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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1173 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                S. 1173

To provide for a comprehensive reduction in the United States bilateral 
trade deficit with Japan, to assure mutually advantageous international 
    trade in motor vehicles and motor vehicle parts, and for other 
                               purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                June 29 (legislative day, June 22), 1993

  Mr. Riegle introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
To provide for a comprehensive reduction in the United States bilateral 
trade deficit with Japan, to assure mutually advantageous international 
    trade in motor vehicles and motor vehicle parts, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``United States-Japan Trade Equalizing 
Act of 1993''.

                   TITLE I--FINDINGS AND DEFINITIONS

SEC. 101. FINDINGS, PURPOSE, AND DISCLAIMERS.

    (a) Findings.--The Congress makes the following findings:
            (1) The United States trade deficit with Japan has 
        increased substantially over the past decade. In 1991, the 
        United States trade deficit with Japan was $43,400,000,000. The 
        trade deficit increased by 14 percent in 1 year, to over 
        $49,400,000,000 by the end of 1992.
            (2) The traditional domestic motor vehicle and motor 
        vehicle parts sector directly employs more than 1 million 
        workers and indirectly employs several million more. The 
        workers are skilled, hard working, productive, capable, and 
        proud of their work. The workers and their employers have 
        achieved great improvements in quality, performance, fuel 
        economy, safety, and design of domestic motor vehicles.
            (3) The domestic motor vehicle and motor vehicle parts 
        sector directly and indirectly accounts for about 12 percent of 
        our gross national product and generates more than 
        $200,000,000,000 a year in revenue.
            (4) The domestic motor vehicle and motor vehicle parts 
        sector is a major consumer of steel, glass, textiles, rubber, 
        aluminum, machine tools, chemicals, electronics, and other 
        important products.
            (5) Recognizing the competitive pressures facing the motor 
        vehicle industry, Japan has operated under a voluntary export 
        restraint arrangement since 1981 that has not been recognized 
        or enforced by the United States Government.
            (6) Since 1986 the United States Government has engaged, 
        with little result, in a negotiating process with the 
        Government of Japan to obtain fair access to the markets of 
        that nation for United States producers of motor vehicle parts 
        and manufacturers of motor vehicles.
            (7) Despite these negotiating efforts, in 1992 the United 
        States posted a $49,400,000,000 trade deficit with Japan of 
        which over $30,000,000,000 was accounted for by the automotive 
        sector deficit ($9,800,000,000 of which was attributable to 
        motor vehicle parts), and there is little evidence that the 
        Japanese Government is seriously trying to eliminate such 
        deficits which are detrimental to the United States economy and 
        jobs.
            (8) In addition to transplant assembly facilities in the 
        United States that are owned or controlled by Japanese persons, 
        motor vehicles and motor vehicle parts are being imported from 
        Japan into the United States in such increased quantities and 
        under such conditions as to cause, or threaten to cause, 
        serious injury to domestic manufacturers of like or directly 
        competitive products and to the domestic workers producing such 
        products.
            (9) In the last 5 years, transplant assembly facilities in 
        the United States that are owned or controlled by persons from 
        Japan have not shifted significantly their procurement to 
        traditional United States producers of motor vehicle parts, as 
        illustrated by the fact that--
                    (A) the United States automotive parts trade 
                deficit with Japan grew between 1985 and 1990 at an 
                annual average rate of 17 percent and totaled 
                $9,800,000,000 in 1992; and
                    (B) only 12.5 percent of the customs value of 
                vehicles manufactured in such transplant facilities in 
                the United States is based on parts produced by 
                traditional United States motor vehicle parts 
                producers, while 35.1 percent of such value is based on 
                imports from Japan and 32.4 percent of such value is 
                based on purchases from Japanese-affiliated parts 
                producers located in the United States.
            (10) The pattern of procurement described in paragraph (9) 
        has contributed significantly to the overall United States 
        merchandise trade deficit with Japan.
            (11) The continuation of current procurement practices by 
        automobile companies owned or controlled by persons from Japan 
        and the increased production of vehicles by transplant 
        facilities in the United States is projected to result in a 110 
        percent (or $21,990,000,000) increase in the United States 
        motor vehicle parts trade deficit by 1994.
            (12) Aftermarket parts are likely to account for 50 percent 
        of the motor vehicle parts trade deficit with Japan by 1994 
        because transplant facilities are not purchasing sufficient 
        quantities of original equipment from United States suppliers.
            (13) Traditional United States motor vehicle parts 
        manufacturers are particularly underrepresented in the 
        production of motor vehicles produced by transplant facilities 
        in the United States in the following 3 major, high value-added 
        vehicle systems:
                    (A) Engines.
                    (B) Transmissions.
                    (C) Body structures.
            (14) In the 1991 National Trade Estimates Report, the 
        United States Trade Representative listed ``close and durable 
        relationships'' between Japanese motor vehicle makers and 
        suppliers as a barrier to United States motor vehicle parts 
        sales in Japan.
            (15) The market share of Japanese motor vehicle 
        manufacturers in the European Community is currently 10 percent 
        while their market share in the United States is about 35 
        percent.
            (16) The European Community has negotiated an understanding 
        with the Government of Japan limiting the market share of motor 
        vehicles produced by Japanese motor vehicle manufacturing 
        companies both in Japan and in the European Community to less 
        than 16 percent until the year 2000.
            (17) The home market for motor vehicles and motor vehicle 
        parts in Japan remains largely closed to all foreign 
        manufacturers whose combined market share equals no more than 3 
        percent.
            (18) Japan's nontariff market barriers include onerous 
        inspection and certification systems that discriminate against 
        foreign-made motor vehicles and motor vehicle parts, a tax 
        system that discriminates against foreign-made products, closed 
        distribution systems and dealer networks, and government-
        tolerated ``Keiretsu'' relationships involving motor vehicle 
        and motor vehicle parts manufacturers and dealers. At the same 
        time, Japanese firms enjoy open markets in the United States 
        with no limitations or discrimination.
    (b) Purpose.--The purpose of this Act is to decrease the 
merchandise trade deficit of the United States with Japan by providing 
for a staged merchandise trade deficit reduction over a 5-year period.
    (c) Congressional Disclaimers.--It is the intent of Congress that 
this Act shall not be deemed to modify or amend the terms or conditions 
of any international treaty, convention, or agreement that may be 
applicable to motor vehicles and motor vehicle parts and to which the 
United States, on the date of the enactment of this Act, is a party, 
including, but not limited to, the terms or conditions of any such 
treaty, convention, or agreement which provide for the resolution of 
conflicts between the parties thereto. Nothing in this Act shall be 
construed (1) to confer jurisdiction upon any court of the United 
States to consider and resolve such conflicts, or (2) to alter or amend 
any law existing on the date of the enactment of this Act which may 
confer such jurisdiction in such courts.

