Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-29T02:57:58.999Z Has data issue: false hasContentIssue false
  • English
  • Français

Automobiles in international trade: regime change or persistence?

Published online by Cambridge University Press:  22 May 2009

James A. Dunn Jr
James A. Dunn Jr
Affiliation:
Associate Professor of Political Science at Rutgers University, Camden.
Get access

Abstract

The concept of a “regime” is frequently used to describe and explain behavior in international political economy. Peter Cowhey and Edward Long, attempting to test theories of surplus capacity and hegemonic decline, advanced a version of a regime governing international trade in automobiles which was fundamentally liberal from 1966 to 1975, but then collapsed into protectionism. Their diagnosis is mistaken, however, because the trade regime for autos was neither as liberal as they assert during the 1950s and 1960s, nor as protectionist as they believe it has become in the 1980s. The discussion focuses on a new definition of the auto trade regime based on four fundamental rules that have persisted since the 1950s. By examining data on auto imports since 1955 on a region-by-region basis, it becomes clear that the trade expansion of the postwar years was not based on a global liberalization of the trade regime, but on carefully managed regional arrangements that favored imports within the region, or extra-regional imports that did not threaten domestic producers. The flurry of restraints on Japanese imports in recent years is not a collapse into protectionism, but a reinforcement of the fundamental regime rules. The auto industry case illustrates the tendency of analysts to underestimate protectionist elements in industry trade regimes and to overestimate the amount of changes that take place in their fundamental rules.

Type
Articles
Information
International Organization , Volume 41 , Issue 2 , Spring 1987 , pp. 225 - 252
Copyright
Copyright © The IO Foundation 1987

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1. Farnsworth, Clyde H., “U.S. Will Not Ask Japan To Extend Car Export Curbs,” New York Times, 2 03 1985, p. 1Google Scholar.

2. Ibid., and “Importers and Association of Car Dealers Hail Move,” New York Times, 2 03 1985, p. 33Google Scholar.

3. “Japan Seeks to Limit Auto Firms' Plans for a Sharp Increase in Exports to U.S.,” Wall Street Journal, 5 March 1985, p. 3.

4. Chira, Susan, “Japan Allotments Set on Cars for U.S.,” New York Times, 27 04 1985, p. 31Google Scholar; and “Japanese Set Car Allotments to U.S. Market: Domestic Makes Affiliates Get Favored Treatment,” Wall Street Journal, 29 April 1985, p. 3.

5. Cf. Safire, William, “Smoot-Hawley Lives,” New York Times, 17 03 1983, p. 23Google Scholar, and Farnsworth, Clyde H., “U.S. White Paper Stresses Free Trade,” New York Times, 8 07 1981, p. D14Google Scholar.

6. Finlayson, Jock A. and Zacher, Mark W., “The GATT and the Regulation of Trade Barriers: Regime Dynamics and Functions,” International Organization 35 (Autumn 1981), p. 563Google Scholar.

7. Ibid., pp. 561–601.

8. Keohane, Robert O., Hegemonic Leadership and U.S. Foreign Economic Policy in the ‘Long Decade’ of the 1950s,” in Avery, William P. and Rapkin, David P., eds., America in a Changing World Political Economy (New York: Longman, 1982)Google Scholar.

9. Aggarwal, Vinod, “The Unraveling of the Multi-fiber Arrangement, 1981: an Examination of Regime Change,” International Organization 37 (Autumn 1983), pp. 617–646CrossRefGoogle Scholar.

10. See Krasner, Stephen D., ed., International Regimes (Ithaca: Cornell University Press, 1983)Google Scholar. This book appeared originally as a special issue of International Organization 36 (Spring 1982), pp. 185–510Google Scholar.

11. Rapkin, David P. and Avery, William P., “U.S. International Economic Policy in a Period of Hegemonic Decline,” in Avery, and Rapkin, , eds., America in a Changing World Political Economy, p. 9Google Scholar.

