Docket Number DOC-2018-0002
June 29, 2018
VIA REGULATIONS.GOV
The Honorable Wilbur L. Ross, Jr.
SecretaryU.S. Department of Commerce
1401 Constitution Avenue, NW
Washington, DC 20230
Re:Keidanren: Comments for the Section 232 Investigation of Imports of Automobiles
and Automotive Parts

Dear Secretary Ross:
On behalf of Keidanren, this submission responds to the Department of Commerce’s(“Commerce’s”) notice inviting comments on the effects on the national security of imports ofautomobiles and automotive parts in connection with its investigation initiated on May 23, 2018
pursuant to Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. § 1862)(“Section 232”).1 Keidanren is a comprehensive economic organization with a membershipcomprised of 1,376 representative companies of Japan, 109 nationwide industrial associations,and 47 regional economic organizations in all 47 prefectures. The core mission of Keidanren in
the United States is to facilitate more engagement by the Japanese business sector with the U.S.
policymaking community, and to promote the very real contributions (in terms of investment andjobs) being made by Japanese companies to the U.S. economy.

1

Notice of Request for Public Comments and Public Hearing on Section 232 National Security
Investigation of Imports of Automobiles, Including Cars, SUVs, Vans and Light Trucks, and Automotive Parts, 83
Fed. Reg. 24,735 (Dep’t of Commerce May 30, 2018) (“Initiation Notice”).

Secretary Wilbur L. Ross
June 29, 2018
Page 2For the reasons set forth below, Keidanren respectfully submits that imports ofautomobiles and automotive parts from Japan do not threaten to impair U.S. national security
within the meaning of Section 232.
I.

Japanese Companies Have Made Substantial Investments in the U.S. andConsistently Create and Support U.S. Jobs in a Wide Range of Industries
Through Investment and Trade
The United States and Japan are close economic partners and global leaders who havecontinuously demonstrated their mutual commitment to one another through strong trade andinvestment ties. The United States is the top destination for Japanese foreign direct investment(“FDI”) and Japan is one of the United States’ largest foreign investors. At $421 billion stockand $34 billion flow, Japan is one of the top investors in the United States.2 Furthermore,
Japanese investment in the United States is of high quality. For example, Japanese investment inthe United States is characterized by a large and growing research and development (“R&D”)
component. In 2014, Japanese FDI accounted for $57 billion in R&D in the United States.3
Since 1997, direct Japanese R&D spending in the United States has increased from $2 billion toabout $10 billion, and continues rising.4
There is no doubt that Japanese enterprises are leaders in creating and supporting U.S.
jobs, having created over 856,000 jobs through direct investment in 2015.5 In fact, many U.S.
corporations have robust production and strategic relationships with Japanese partners – fromarrangements with local suppliers, to joint ventures and co-production, to R&D and distribution
2Keidanren, Toward a Stronger and More Resilient U.S.-Japan Relationship 3 (2017),
https://www.keidanren.or.jp/en/policy/2017/043.pdf.
3Id. at 4.
4Id.
5
SelectUSA, Foreign Direct Investment (FDI): Japan, U.S. Dep’t of Commerce,
https://www.selectusa.gov/servlet/servlet.FileDownload?file=015t0000000LKMu.

Secretary Wilbur L. Ross
June 29, 2018
Page 3– even as they compete with each other in global markets. For instance, materials supplier Toray
Industries, Inc. recently built a $1 billion production facility in Spartanburg Country, SouthCarolina that will supply carbon fiber for Boeing jetliners and will create 500 U.S. jobs.6
Additionally, trade with Japan creates almost 1.3 million jobs all across the United States,generating more than 30,000 jobs in 12 states, and more than 10,000 jobs in 24 states.7
Moreover, Japanese companies are leaders in corporate social responsibility andfrequently establish charitable foundations to empower U.S. communities and engage at a locallevel. From Alabama to Wyoming, Japanese corporations endow cultural events at museums
and theaters; provide disaster relief and donate to hospitals for disease prevention; sendemployees into the community to volunteer to tutor at elementary schools; provide job training
for high schoolers and underemployed adults; cook meals at shelters; and engage in numerous
other charitable activities.8
The existence of the rule-based free and fair trade/investment framework has enabled
Japanese businesses to bring such contributions to the U.S. economy. Having such a framework
as a solid foundation to guarantee a level playing field, the businesses can structure their supply
chains across borders making optimal choices in locating production sites and procuring from6Press Release, Toray Industries, Inc., Toray Extends Comprehensive Agreement with Boeing to Supply
Carbon Fiber TORAYCA® Prepreg Will Build Integrated Production Line for Carbon Fiber TORAYCA® Prepreg
in the U.S. (Nov. 9, 2015),
http://cs2.toray.co.jp/news/toray/en/newsrrs02.nsf/0/28B83DB556D73DAE49257EF8000A3A15; Press Release,South Carolina Dep’t of Commerce, Toray Selects Spartanburg Country for its Business Expansion in the U.S. (Feb18, 2014), https://www.sccommerce.com/news/toray-selects-spartanburg-county-its-business-expansion-us.
7The twelve states include California, Florida, Georgia, Illinois, Massachusetts, New Jersey, New York,North Carolina, Ohio, Pennsylvania, Texas, and Virginia. Trade Partnership Worldwide, LLC., Trade and American
Jobs: The Impact of Trade on U.S. and State-Level Employment Update (2018) http://tradepartnership.com/wpcontent/uploads/2018/04/Trade-and-American-2018-FINAL-copy.pdf.
8
Keidanren, supra note 2, at 9.

