Sunday, March 21, 2010

“Tremors of an Age of the Warring States in International Trade”

Here’s a look into what goes on in the minds of many people here—probably more in the media and political ranks than the business world—regarding the US treatment of the Toyota recalls.

Yasuhiko Ohta, a member of the Nikkei board of editors, has a column in the 20 March edition entitled “Tremors of an Age of the Warring States in Trade(通商戦国時代の響き)” that criticizes the Japanese Government for staying above the fray on Toyota’s braking problems in the United States. He thinks that “the Toyota bashing in the US carried an element of political and diplomatic problems from the outset,” citing LaHood’s role as a member of the Obama cabinet in “setting fire to the US consumer’s sense of unease through [his] congressional testimony,” the “leading role played by the US Transportation Department’s National Highway Traffic Safety Administration in criticizing Toyota,” and the prominence of congressmen and senators from regions that have strong connections with the UAW and US auto manufacturers as the angry voices in Congress. He goes on to claim that “the pressure leading to trade friction is in the danger zone, where a small incident can lead to a blowup.” He takes President Obama’s State of the Union address and sees Obama’s goal to “double our exports over the next five years” as leading to a push to “take away shares of emerging markets from corporations from other countries by force if necessary.” He closes with the following two parargraphs:
“The curtains are rising on an Age of Warring States in Trade. Shouldn’t the uproar surrounding the recalls be understood within that larger context?

Toyota tripped on its own regarding the safety problems of its product. But it is also true that pressure to trip up competitors is mounting on a level other than safety. Since the Hatoyama administration does not have the diplomatic power against the US to resolve the issue, Toyota must work on the Obama administration on its own.”
Americans probably don’t need me to tell you how incomplete and misguided this analysis is with regard to Toyota’s predicament. But this is no nationalist or conspiracy theorist blogger, but a member of the Nikkei board of editors. So, even discounted for Nikkei’s dislike of the Hatoyama administration and its budget-busting handout policies, you have to believe that this is the kind of thinking that is fairly common in the Japanese establishment. Now, some things that these people miss:
1. LaHood’s personality as a big reason why he wings it, his political cachet as a Republican in a Democratic cabinet as the reason why he is allowed to do so.
2. The NHTSA’s need to cover its butt.
3. The UAW’s grip over the Detroit Three contrasted to its lack of influence over the largely union-free Japanese manufacturers.
4. The countervailing congressional voices from constituencies with Toyota operations.
I hope this helps anyone who has to explain what’s going down over there. And the real trade war story, if there is going to be one, will of course be a US-China story.

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