilateral auto talks, the U.S. and Japan generally agreed that issues related to distribution and servicing of vehicles need to be addressed. Finally, the UAW seeks non-discrimination for any industry or consumer incentive applied to autos by requiring it to be reviewed and approved by both parties. The U.S.-Japan bilateral talks on autos will also address the need to review fiscal incentives and other measures to ensure that they do not discriminate against U.S. autos. However, contrary to what the UAW is seeking, the two sides agreed that this would not be done in a way that would prejudice the sovereign right for a government to manage its own taxation system and fiscal incentives.

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