Who Is Europe Kidding?

Talk about the pot calling the kettle black. There's a hue and cry that the U.S. has, by threatening to slap tariffs on Japanese luxury cars, suddenly become the world's worst violator of free-trade principles. This criticism, coming from European governments far more protectionist than the U.S., is rank hypocrisy.

Look where Europe is starting from. Japan has 23% of the car market in America but only 8.3% in Europe, according to this year's allocation. If sales by Japanese transplants in Western Europe are included, the share rises to a still-low 11%. Japan's agreement with the European Union outlining such market shares was drawn up in 1991 to consolidate a grab bag of earlier limits. But five countries--Britain, France, Italy, Portugal, and Spain--still maintain their own restrictions.

Britain allows Japanese cars 12.9% of the market, up from 10% when the agreement went into effect the same year. The French, meanwhile, permit Japan a mere 3.8% of the market, a piddling increase from 3% in 1991. It's clear the Europeans haven't welcomed Japanese cars with open arms, and it's hard to believe the quotas will end in 1999, as the accord specifies.

Publicly, Europeans are chiding the U.S. In criticizing the U.S. complaint against Japan, the Europeans say that their automobile manufacturers have put more of an effort than American carmakers into cracking the Japanese auto market, and they're right on that score. Volkswagen, Mercedes-Benz, and BMW all have dealerships in Japan.

Privately, though, the Europeans are probably cheering. Because whatever happens, the Europeans win. If the Clinton Administration imposes tariffs on Japan, Europe stands to sell more luxury cars to the U.S. If the Japanese ease access to their market, Europeans will enjoy that access, too. And if the World Trade Organization rules against the U.S., Europeans can crow that they were right all along.

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