SEC. 102. DEFINITIONS.

    For purposes of this Act:
            (1) Motor vehicle and motor vehicle parts.--
                    (A) The term ``motor vehicle'' means any article of 
                a kind described in heading 8703 or 8704 of the 
                Harmonized Tariff Schedule of the United States.
                    (B) The term ``motor vehicle parts'' means any 
                article of a kind described in the following provisions 
                of the Harmonized Tariff Schedule of the United States 
                if suitable for use in the manufacture or repair of 
                motor vehicles:
                            (i) Subheadings 8407.31.00 through 
                        8407.34.20 (relating to spark-ignition 
                        reciprocating or rotary internal combustion 
                        piston engines).
                            (ii) Subheading 8408.20 (relating to the 
                        compression-ignition internal combustion 
                        engines).
                            (iii) Subheading 8409 (relating to parts 
                        suitable for use solely or principally with 
                        engines described in clauses (i) and (ii)).
                            (iv) Subheading 8483 (relating to 
                        transmission shafts and related parts).
                            (v) Subheadings 8706.00.10 and 8706.00.15 
                        (relating to chassis fitted with engines).
                            (vi) Heading 8707 (relating to motor 
                        vehicle bodies).
                            (vii) Heading 8708 (relating to bumpers, 
                        brakes and servo brakes, gear boxes, drive 
                        axles, nondriving axles, road wheels, 
                        suspension shock absorbers, radiators, mufflers 
                        and exhaust pipes, clutches, steering wheels, 
                        steering columns, steering boxes, and other 
                        parts and accessories of motor vehicles).
                The Secretary shall by regulation include as motor 
                vehicle parts such other articles (described by 
                classification under such Harmonized Tariff Schedule) 
                that the Secretary considers appropriate for the 
                purposes of this Act.
                    (C)(i) The term ``Japanese motor vehicle'' means a 
                motor vehicle which is the product of Japan.
                    (ii) The term ``Japanese motor vehicle part'' means 
                a motor vehicle part which is the product of Japan.
            (2) Entered.--The term ``entered'' means entered, or 
        withdrawn from warehouse for consumption, in the customs 
        territory of the United States.
            (3) Import restriction implementation period.--The term 
        ``import restriction implementation period'' means a calendar 
        year which--
                    (A) occurs after 1994 and before calendar year 
                2001, and
                    (B) follows a calendar year with respect to which 
                the Secretary finds, under section 201(b), that the 
                trade deficit reduction target was not met.
            (4) Interstate sale.--The term ``interstate sale'' means 
        sale or distribution in the interstate commerce of the United 
        States.
            (5) Baseline deficit.--(A) The term ``baseline deficit'' 
        means the average monthly merchandise trade deficit, as 
        computed by the Secretary, of the United States with Japan 
        during calendar year 1993.
            (B) In computing merchandise trade deficits under this 
        section, the value of bilateral trade between the United States 
        and Japan in--
                    (i) crude petroleum; and
                    (ii) nonmonetary gold;
        shall not be included.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Commerce.
            (7) Trade representative.--The term ``Trade 
        Representative'' means the United States Trade Representative.

