Under pressure from the Canadian and US governments in the early 1980s, Japanese
ID: 1103049 • Letter: U
Question
Under pressure from the Canadian and US governments in the early 1980s, Japanese automobile producers agreed to restrict their exports to the North American market. After the formal agreement ended, the Japanese producers decided unilaterally to continue restricting their exports.
a. Explain why the Japanese producers would voluntarily continue these restrictions.
b. Explain why an agreement to export only 100 000 cars to North America is better for the Japanese producers than a North American tariff that results in the same volume of Japanese exports.
c. Who is paying for these benefits to the Japanese producers?
Explanation / Answer
(a) japanese producers voluntarily continued these restrictions because of the working conditions in united states.the major firms like nissan and toyoto, had resisted investing in the United States.these firms were extremely concerned about higher wages, frequent strikes, the lower standard of workmanship in the United States, all of which were perceived as increasing the cost of manufacturing in America.
(b) The elimination of U.S tariff on imported trucks for cargo use as the result of an FTA between Japan and the United States resulted in a significant increase in exports of Japanese truck models with fuel efficient engines.that is why an agreement to export only 100 000 cars to North America is better for the Japanese producers than a North American tariff.
(c) the U.S. government and the U.S. people are paying for these benefits to the japanese producers because the cost of manufacturing the same product in U.S. is very high as compared to japan. therefore U.S. has to import from japan.
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