AIADA Look Back: Sanctions Averted in U.S.-Japan Auto Battle: How Dealers Made a Difference

This article originally appeared in AIADA’s International Automobile Dealer magazine, volume 12, No. 4 July/August 1995

Thousands of dealers and their employees breathed a sign of relief on June 28 [1995] as the

U.S. and Japan reached an 11^th-hour trade accord narrowly averting sanctions that would have been imposed at midnight. The sanctions, which targeted 13 models of Japanese luxury cars for 100% tariffs, threatened to put some dealers out of business in 30 days, and would have directly impacted 2,028 dealerships around the country that sell the affected cars.

 

Caught in the crossfire of an international trade dispute, AIADA members led the battle against the sanctions, waging an all-out lobbying and public relations campaign from the national level to the grassroots, reaching Congress, the Administration, the media and the public. In the end, our message was heard: America’s international auto dealers played a key role in helping to bring about a negotiated settlement and avert the sanctions.

 

By mid-April, concern at AIADA headquarters was starting to build. Months of “framework” talks between the U.S. and Japan on auto trade had yielded little, if any, agreement and the two countries seemed to be on a collision course that put U.S. dealers of Japanese cars in the firing line.

 

Early Action Key to Strategy

 

AIADA began laying the groundwork to guard against sanctions, setting the wheels in motion to focus efforts on:

 

¨Educating the Administration, Congress and the press of the potentially devastating impact sanctions could have on U.S. dealers and their employees.
¨Urging the two countries to forge a negotiated settlement or take their dispute to the World Trade Organization.

 

AIADA met with Commerce Department officials in charge of U.S.-Japan auto trade talks while the government relations team also worked vigorously to spread this message on Capitol Hill.

 

On April 20 [1995], AIADA sent a letter to U.S. Trade Representative (USTR) Mickey Kantor offering to send a delegation of AIADA leaders to Japan to try to help reach a negotiated settlement.

 

On April 27 [1995], AIADA sent a faxed trade alert to all U.S. dealers of Japanese cars notifying them that sanctions appeared on the horizon.

 

Talks Break Down, Sanctions Loom

Autos Targeted for 100% Tariffs

Acura Legend Acura 3.2 TL Infiniti Q 45 Infiniti J 30 All Lexus models Mazda 929 Mazda Millenia Mitsubishi Diamante

 

The auto talks officially broke down after Kantor and Japan’s Minister of Industry and International Trade and Industry (MITI) Ryutaro Hashimoto failed to reach an agreement during a May 3 meeting in Canada.  Kantor announced that a list of trade sanctions was forthcoming and would include tariffs high enough to eliminate U.S. sales of targeted vehicles.

 

Immediately following Kantor’s remarks, AIADA President Walter Huizenga warned in a press release that sanctions on Japanese import autos would threaten thousands of American small businesses and jobs: “Our government is firing a bullet at Japan, but they are hitting Americans.”

 

Grassroots Action Launched

 

On May 9 [1995], AIADA sent a trade sanctions bulletin to all members of the grassroots program, alerting them to the current situation.

 

On May 10 [1995], AIADA sent a letter to all Members of Congress opposing sanctions and supporting a resolution of the dispute either through a negotiated settlement or through the WTO.  Included in this Capitol Hill mailing was a compelling Wall Street Journal article telling of the impact of sanctions on America’s small business international auto dealerships.

 

Also on May 10 [1995], AIADA sent a five-page sanctions alert to all dealers of Japanese vehicles calling for immediate grassroots action. Dealers were provided with AIADA’s position paper and talking points to use with both their local press and with their Members of Congress.

 

Within days, dozens of Members of Congress had heard from dealer constituents who warned of the severity of the sanctions the Clinton Administration was pursuing.  Dealers were making a difference through the media at the grassroots, too. Armed with AIADA’s talking points, dealers across the country were featured in newspaper reports, radio and TV interviews.

 

Sanctions Announced, AIADA Reaction Swift

 

On Tuesday, May 16 [1995], Kantor announced the U.S. would impose trade sanctions against Japan targeting 13 Japanese import vehicles for 100% tariffs valued at $5.9 billion annually.

 

AIADA immediately unleashed its four-prong lobbying and public relations campaign designed to reach the Administration, Congress, the media and the public, hitting hard with our message that sanctions would devastate American businesses and jobs.

 

Target: The Media

 

AIADA’s pre-planning enabled a hard and fast strike following the USTR’s 10:00 a.m. announcement. AIADA held a press conference at 12:00 noon jointly with the National Automobile Dealers Association (NADA), denouncing the proposed sanctions and presenting a unified dealer front. By 11:00 a.m. a press release was on the wire to thousands of media outlets across the country, establishing AIADA as the voice of international auto dealers impacted by the sanctions.

 

The media presence at the press conference included all three major America networks, CNN, CNBC, the major wire services, three Japanese TV networks, several radio broadcasters and numerous members of the print media. AIADA President Walter Huizenga began a round of continuous media interviews while the association fielded hundreds of press calls and requests for background information.

 

Target: Congress & Administration

AIADA Position on Auto Dispute

* A negotiated settlement is the best solution for both countries. * Unilateral sanctions would be devastating to Americans, not the Japanese. *American auto dealers are not the problem. * American businesses, workers and consumers will suffer under sanctions. * The U.S. should use the established system to settle this dispute: The World Trade Organization (WTO).

