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General Motors has urged the United States Government to take stronger action against Japanese currency policies, which it blames for heavy US job losses in the automotive sector.
"Nowhere are the effects of the undervalued yen greater and more devastating than in my industry which has lost 300,000
highly productive, good-paying jobs since 2000," said Mustafa Mohatarem, GM's chief economist, in remarks prepared for a US House of Representatives hearing.
The testimony came just a few weeks after industry sales data showed Toyota Motor Corp outsold GM in the first quarter of this year, moving it a step closer to unseating its US rival as the world's biggest automaker.
Mohatarem attributed industry woes to a long-time Japanese policy of subsidising auto exports by deliberately undervaluing its currency.
"Over the past several years, the government of Japan has engaged in at least four strategies to keep the yen weak and provide an enormous subsidy to Japan's vehicle and auto parts exporters," Mohatarem said.
"We would hope that by shining a bright light on the yen policy of the government of Japan, a co-ordinated international effort would result in a yen that appreciates to the level of perhaps 90 yen to the dollar," he said.
Mohatarem urged the US to lead that effort through the International Monetary Fund and other forums, such as the Group of Seven finance ministers' meeting.
He also appeared to endorse legislation that would allow the US Commerce Department to slap duties on Japanese auto imports to offset a currency advantage.
Treasury Secretary Henry Paulson has shrugged off auto industry pleas to increase pressure on Tokyo.
Paulson told lawmakers this year he believed the Japanese currency reflected market fundamentals, a view shared by many economists.
"Manipulation is sustained government action to try to prevent the market from setting the exchange rate," said Adam Posen, a senior fellow at the Peterson Institute for International Economics, in an interview arranged by the International Automobile Manufacturers Association.
"The Japanese Government did, indeed, behave like that in the past. In 2003, especially in the second half, they spent oodles of money on this," Posen said.
But they stopped cold on April 1, 2004, after a chorus of US complaints and haven't resumed since, Posen said.
Don Evans, chief executive of the Financial Services Forum, which represents big banks and brokerage firms, also told lawmakers there was no evidence Japan was manipulating its currency.
The yen's low levels against the dollar and the euro reflected "economic fundamentals - a fragile Japanese economy still recovering from a decade of stagnation and deflation during the 1990s, and low interest rates designed to nurture and extend the early recovery", he said.
- Reuters