Secretary Wilbur L. Ross
June 29, 2018
Page 4diverse business partners, and continue to gain competitiveness in the global market. The
automobile industry is one of the most successful examples of such business models
II.

Japanese Auto Companies Strengthen the U.S. Economy By Consistently
Creating and Supporting Jobs for Americans in the Automobile Sector
The Japanese automobile industry is deeply intertwined with the U.S. automobileindustry and undoubtedly strengthens the U.S. economy by creating and supporting jobs incommunities throughout the country. Japanese auto-related companies, including Toyota,Nissan, Honda, Mitsubishi, and Subaru employ hundreds of thousands of Americans, including
in factories in Kentucky, Ohio, Tennessee, Indiana, Michigan, and Texas. Japanese-brandedautomakers operate 24 manufacturing plants and 44 R&D facilities in 19 different U.S. states.9
And, this investment is growing. For example, Hino Motors Manufacturing is planning to open a$100 million plant in Mineral Wells, West Virginia in 2019, and Mazda and Toyota haveestablished a joint venture company to manufacture automobiles at a $1.6 billion plant inAlabama by 2021.10 The Japan Automobile Manufacturers’ Association (“JAMA”) estimatesthat when indirect employment is included, Japanese automakers employ over 1.5 million
Americans, and that number will certainly increase given the two new plants currently underconstruction. Many of these jobs are highly-skilled and include worker training programs,
premium wages, and benefits packages.
9Japan Automobile Manufacturers’ Association, 2018-2019 Contributions Report 5-6, http://www.jamaenglish.jp/publications/2018US Contributions Report.pdf (Alabama, Arizona, Arkansas, California, Colorado,Connecticut, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Missouri,Mississippi, North Carolina, New Jersey, Nevada, Ohio, Oregon, South Carolina, Tennessee, Texas, West Virginia).
10Press Release, Hino Motors Mfg., Hino to Make Substantial Investment to Expand U.S. Operations(Sept. 27, 2017), http://hmmusa.com/press20170927.html; Press Release, Toyota Motor Corp., Mazda and Toyota
Establish Joint-Venture Company “Mazda Toyota Manufacturing, U.S.A., Inc.” (Mar. 8, 2018),
http://corporatenews.pressroom.toyota.com/releases/mazda+toyota+establish+joint+venture+company+mazda+toyot
a+manufacturing+usa+inc.htm.

Secretary Wilbur L. Ross
June 29, 2018
Page 5President Donald Trump himself has praised Japanese companies for creating so many
U.S. jobs. During a recent meeting in Tokyo with Japanese business leaders, the President
thanked the leaders for “creating jobs for our country for a long, long time,” adding that “we loveit when you build cars – if you’re a Japanese firm, we love it . . . .”11 During his 2018 State ofUnion Address, President Trump thanked Toyota and Mazda by name for opening the new plantin Alabama.12 The President has also commented on other Japanese auto parts companies, suchas Denso, a Japanese supplier of advanced automotive technology, systems, and components.
Just last November, President Trump stated that “we’re very pleased that . . . Denso announced
that it will invest $1 billion to expand its activities in Tennessee, a great state . . . .”13
Abruptly shifting course and placing tariffs on Japanese imported automobiles andautomotive parts would not only directly contradict the President’s laudatory statements on thebenefits of Japanese automobiles to the U.S. economy, but would also significantly affectautomobile consumers, confuse businesses and impair predictability, which is an essential factor
for a sound business judgment on when and where to invest. Furthermore, it would substantiallyhurt U.S. manufacturing and negatively impact U.S. jobs.
III.

Unilateral Measures Will Discourage Investment in the United States
As indicated above, over the last 30-40 years, investment by Japanese businesses in theUnited States has increased significantly and the amount and proportion of imports havedecreased considerably. As a result, Japan’s trade surplus with the U.S. to the U.S. nominal

11

The White House, Remarks by President Trump to U.S. and Japanese Business Leaders (Nov. 6, 2017),
https://www.whitehouse.gov/briefings-statements/5769/.
12
The White House, President Donald J. Trump’s State of the Union Address (Jan. 30, 2018),
https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-state-union-address/.
13
See supra note 11.