 

The USTR announcement came just days before the start of AIADA’s 18^th annual American International Automotive Congress, May 21-23 [1995]. Nearly 1,000 dealers descended on Washington and met with more than 300 Senators and Representatives. They urged Congress to support the suspension of auto sanctions and presented a draft sample letter to be signed and sent to President Clinton. While many Members said that they would not interfere publicly with the President’s trade actions, they were willing to help through backchannels.

 

AIADA Chairman Kjell Bergh, and with four senior dealer members, also met with USTR General Counsel Ira Shapiro on May 23 to discuss how the sanctions would impact American businesses and jobs.

 

Target: Public Support

 

AIADA launched a national advertising campaign designed to build support for our position on U.S. auto sanctions. The first ad appeared in the Washington Post and Roll Call, the newspaper on Capitol Hill, the day dealers headed to the Hill during the Automotive Congress. It focused on the lost jobs U.S. auto sanctions against Japan would cause. This ad and subsequent ones were also placed in the Wall Street Journal, Washington Times, and USA Today.

 

The second ad centered on the editorial support our position had received from newspapers across the country. A third ad was an open letter from Begh and Huizenga on behalf of the 2,028 [1995 totals] impacted dealerships and their 81,000 employees, urging Kantor and Hashimoto to reach a negotiated settlement.

 

An AIADA radio ad advocating our position was also broadcast on twelve stations in the Washington metro area in the three weeks leading up to the sanctions deadline.

 

Grassroots Action Intensifies

"I want Mickey Kantor and President Clinton to look at my 102 employees in their eyes and tell them what they are going to do. Bill Clinton and his company are about to put us out of business." -Cadillac and Lexus dealer Ron Salhany Wall Street Journal, May 10, 1995

 

AIADA’s lobbying did not end following the Congress, it only intensified. Every dealer member was sent a “Sanctions Survival Kit” with an action plan outline of what to do to help avert the sanctions:

 

¨ Write to the USTR

¨ Call Congress Now

¨ Write or FAX Congress your USTR Letters

¨ Contact Your Local Media

¨ Place AIADA’s Ads in your Local Paper

¨ Serve as a Spokesperson in your Community

¨ Keep AIADA Informed of your Activities

 

Different talking points were presented for dealers who sell the impacted cars and those who do not. Dealers were urged to keep the pressure on.

 

Hundreds of letters poured into AIADA that had been sent to the USTR and to Congress and from Congress to the USTR and the President. Also, dealers continued to win the PR battle at the grassroots, earning editorial support coast to coast by reaching out to educate the media on this issue.

 

Public Hearing Put Dealers Last

 

On June 8 [1995], two days of scheduled testimony before the USTR on the sanctions issue were packed into one, with dealers scheduled dead last. Many dealers sat through nearly 12 hours of testimony to get their turn to speak. “The USTR intentionally scheduled anti-sanction panelists after 5:00 p.m. so their side of the story would not meet press deadlines,” said Huizenga.

 

To ensure that their side would be heard, auto dealers from around the nation gathered in Washington at noon for an AIADA press conference. Speaking before a packed room of television, radio and print reporters, dealers passionately explained how the tariffs threatened their businesses and their employee’s jobs.

 

Dealer Delegation to Japan

 

AIADA Chairman Kjell Bergh led a delegation of AIADA dealers to Japan June 11-15 [1995] to ensure that all parties were aware of the disastrous impact trade sanctions would have on America’s small business auto dealers and their American employees.

 

The AIADA delegation met with U.S. Ambassador to Japan Walter Mondale, the Ministry of International Trade and Industry (MITI), the Ministry of Transport, key executives and Toyota, Honda, Nissan and Mitsubishi, the Japanese Automobile Manufacturers Association (JAMA), the Japanese Automobile Dealers Association (JADA), and the Japanese Auto Importers Association (JAIA).

 

The meetings helped open the lines of communication between the embassy and the manufacturers, and the groups began to outline a potential agreement on the sticky issue of the so-called “voluntary” parts plan. The outline sought to ensure that manufacturers would receive credit for the multi-billion dollar investment they had made in the United States and would continue to make.

 

Each manufacturer developed its own business plan outlining the investment program and including parts purchasing plans in that plan.

 

11^th Hour Trade Accord: Sanctions Averted

 

The plans outlined during AIADA’s trip to Japan left Bergh and the reset of the delegation feeling optimistic that outstanding issues between the two countries had been resolved and an agreement was within reach.  Standing in the way: politics on both sides of the Pacific.

 

While dealers maintained pressure at home through the media and n Administration officials, the negotiations were clearly in the hands of Kantor and President Clinton and Japan’s Hashimoto and Prime Minister Murayama.

 

Finally, at noon Washington time on June 28 [1995], President Clinton announced that the two countries had reached an agreement – ending the threat of sanctions.

 

The agreement, hammered out in marathon sessions at the home of the World Trade Organization, mirrored the plan outlined in Tokyo during the AIADA delegation visit. The business plans discussed by the manufacturers in Japan were carried to Geneva and formed the basis for the final agreement.

 

After weeks of united effort by dealers nationwide, the negotiated settlement that had been hoped for and fought for came to light in the final hours. It will go down in history as one of the biggest battles AIADA and its members have ever fought.

AIADA Presents - Chapter 1 A Look Back

AIADA Presents - Chapter 2 A Look Back: Volkswagen: A Summary History of Trials, Tribulations and Triumphs

AIADA Presents - Chapter 3 How Free Trade Policy Impacted the U.S. Auto Industry"