Free Trade is Good for Everyone

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1 Free Trade is Good for Everyone More Jobs Makg the Trans-Pacific Partnership a W-W-W for All Member Countries Increased Investment October 2013 Trade Growth

2 Introduction 1. JAMA strongly supports Japan s participation the TPP. See pages 1 through Unsubstantiated claims have been made that Japan s market is closed to imports. On the contrary, Japan s auto market is completely open to other countries products. No restrictive customs or other regulations apply to imported vehicles. See pages 4 through Japan s auto dustry has been and will contue workg with the global auto dustry on issues of mutual concern. See page 9.

1. The TPP Will Brg Economic Benefits to the World By enablg free trade and the liberalization of vestment the Pacific region, the TPP will contribute to the further development of the world economy.

74) GDPs* of the 12 Countries Participatg the TPP Negotiations (*2011 nomal GDP) Mexico Australia (1.15) (1.49) Japan (5.87) 6 % 4% 5% 6 % 22 % Other (1.27) 57 % U. S. (15.

3 1. The TPP Will Brg Economic Benefits to the World By enablg free trade and the liberalization of vestment the Pacific region, the TPP will contribute to the further development of the world economy. (The TPP will promote liberalization while negotiations the Doha Round are suspended.) TPP-enabled free trade will brg major benefits to consumers through more diversified market choices. Canada (1.74) GDPs* of the 12 Countries Participatg the TPP Negotiations (*2011 nomal GDP) Mexico Australia (1.15) (1.49) Japan (5.87) 6 % 4% 5% 6 % 22 % Other (1.27) 57 % U. S. (15.08) The participation of Japan, the world s third largest economy, is key to the role of the TPP. In USD trillions Source: World Economic Outlook, IMF, Oct A successful conclusion to the TPP negotiations will be economically beneficial to all parties, and its significance will go beyond the capacity to liberalize trade. Joshua Meltzer, The Trans-Pacific Partnership Its Economic and Strategic Implications, Brookgs Institution, Sept. 30, 2011 Japan s clusion the TPP would be a game changer. Bernard K. Gordon, The Trans-Pacific Partnership and the Rise of Cha, Foreign Affairs, Nov. 7, 2011

4 2. Japan s Participation the TPP Will Brg Benefits to the U.S. Japanese automakers have been engaged local production the U.S. sce the 1980s, and today are an tegral part of the U.S. auto dustry. 70% of the vehicles they sell the U.S. are built North America. Japanese automakers contribute to quality job creation and enhanced productivity the U.S. and to the creased competitiveness of the U.S. auto dustry. The TPP would promote creased exports from the U.S. to TPP member countries, thereby boostg employment and the economy the U.S. Japanese Automakers Activities the U.S million vehicles produced the U.S. 35 billion U.S. dollars vested cumulatively U.S. plants 409,000 U.S. workers employed directly by Japanese automakers and their dealers Note: Includg termediate and sp-off employment, the total becomes 1.36 million workers.* 51.3 billion U.S. dollars purchases of U.S.-made auto parts 336,000 vehicles exported from U.S. plants ( These exports constituted 18.8% of total U.S. vehicle exports.) All data is for * Source: Thomas J. Prusa, The Contribution of the Japanese-Branded Automotive Industry to the United States Economy: 2012 Update, Rutgers University, October 2013

3. Japan s Participation the TPP Would Promote the Creation of More

participation the TPP will contribute constructively to the development

tellectual property rights, among other benefits.

participation the TPP, based on their long, proactive experience the

5 3. Japan s Participation the TPP Would Promote the Creation of More Liberalized Trade and Investment Rules JAMA believes that Japan s participation the TPP will contribute constructively to the development of rules that promote free trade, open vestment, and the protection of tellectual property rights, among other benefits. JAMA and its member companies endorse and will promote Japan s participation the TPP, based on their long, proactive experience the promotion of free trade, open vestment, and the protection of tellectual property rights, among other activities. 3

6 4. Imported Vehicles Japan s Home Market: Consumer Demand Profile (1) Smaller (compact) models of up to 2,000cc enge capacity are the mastay of Japan s passenger car market. European automakers have troduced models a targeted response to the demands of Japanese consumers. Breakdown of Japan s Domestic Market for Passenger Cars, by Vehicle Class (cc) and Number of Imported Models (2013/Jan-Aug) Up to 2,000cc U.S. automaker models European automaker models % 2,001cc-3,000cc 8.1% U.S. automaker models 6 Over 3,000cc U.S. automaker models European automaker models % European automaker models 49 4

cars up to 2000cc are listed the chart below. U.S.

In the Japanese market, however, they have troduced only a very small number of such models.

