On The TPP Negotiations And Abe Shinzo's Sense Of America

Friend Stephen Harner finds much to harrumph about regarding the purported proposals on the steps the government of Japan can take to increase the sales of U.S automobiles in Japan made during this most recent round of talks on the proposed Trans Pacific Partnership by the U.S. negotiating team. (Link)

And yes, Harner's post does not even touch upon the anachronistic and preposterous U.S. light trucks tariff, or the ridiculous U.S. suggestions as to a timetable for its abolition.

My only quibble with Mr. Harner's piece is his ending. I am reluctant to believe Prime Minister Abe Shinzo is willing give away much to secure a deal with the U.S. on TPP. Abe probably believes that pushing hard on the construction of a Futenma Replacement Facility at Henoko in Okinawa and some sort of increase in the capacities of the Self Defense Forces to participate in international security affairs are together more than sufficient for him to pick up the big pencil and check off the "Took Care Of The Alliance" box. Making positive noises about TPP helps maintain international investor interest in Japan, particularly in the all-important Japanese equities markets. However, the decision to have Japan participate in the TPP was made by the now much-maligned Prime Minister Kan Naoto of the Democratic Party of Japan. The negotiations have dragged on -- but as a legacy, not a core, Abe Cabinet economic initiative.

Furthermore, as Tobias Harris sagely noted, TPP is, for Abe Shinzo, a part of the "second" opening of Japan (Link -- not the third one, as Prime Minister Kan insisted the trade partnership would be. (Link)

That little bit of contemporary revisionism on Abe's part tells a grand tale of his willingness or not to kowtow to America.

Ave Imperator Mobilis!

The neatest factoid from today's plethora of special articles looking at the Heisei Emperor on the occasion of his 80th birthday? It is not that he has a driver's license that he has to renew every three years just like any other senior driver of his advance age. It is not that he has a car he loves which he uses to ferry himself and the Empress to the Imperial Palace tennis court (where he unleashes a mean cross-court forehand).

It is that the Emperor's car is a gray 1991 Honda Integra.

Talk about an unpretentious ride.

Not a Nissan. Not even a Toyota. A Honda!

And a thirteen twenty-three year old Honda at that. (Check out the video)

One can imagine His Royal Highness Prince Akishino trying to convince his father it is time to upgrade his mode of transport:

HRH P.A. - Dad, you need a new car.

HME - Why?

HRH P.A. - Dad, that car of yours is three technology cycles out of date. How about a Prius or an electric vehicle? You're never going to drive faster than 30 kilometers an hour anyway. Heck, the annual shaken on that car probably costs double what a Siberian is willing to pay for it.

HME - How can I get rid of my car? It's got less than 3000 kilometers on it!

Which brings up question I have never considered before: how do members of the royal family address one another, when they are strictly en famille?


Later - Reader Karayama (?) answers the above question in comments.

Later still - It seems that the above linked-to snippet is the first ever Imperial Household Agency release of video of the emperor at the wheel of his car.

Size Matters

Finally, an article in the vernacular press explaining, at least partially, how Japan's vehicle markets can be so resistant to imports.

Are Japan's Minicars a Trade Barrier?
Nation's Preference for Ultrasmall Autos Poses Hurdle for Foreign Auto Makers

TOKYO—Japan's auto market, once a global trend setter, has become one of the most disconnected from markets elsewhere, putting it at risk of becoming irrelevant, say executives here.

More than 90% of cars sold in Japan are Japanese brands. A third of them—ultralight minicars—are sold nowhere else. Originally developed to fill Japan's need for cheap cars after World War II, they are too small or too expensive for other markets.

The country's singularly strong appetite for fuel-efficient cars means car makers have developed a series of advanced technologies, such as hybrid cars, that don't necessary translate easily elsewhere.

Japan has no tariffs on auto imports. Japanese auto executives say the country's unique tastes are a big reason for global auto makers' failure to thrive in the world's third largest auto-buying country, after China and the U.S. Foreign auto executives say the country's preferential tax treatment for minicars and its unique safety and environmental regulations are nontariff barriers that protect the country from foreign competition...

