Japan auto lobby says hopes NAFTA will keep current framework

TOKYO: Japan’s automakers’ association said yesterday it hoped that the North American Free Trade Agreement (NAFTA) would maintain its current framework as the US, Canada and Mexico update the trade pact amid growing trade tensions between the US and its trading partners.

“Japanese automakers’ businesses in North America are based on the NAFTA framework, and that framework is based on a three-party agreement,” said Akio Toyoda, chairman of the Japan Automobile Manufacturers Association (JAMA) and president of Toyota Motor Corp.

“We hope that framework continues this way, and that it remains well-balanced.”

Japanese automakers are bracing for the possibility of higher tariffs on the vehicles they ship for the US market after Washington earlier this year launched a national security investigation into car and truck imports.

They are also awaiting an agreement on a renegotiated NAFTA, which may come in coming weeks. Both issues could raise the cost of selling cars, one of Japan’s biggest export earners, in the US.

The US has wrapped up a side deal with Mexico and is threatening to exclude Canada if necessary. Canadian officials say they do not believe the US Congress would agree to turn NAFTA into a bilateral treaty.

Most of Japan’s major automakers operate plants in the US. At least half of the cars and trucks sold in the country by Japan’s top three carmakers are made in the US.

In a statement, the association said it was concerned that US tariffs of up to 25 percent on vehicle imports on the grounds of national security could have an impact on the Japan’s auto production and supply chain.

A renegotiated NAFTA could also have an impact on Japanese automakers producing cars in the US, Canada and Mexico, JAMA said.

Toyota, Nissan Motor Co and Honda Honda Motor co all build vehicles in the US, and also produce in Mexico, while Toyota and Honda also operate plants in Canada.

Toyoda suggested the possibility that automakers embrace more localised production globally even as waning demand for cars at home clouds the outlook for the future of Japanese production.

For years, a portion of Japanproduced cars have been exported overseas.

Japan’s government is hoping to avert additional, steep US import tariffs on its cars and fend off US demands for a bilateral free trade agreement at a second round of trade talks with Washington, likely to take place next week.