The Automotive Trade Policy Council, whose members include General Motors, Ford and DaimlerChrysler, praised legislation introduced today by Senator Debbie Stabenow (D-MI) to force the Japanese government to take action to stop subsidizing millions of auto exports to the U.S. by bringing its currency into proper alignment with the U.S. dollar. The Japanese Currency Manipulation Act would require the administration to immediately begin the process of pressuring Japan directly as well as coordinating with other major industrialized countries and the IMF to put a stop to Japan's damaging currency policy.
"ATPC thanks Senator Stabenow for her leadership in demanding that Congress and the Administration begin to take seriously the damage caused by Japan's currency policy excesses," said ATPC President Stephen J. Collins. "It's time for the Administration to stop condoning this policy and start pressuring the Japanese Government to bring its currency into proper alignment with the U.S. dollar."
Japan's yen subsidy provides the average imported Japanese car a $4,000 windfall cost advantage over U.S. automakers and other competitors in the U.S. market -- a windfall that ranges up to $10,000 per vehicle for higher-end Japanese imported SUVs such as those sold by Toyota under the Lexus brand.
The Japan Currency Manipulation Act directs the Department of Treasury, in consultation with the Council of Economic Advisors, to work with the government of Japan to come up with a plan to draw down Japan's excessive levels of currency reserves, which will facilitate the proper realignment of the yen to the dollar. The legislation also directs the Treasury Department to work with our European trade partners, as well as the International Monetary Fund to reach a multiparty agreement dealing directly with the destabilizing effects of Japan's misaligned currency, excessive currency reserve levels, and extreme trade imbalances.
A new Peterson Institute for International Economics report released this week by 30 leading economists called for an increase of 25-30 percent in the value of the yen to the dollar. The report called for adjusting the yen/dollar exchange rate from the current level of about 118 yen/dollar to 90 yen/dollar, consistent with ATPC's previous estimates. The report identified "large and unsustainable imbalances in current account practices" as one of the principal dangers facing the world economy today and calls on policymakers "to reduce the risks of a crisis that could produce a world recession."
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