Politics at play in Toyota woes; no trade wars seen

Politics at play in Toyota woes; no trade wars seen

Tokyo: US politics look to be playing a role in Washington’s harsh responseto safety problems battering Toyota’s reputation, but no one expects a replay of the bitter trade wars that frayed ties and jolted currencies decades ago.

That’s in large part because while Toyota Motor Corp as No.1 seems an easy target, Japan firms overall are no longer seen as the competitive threat that once rocked US confidence.

“It is part of a US protectionist mood basically against foreign firms," said Takuji Okubo, chief economist at Societe general Securities in Tokyo.

“But it is different from the 1980s or the first term of (US president Bill) Clinton, when there were trade spats and the exchange rate moved according to political noise," he said.

“So far, it’s a Toyota problem. I think the US’ main target is still China and the Chinese exchange rate."

Toyota’s troubles deepened on Tuesday as the carmaker recalled its flagship Prius hybrid in Japan for braking problems, one day before a top executive was to testify to Congress at a hearing in front of the House Oversight Committee in Washington.

US safety authorities and members of the administration have accused Toyota of responding too slowly to problems related to uncontrolled acceleration that have been linked to up to 19 deaths in the United States over the past decade.

No one is suggesting a US conspiracy to topple Toyota.

But many in Japan do see more than a hint of US domestic dynamics at work — from last year’s bankruptcies of General Motors and Chrysler and charges that lax bank regulation led to the financial crisis, to the tough spot President Barack Obama’s Democrats are in ahead of November mid-term elections.

“Of course Toyota has some problems, but I feel like it is getting beaten on," said Kazuo Akatsuka, who works at a factory making Prius hybrids in Toyota City, central Japan.

“In the US, two car makers have gone under and I feel like some people might be using this as an opportunity. I might not go so far as to call it malicious, but there is something there," said Akatsuka, who has worked for Toyota for 35 years.

Fear Of Fraying

Japanese media and analysts have been critical of Toyota’s handling of its quality problems, but have also pointed to signs of US protectionism that some fear could further fray ties already soured by a feud over a US airbase on Okinawa island.’

“For the Obama administration, which is worrying about its falling support rates, the best way of letting off steam about the jobless situation is to target Toyota, which has overtaken the Big Three," wrote Kazutaka Oshima, president of Rakuten Investment Management. The US government now owns 60% of General Motors and nearly 10% of Chrysler.

“This is a kind of show, so to speak," said Koji Endo, managing director of Advanced Research Japan, referring to the Congressional hearings.

“So it’s going to be a very, very difficult situation. We’re not talking about the pure recall-related business situation here. We’re probably talking about something else, and that’s not necessarily friendly political consideration against Toyota."

Tough talk by US Transportation Secretary Ray LaHood last week, including a pledge to “hold Toyota’s feet to the fire", also fanned speculation that US regulators were trying to deflect criticism that they, too, had dropped the ball.

Some analysts warn that assumptions of politically motivated Toyota bashing are overdone. “Secretary of Transportation LaHood’s inappropriate comments created an adversarial political climate that will take time to recede," said Michael Auslin at the American Enterprise Institute in Washington.

“However, there is no evidence that the US government would be so reckless as to try to intentionally harm Toyota to benefit the car company it now owns, GM," he said.

A huge imbalance in US auto trade with Japan is a longtime irritant that has received more attention of late. But few foresee a return of the mid-1990s friction, when Tokyo’s huge trade surplus sparked yen-boosting jawboning by US officials.

Nor do they expect the sort of “Japan Bashing" symbolised by members of Congress smashing a Toshiba radio-recorder on Capitol Hill in 1987.

Toyota’s status as a major employer in America could also dampen some of the fuss.

“It’s not going turn into scenes of beating a Toyota Prius with a sledge hammer on Capitol Hill," said Brad Glosserman, director of research at think tank Pacific Forum CSIS.