WASHINGTON - Congressman Dale E. Kildee (D-MI) urged Treasury Secretary John Snow to stand up for American workers and address the effects of Japan’s longstanding policy of currency manipulation at the recent meeting of the G7 Finance Ministers in Washington.  Kildee, Co-Chair of the House Auto Caucus, was joined by 19 other Members in writing a letter to Secretary Snow expressing their personal concern with the damage caused to domestic economic interests, especially the American automobile industry, due to Japan’s monetary policies, which have gone unaddressed by the Bush Administration.

“Japan’s historic currency intervention has allowed them to undercut the U.S. automobile market while keeping American cars and trucks out,” said Kildee. “Punctuating this distortion is the fact that it has gone largely unquestioned or unchallenged by leading officials in America.   Secretary Snow needs to stand up for American workers and American auto companies and make it clear to Prime Minister Sadakazu Tanigaki that Japan should no longer engage in this unfair and disruptive policy.”

In January of this year, the U.S. Federal Reserve reported that “[s]ince the early 1990s, the monetary authorities of the major industrialized countries, with one exception, have greatly curtailed their foreign-exchange interventions.  That exception has been Japan, where the Ministry of Finance has continued to intervene frequently – and at times massively – in foreign exchange markets.”  Japan’s interventions in the currency markets have artificially weakened the yen in order to provide a major subsidy to their exporting industries, particularly in the manufacturing sector.  This in turn allows Japanese automakers to compete with a substantial and unfair advantage in the U.S. market.

Over the past five years Japan’s currency has been undervalued by a range of 12 to 36 percent.  This means a $20,000 car imported from Japan carries a subsidized cost advantage of $2,400 to nearly $8,000 over U.S. cars, and U.S. exports to Japan face the equivalent of a $2,400 to $8,000 yen manipulation ‘tax.’  This yen-driven cost advantage extends to every part imported by Japanese manufacturers for use in their U.S. assembly facilities as well. 

Kildee led the effort to urge Secretary Snow to put this issue on the G7 agenda and was joined by a bipartisan group of Representatives seeking to end the significant harm Japan’s monetary policies have caused to American automakers and their suppliers.

Japanese auto exports have increased by an average of 14% a year through this currency manipulation and American manufacturing has been harmed in the process.

“Many of the efforts of U.S. automakers to improve the performance, competitiveness, and profitability of their businesses have been undermined by the Japanese government’s policy of currency manipulation,” concluded Kildee.  “Japanese officials have frequently stated that their purpose of this distortion is to give their exporters an advantage in overseas markets.  For the sake of American workers, it’s time our top officials make it clear to the Japanese that the U.S. government opposes this policy.”