12. For a skeptical view of this vision of America's decline, see Russet, Bruce, “The Mysterious Case of Vanishing Hegemony; or, Is Mark Twain Really Dead?” International Organization 39 (Spring 1985), pp. 207–231CrossRefGoogle Scholar.

13. Ruggie, John Gerard, “International Regimes, Transactions and Change: Embedded Liberalism in the Postwar Economic Order,” in Krasner, , ed., International Regimes, pp. 379–416Google Scholar.

14. For a classic “alarmist” view, see Carter, Jimmy and Ford, Gerald R., “Halt the Drift Toward Economic Anarchy,” New York Times, 21 11 1982, p. E19Google Scholar.

15. For a skeptical view of the regimes approach, see Strange, Susan, “Cave! Hic Dragones: A Critique of Regime Analysis,” in Krasner, , ed., International Regimes, pp. 479–496Google Scholar.

16. Finlayson and Zacher, “Regime Dynamics and Functions.”

17. Bressand, Albert, “Mastering the World Economy,” Foreign Affairs 61 (Spring 1983), pp. 745–772CrossRefGoogle Scholar.

18. Cowhey, Peter F. and Long, Edward, “Testing Theories of Regime Change: Hegemonic Decline or Surplus Capacity?” International Organization 37 (Spring 1983), pp. 157–183CrossRefGoogle Scholar.

19. Ibid., p. 159.

20. Ibid.

21. Ibid.

22. See, in particular, Hedlund, Gunnar, “Appendix D: The Case for Free Trade,” in Altshuler, Alan et al. , The Future of the Automobile (Cambridge: MIT Press, 1984), pp. 291–299Google Scholar.

23. Wilkens, Mira and Hill, Frank, American Business Abroad: Ford on Six Continents (Detroit: Wayne State University Press, 1964), pp. 230–240Google Scholar.

24. There is a growing literature on the auto industry in the Third World, especially business-government relations, trade, and development issues. For an introduction and overview, see Bennett, Douglas C. and Sharpe, Kenneth E., Transnational Corporations versus the State: The Political Economy of the Mexican Auto Industry (Princeton: Princeton University Press, 1985)CrossRefGoogle Scholar, especially chapters 3, 8, and 11. See also McMullen, Neil and Megna, Laura, The Impact of the Newly Industrializing Countries on the World Motor Vehicle Industry (Washington, D.C.: National Planning Association, 1980)Google Scholar.

25. Cowhey, and Long, , “Testing Theories of Regime Change,” pp. 167, 181Google Scholar.

26. Ibid., p. 167.

27. Ruggie, , “Embedded Liberalism in the Postwar Economic Order,” pp. 384, 404–405Google Scholar.

28. Strange, Susan, “Protectionism and World Politics,” International Organization 39 (Spring 1985), p. 241CrossRefGoogle Scholar.

29. The import figures are drawn from: Automobile International, World Automotive Market (New York: Johnson International)Google Scholar. This series was chosen for its statistical continuity and because its reporting format of “exports from/imports to” made it possible to show the regional dimensions of trade. Prior to 1969, the publication was Global Automotive Market Survey and World Motor Census, and was published by McGraw-Hill, but the same format and categories of reporting were used. There are two drawbacks to the series, however. One is that the Eastern Bloc countries are not included. The second is that only major exporting countries are included. The exports of new exporting countries, such as Spain, Brazil, and Mexico, are not given. Thus, in the years since the mid-1970s, total world trade in autos is increasingly underestimated by this series. By comparing the data in this series with data in the Motor Vehicle Manufacturers Association publication, World Motor Vehicle Data, it is possible to estimate that the undercounting of free world exports was approximately 800,000 vehicles in 1983. About 560,000 of those exports were cars produced in Spain by U.S. or French multinational auto firms from components manufactured all over Europe. They were imported into Spain under special arrangements with the Spanish government, and then sold in Europe under favorable trade arrangements with the EEC (with a view to Spain's imminent accession to Common Market membership). This, then, means that Intra-European trade remains the largest element in world auto trade, despite the undercounting of exports. Mexican and Brazilian passenger car exports have similar links to government promotion policies and multinational corporations' world marketing strategies, although, as yet, the volume of their exports is much lower than Spain's.