(Link)

Had the author added brand loyalty based on regional and keiretsu ties to his reasons why Japanese consumers and business customers buy what they buy, he would have covered all the bases.

The ruling coalition is set to try leveling the playing field in terms of the tax advantages of minicars. The Liberal Democratic Party's tax committee has recommended lowering the acquisition tax for full-size vehicles and raising the annual taxes minicar owners pay by 50%. (Link). Minicar manufacturers and their suppliers screamed in protest when the proposals came before the committee.

Minicar makers, particularly minicar-motorcycle manufacturers like Suzuki and Yamaha, seem to have little traction or connection with Abe Shinzo and his allies, however. Daihatsu in theory might have been able to bend the ear of the LDP tax committee, corporate parent Toyota Motors being seen as a vital member of Team Abe thanks to President Toyoda Akio's obsequious praise of Abenomics.

Daihatsu, is, however, the outcast problem child of the Toyota family. Toyota Motors would really want to have Daihatsu customers buying the group's more profitable full-sized cars. That Daihatsu did not take a lead in fighting the tax changes, leveraging the Abe-Toyoda relationship into influence upon the committee's deliberations, is not surprising.

Raising the taxes on minicars goes partway into answering the charges of U.S. automakers that regulations plays a role in closing Japan's auto markets to foreign manufacturers. The tax changes can therefore be seen as one facet of the political show Japan has to put on in order to consolidate its position inside Trans Pacific Partnership negotiations on vehicle tariffs -- where the white whale of Japanese trade policy, the U.S. 25% tariff on light trucks (a.k.a., minivans), lurks.

The still far off tax rise (the tax changes would only affect vehicles purchased after March 2015) on minicars does carry a political price. Minicars are seen as "people's cars" (Ja, ist Japonishes Volkswagen!) and everyday life vehicles (seikatsu no ashi - literally, "livelihood legs"). They are particularly important for rural households, which generally have lower than national average incomes yet which need a vehicle for each adult family member for both personal transportation and ferrying goods. Raising the costs of owning a minicar, or two or three or four as is often the case, is a rude slap in the face to rural voters. Coupled with the recently announced plan to phase out the gentan rice subsidy program over the next five years (Link), it looks as though the LDP is double-crossing the rural voters who remained loyal to the LDP even during the party's years of decline and banishment to the political wilderness.

Thinking that the demographic trends in agriculture and the rural areas make the minicar tax rise a safe bet for the LDP -- a "So long and thanks for the votes, you losers" -- ignores the reality that younger consumers are also big fans of minicars. Ticking off youth, folks who will voting for a long time to come, seems dumb, strategically. The young, however, are s numerically small proportion of the current electorate who do themselves no favors by furthermore not showing up at the polls on election day. (Link - J)

So minicars go to it, despite their extreme popularity.

How Chinese Rioting Helps Japanese Car Sales...

...in the long run.

A light-hearted analytical view of the unintended consequences of semi-orchestrated hatred against another country.

It's not all ships maneuvering and hot-headed rhetoric (former prime minister and current Liberal Democratic Party presidential candidate Abe Shinzo has yet to realize that China paranoia as electoral jet fuel is oh, so Wednesday) you know.

The Earth Does Not Like Japanese Automakers

What are Japanese auto manufacturers supposed to do?

In order to serve the Southeast Asian market, have an alternate manufacturing center to plants in Japan which are liable to disruption due to typhoons, earthquakes and the occasional tsunami, and lastly to escape the export-depressing effects of the soaring yen, they invest in a second center.

And it is Thailand.



One would not be farfetched in thinking that at least this year, offerings made to placate the kami and petition them to shower the companies of Japan with prosperity were somehow deeply flawed.

Image courtesy: AFP/Getty Images

Later - The Japan Times has the Kyodo report on the economic disaster (en).