Secretary Wilbur L. Ross
June 29, 2018
Page 6

GDP has decreased substantially, from -1.2 percent in 1987 to -0.4 percent in 2016. In order forJapanese businesses to continue investing in the United States, a stable and predictable businessenvironment is indispensable, and access to competitive automotive parts procurement is a
critical factor when making investment decisions. There is no question that Japanese automobile
companies wishing to invest in the United States may be left with no choice but to reconsider
investment decisions if faced with tariffs on imports. Unilateral trade measures, which do notnecessarily comply with internationally-agreed rules, will increase unpredictability anddiscourage investment. The negative impact on investment appetite will not be limited to autoand auto-related industries, as businesses in general would raise concern that the similar policy
measures may be taken in other sectors as well.
To the extent the Department is concerned about the impact of the Japanese auto sector
on the economic welfare of the U.S. auto sector, President Trump recently stated that “our car
industry is doing well and our product is fantastic.”14 Tariffs on imports will cause priceincreases, harming both U.S. consumers and U.S. industry’s global competitiveness. For thesake of national security, it is important to improve competitiveness through sound competitionon quality products.
IV.

Imports from Japan Do Not Threaten to Impair U.S. National Security
Keidanren submits that the indelible security and economic relationship between Japanand the United States ensures that imports of automobiles and automotive parts from Japan do
not pose a national security threat to the United States. Ultimately, it is in Japan’s own selfinterest to see a strong and secure United States: a country that has provided decades of14Id.

Secretary Wilbur L. Ross
June 29, 2018
Page 7leadership and security in the Indo-Pacific region. As such, Japan’s investments and job creationin the United States are aimed and designed to benefit both countries and contribute to thestrengthening of our critical alliance. In recent months, President Trump has highlighted theunique bond between the United States and Japan, declaring that that “[t]he friendship between
Japan and the United States has never been closer,” and the “bonds between our people havenever been stronger.”15 He also recently stated that “[t]he steadfast alliance between Japan andthe United States is an enduring force of peace and stability in the Pacific region and around theworld,” adding that he has been working with Japanese Prime Minister Shinzo Abe “to expand
our cooperation in a range of areas, including defense and commerce,” as well as science,medicine and technology.16 President Trump and Prime Minister Abe are working to continue a“decades-long tradition of shared economic successes between [the] two nations.”17
In addition, the robust U.S.-Japan partnership is built upon a long-running and strong
foundation. Our security relationship continues to grow and strengthen in light of the uncertain
security environment in the Asia-Pacific region. President Trump has reiterated the “closecooperation between the United States and Japan on the issue of North Korea and our commondefense,”18 and that “[t]he unshakable U.S.-Japan Alliance is the cornerstone of peace,

15

The White House, Remarks by President Trump and Prime Minister Abe of Japan in Joint Press
Conference (Apr. 18, 2018), https://www.whitehouse.gov/briefings-statements/remarks-president-trump-primeminister-abe-japan-joint-press-conference/.
16
The White House, Remarks by President Trump and Prime Minister Abe of Japan in Joint Press
Conference (June 7, 2018), https://www.whitehouse.gov/briefings-statements/remarks-president-trump-primeminister-abe-japan-joint-press-conference-2/; The White House, Remarks by President Trump to U.S. and JapaneseBusiness Leaders (Nov. 6, 2017), https://www.whitehouse.gov/briefings-statements/5769/.
17
The White House, President Donald J. Trump and Prime Minister Shinzo Abe are Working Together toStrengthen the U.S.-Japan Alliance (Apr. 17, 2018), https://www.whitehouse.gov/briefings-statements/presidentdonald-j-trump-prime-minister-shinzo-abe-working-together-strengthen-u-s-japan-alliance/.
18
See supra note 15.

Secretary Wilbur L. Ross
June 29, 2018
Page 8prosperity, and freedom in the Asia-Pacific region.”19 The strong U.S.-Japan relationship canbalance the myriad geopolitical issues in the region, and the close military relationship between
the United States and Japan confirms the two countries’ common interests in safeguarding
national security. Including Japanese imports in any national security investigation isinappropriate given the strong and lasting alliance between U.S. and Japan.
V.

Conclusion
In sum, Japanese imports of automobiles and automotive parts into the United States do

not cause harm to or threaten U.S. national security in any way. The additional tariffs on
automobiles and automotive parts will have a significant negative impact on the U.S. economy,
discourage investment not only for automobile and automobile-related industries, but also forother businesses, and may lead to the loss of jobs. Keidanren is grateful for the Department’s
consideration of these comments. Please do not hesitate to contact the undersigned with anyquestions concerning this submission.
Respectfully submitted,_____________________________________
Masakazu Kubota
Director General and President
Keidanren (Japan Business Federation)

19

The White House, Joint Statement from President Donald J. Trump and Prime Minister Shinzo Abe (Feb.
10, 2017), https://www.whitehouse.gov/briefings-statements/joint-statement-president-donald-j-trump-primeminister-shinzo-abe/.