30. Altshuler, et al. , The Future of the Automobile, pp. 22–23, especially Figure 2.3Google Scholar.

31. Motor Vehicle Manufacturers Association, World Motor Vehicle Data, 1984/1985 edition (Detroit: MVMA, 1985)Google Scholar.

32. For a very effective exposition of Europe's lack of competition in autos and many other industries during these years, see Hagar, Wolfgang, “Protectionism and Autonomy: How To Preserve Free Trade In Europe,” International Affairs 58 (Summer 1982), pp. 413–428CrossRefGoogle Scholar; and “Protectionism in the 80's: The Managed Co-Existence of Different Industrial Cultures,” in Noelke, Michael and Taylor, Robert, EEC Protectionism: Present Practice and Future Trends, vol. 1 (Brussels: European Research Associates, 1981), pp. 3–34Google Scholar.

33. Wilks, Stephen, Industrial Policy and the Motor Industry (Manchester: Manchester University Press, 1984), p. 70Google Scholar; Jones, Daniel T., “The European Motor Industry and Government Intervention,” paper presented at a meeting of the IAP project and EEC Commission, Brussels, 12–13 11 1979, appendix Table 6; and Motor Vehicle Manufacturers Association, World Motor Vehicle DataGoogle Scholar.

34. Wilks, , Industrial Policy, p. 272Google Scholar.

35. Ibid.

36. See also Dunnett, Peter J. S., The Decline of the British Motor Industry (London: Croom Helm, 1980)Google Scholar.

37. Altshuler, et al. , The Future of the Automobile, p. 26Google Scholar.

38. For details of the Pact and its negotiations, see Keeley, James F., Cast in Concrete for All Time? The Negotiation of the Auto Pact,” Canadian Journal of Political Science 16 (06 1983), pp. 281–298CrossRefGoogle Scholar.

39. An Automotive Strategy for Canada, Report of the Federal Task Force on the Canadian Motor Vehicle and Automotive Parts Industries to Hon. Lumly, Edward C., M.P., Minister of Industry, Trade and Commerce and Regional Economic Expansion (Ottawa: Minister of Supply and Services, 1983), p. 18Google Scholar.

40. Ibid., p. 21.

41. European Community Commission, Commission Activities and EC Rules for the Automobile Industry 1981/1983 (Brussels: EC Commission, 1983), annexGoogle Scholar.

42. Altshuler, et al. , The Future of the Automobile, p. 231Google Scholar.

43. Ibid., p. 232.

44. Dunnett, , British Motor Industry, pp. 166–167Google Scholar.

45. The official German position is that there was no “deal” to restrain Japanese exports to Germany. German Economics Ministry and Foreign Ministry officials told the author that the Japanese simply gave a “weather forecast” to the German economics minister, predicting that Japanese auto exports to Germany would not increase beyond their 1980 levels. In fact, the Japanese market share dropped rather sharply below the 10% it had reached in 1980.

46. Noelke, and Taylor, , Present Practice and Future Trends, p. 132Google Scholar.

47. Ibid., p. 133; and Altshuler, et al. , The Future of the Automobile, p. 232Google Scholar.

48. For a summary and comparison of seventeen forecasts of annual auto demand in 1990 and 2000, and a forecast of the regional distribution of this demand which clearly puts the developing countries in the forefront of auto growth, see Altshuler, et al. , The Future of the Automobile, pp. 112–117Google Scholar.

49. Calculated from data in Motor Vehicle Manufacturers Association, World Motor Vehicle Data, 1982 ed. (Detroit: MVMA), passimGoogle Scholar.

50. Ibid., p. 37; and the European Community Commission, The European Automobile Industry, 1981 (Brussels: EC Commission, 1981), annex 8Google Scholar.

