Japan's Auto Makers Get Subsidy Via Weak Yen [View All]

[FreakinDJ]

Japan's Auto Makers Get Subsidy Via Weak Yen

Your Sept. 25 editorial "Auto Epiphany" about the plight of the American auto industry disregarded the weak yen as a non-problem made up by protectionists in Congress. I have voted for every free trade agreement that has come before me during my 15 years in Congress, but the Japanese government's policy of maintaining a weak yen is a real issue that deserves scrutiny.

Since 2001, the Japanese government has intervened repeatedly in currency markets to artificially devalue the yen by upward of 30%. As a result, Toyota and the other Japanese automakers receive a $4,000 to $14,000 subsidy on every vehicle they export to the U.S. Japan's currency manipulation is fueling the market share gains of Toyota, Honda and Nissan in the U.S. and putting downward pressure on UAW wages and benefits.

As long-standing proponents of free and open financial markets, this is not something the Journal should celebrate in editorials, especially since the profit edge Toyota has over the Big Three is roughly $3,800 per vehicle, or about the same edge it derives from the yen-subsidized Toyota Prius.

The unfair yen subsidy is particularly egregious considering that Toyota will earn 75% of its profits this year in the U.S., while GM, Ford, and Chrysler will sell less than 20,000 vehicles in Japan.

Rep. Joe Knollenberg (R., Mich.)
Washington