(GM) Sales rankg 2011: 1st 2012: 1st overall domestic market 2011: 2nd 2012: 3rd overall domestic market

overall EU market 2011: 7th 2012/Q1-2: 8th overall EU market Unranked overall domestic market Unranked

S. mkt.) (6th U.S. mkt.) (N/A U.S. mkt.) 5 No.

209,276 (2012) 22,252 (2012) 16,212 (2012) 348,465 (2011) 280,209 (2011) 1800cc 1300cc 1500cc 1197cc 1394cc

51 449 (2013) (troduced Japan March 2013) [71 units sold 2008] 212 (2012) (troduced Japan 2011) 1000-1600cc

7 Model (Make) 5. Imported Vehicles Japan s Home Market: Consumer Demand Profile (2) Top-sellg domestic and imported compact cars up to 2000cc are listed the chart below. U.S. automakers have troduced a range of compact cars the European market that have sold very well. In the Japanese market, however, they have troduced only a very small number of such models. Top-Sellg Smaller Models (up to 2,000cc) the Japanese and EU Markets Japanese Market EU Market Japanese Market Top-sellg Japanese-brand models Top-sellg European-brand models Top-sellg D3-brand models D3-troduced smaller models Prius (Toyota) Fit (Honda) Golf (VW) MINI (BMW) Fiesta (Ford) Focus (Ford) Focus (Ford) Sonic (GM) Sales rankg 2011: 1st 2012: 1st overall domestic market 2011: 2nd 2012: 3rd overall domestic market 2011: 1st 2012: 1st imported auto market 2011: 3rd 2012: 2nd imported auto market 2011: 3rd 2012/Q1-2: 4th overall EU market 2011: 7th 2012/Q1-2: 8th overall EU market Unranked overall domestic market Unranked overall domestic market (12th U.S. mkt.) (41st U.S. mkt.) (63rd U.S. mkt.) (44th U.S. mkt.) (39th U.S. mkt.) (6th U.S. mkt.) (6th U.S. mkt.) (N/A U.S. mkt.) 5 No. of units sold (Year) Enge capacity Price range (million JPY) Fuel consumption (km/l) Notes 317,675 (2012) 209,276 (2012) 22,252 (2012) 16,212 (2012) 348,465 (2011) 280,209 (2011) 1800cc 1300cc 1500cc 1197cc 1394cc 1396cc 1598cc (2013) (troduced Japan March 2013) [71 units sold 2008] 212 (2012) (troduced Japan 2011) cc cc 2000cc 1597cc 11,900-17, ( 1 = 130) 18,250-31, ( 1 = 130) Sources: Japan Automobile Importers Association; Japan Automobile Dealers Association; Automobile manufacturers Web sites; Other cc models sold EU market. - EU-made Ford Fiesta not sold Japanese market c model sold as the Aveo EU market.

8 6. Imported Vehicles Japan s Home Market: Foreign Vehicle Dealership Penetration The number of dealerships Japan sellg European vehicles has creased. In contrast, there has been a decrease the number of dealerships sellg U.S. vehicles. Number of U.S. and European Auto Dealerships Japan s Home Market Up 72% 1,300 Down 74% U.S. dealerships European dealerships 6

9 7. Imported Vehicles Japan s Home Market: Market Shares The share of European vehicles Japan s home market has steadily creased over the past 15 years. In contrast, the share of U.S. vehicles has decreased over the same period. Share ( units and %) of U.S. and European Vehicles Japan s Home Market Number of European vehicles sold Number of U.S. vehicles sold Units Share of European vehicles Share of U.S. vehicles 250,000 6% 200, % 4.2% 4.6% 5% 150, % 3.0% 3.1% 3.1% 3.3% 3.4% 3.6% 3.9% 3.8% 3.8% 3.8% 3.9% 4.0% 3.6% 3.3% 3.5% 4% 3% 100,000 50, % 1.6% 1.4% 1.1% 0.9% 0.8% 0.7% 0.5% 0.4% 0.3% 0.4% 0.3% 0.3% 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 1995 '96 '97 '98 ' '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 Jan- Aug 2% 1% 0%

10 8. Imported Vehicles Japan s Home Market: Investments Advertisg European automakers are actively volved product promotion via advertisg various media. 3,500 3,000 European and U.S. Automakers Advertisg Investments Japan (August 2008-July 2013) In JPY millions 3,224 2,858 2,500 2,000 1,500 1,519 1,945 Internet Magazes Newspapers 1,000 Radio TV Source: Video Research

11 9. Ongog Cooperation the Global Auto Industry Japan s auto dustry has been and will contue workg with the global auto dustry on issues of mutual concern. For example, the course of the contug JAMA-MEMA/OESA* dialogues, the three parties have successfully addressed issues related to product quality, delivery time, and novation, among others, which has led to creased competitiveness. Through these and other bilateral activities, the cooperative relations between Japanese automakers and U.S. auto parts suppliers have strengthened significantly. * MEMA: Motor & Equipment Manufacturers Association (U.S.); OESA: Origal Equipment Suppliers Association (U.S.) In USD billions Japanese Automakers Purchases of U.S.-Made Auto Parts, '96 '97 '98 ' '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 Note: The global economic recession adversely impacted auto production and related parts purchases 2008 and 2009.

12 Makg the Trans-Pacific Partnership a W-W-W for All Member Countries 10 October 2013

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