51. Kurihara, Shohei, “The Japanese Auto Industry: Its Development and Future Problems,” in Cole, Robert E., ed., The American Automobile Industry: Rebirth or Requiem? (Ann Arbor: Center for Japanese Studies, University of Michigan, 1984), p. 16Google Scholar.

52. Parkins, Robert A., “Internationalization of the Japanese Auto Industry: Real Progress or a Snail's Pace?” in Cole, Robert E., ed., Automobiles and the Future: Competition, Cooperation, and Change (Ann Arbor: Center for Japanese Studies, University of Michigan, 1983), p. 14Google Scholar.

53. Fukushima, Kiyohiko, “Japan's Real Trade Policy.” Foreign Policy (Summer 1985), p. 23Google Scholar.

54. Reich, Robert B., The Next American Frontier (New York: Penguin Books, 1983), p. 260Google Scholar.

55. See, for example, “Statement of F. G. Secrest, Executive Vice President, Ford Motor Company, before the House Ways and Means Committee Subcommittee on Trade,” (7 March 1980), p. 8.

56. Smith, John F. Jr, “Prospects and Consequences of American-Japanese Company Cooperation,” in Cole, Robert E., ed., Automobiles and the Future, p. 25Google Scholar.

57. Ibid., p. 27.

58. Holusha, John, “Chevy Turns to the Japanese,” New York Times, 6 10 1983, p. DlGoogle Scholar.

59. Chira, Susan, “Chrysler and Mitsubishi to Build Small Cars Jointly in the Midwest,” New York Times, 16 04 1985, p. 1Google Scholar.

60. Johnson, Richard, “AMC Nears Deal for Low-Priced Asian Model,” Automotive News, 9 12 1985, p. 1Google Scholar.

61. DeLorenzo, Matt, “Chrysler to Import 150,000 Cars,” Automotive News, 21 10 1985, p. 4Google Scholar.

62. “G.M., Daewoo to Build Car,” New York Times, 7 March 1984, p. D4.

63. Holusha, John, “Ford Plans New Plant in Mexico: Car Designed in Japan for U.S. Market,” New York Times, 10 01 1984, p. DlGoogle Scholar.

64. Johnson, Richard, “Ford Eyes Mexico as V-8 Source,” Automotive News, 2 12 1985, p. 21Google Scholar.

65. Johnson, Richard, “Will Ford Import Brazilian Cars?” Automotive News, 21 10 1985, p. 3Google Scholar.

66. Ibid.

67. Altshuler, et al. , The Future of the Automobile, p. 231Google Scholar.

68. Foreign manufacturing value added estimates for the American new car fleet in 1990 and beyond vary from 35% to well over 50%. All estimates agree that the trend is on the increase, and most tend to cluster on the high side. See Holusha, John, “The Disappearing ‘U.S. Car,’ ” New York Times, 10 08 1985, p. 31Google Scholar.

69. Ruggie, , “Embedded Liberalism in the Postwar Economic Order,” p. 384Google Scholar.

70. Ibid., p. 405.

71. The three International Policy Forums that were organized by the MIT Future of the Automobile Program are excellent examples of this type of meeting. They took place annually over a three-year period. They were held, successively, in the United States, Japan, and Europe, and they brought together the same group of high level auto executives, labor leaders, government officials, consultants, and researchers for three days of intensive discussions on issues that had been selected and prepared in advance by the project staff. At the forums and in discussions between forums, these leaders were eventually able to hammer out positions on even the most controversial issues of government trade policy-issues that had initially been divisive. For a complete list of the participants see Altshuler, et al., The Future of the Automobile, Appendix B. For another example of a multinational effort to come to grips with the “rules of the game” in a changing world, see Cole, Robert E. and Yakushiji, Taizo, eds., The American and Japanese Auto Industries in Transition: Report of the Joint U.S.-Japan Automotive Study (Ann Arbor: Center for Japanese Studies, University of Michigan, 1984)Google Scholar.