             TITLE II--MERCHANDISE TRADE DEFICIT REDUCTION

SEC. 201. STAGED TRADE DEFICIT REDUCTION.

    (a) Trade Deficit Reduction Targets.--
            (1) In general.--The trade deficit reduction target for 
        each of the calendar years listed below is an average monthly 
        merchandise trade deficit of the United States with Japan 
        during such year that does not exceed an amount that equals the 
        applicable percentage of the baseline deficit that appears 
        opposite such year:

Calendar year                       Applicable percentage of baseline 
                                            deficit
    1994..........................................           80 percent
    1995..........................................           60 percent
    1996..........................................           40 percent
    1997..........................................           20 percent
    1998..........................................            0 percent
            (2) Special rule for 1998.--For calendar year 1998, the 0 
        percent trade deficit reduction target shall be treated as 
        having been met if the merchandise trade deficit of the United 
        States with Japan during such year does not exceed--
                    (A) an amount equal to 5 percent of the value of 
                the aggregate bilateral merchandise trade between the 
                United States and Japan during such year; or
                    (B) $5,000,000,000.
    (b) Computations.--
            (1) In general.--Not later than January 1 following each 
        calendar year listed in subsection (a)(1), the Secretary shall 
        compute whether the trade deficit reduction target for such 
        year was met.
            (2) Announcement of import restriction implementation 
        period.--If the Secretary finds under paragraph (1) that the 
        trade deficit reduction target specified under subsection (a) 
        for a calendar year was not met, the Secretary shall announce, 
        by publication in the Federal Register, that the import 
        restriction implementation period is in effect beginning on 
        January 1 of the year after the year to which the finding 
        applies.

SEC. 202. COMPUTATION OF IMPORT RESTRICTIONS IF TRADE DEFICIT REDUCTION 
              TARGET NOT MET.

    (a) In General.--On January 1 of the first calendar year (and each 
calendar year thereafter) for which an import restriction 
implementation period is in effect, the Secretary shall compute and 
publish in the Federal Register the quantitative import restrictions 
for such calendar year.
    (b) Computation.--
            (1) In general.--For purposes of subsection (a), the term 
        ``quantitative import restrictions'' means the aggregate 
        quantity of Japanese motor vehicles and the aggregate quantity 
        of Japanese motor vehicle parts that may be entered into the 
        United States (in accordance with paragraph (2) or (3)) for a 
        calendar year described in subsection (a).
            (2) First year restrictions.--The aggregate quantity of 
        Japanese motor vehicles and Japanese motor vehicle parts that 
        may be entered into the United States, during the first 
        calendar year for which an import restriction implementation 
        period is in effect, may not exceed the aggregate quantity of 
        such motor vehicles and the aggregate quantity of such motor 
        vehicle parts entered into the United States during 1993, 
        reduced by 20 percent.
            (3) Subsequent years.--In the case of any calendar year for 
        which an import restriction period is in effect after the first 
        such calendar year, the aggregate quantity of Japanese motor 
        vehicles and Japanese motor vehicle parts that may be entered 
        into the United States shall not exceed the amount of such 
        motor vehicles and motor vehicle parts entered during the most 
        recent preceding calendar year for which an import restriction 
        implementation period was in effect, reduced by 20 percent.
            (4) Administration.--In order to prevent import surging or 
        to otherwise ensure the efficient administration of this Act, 
        the Secretary may impose temporary quantitative import 
        restrictions on Japanese motor vehicles and Japanese motor 
        vehicle parts entered during the first 3 months of a calendar 
        year in an import restriction implementation period.

SEC. 203. REPORTS.

    Within 30 days after a computation is made under section 201 or 202 
with respect to a calendar year, the Secretary shall submit to the 
Congress a report setting forth the bases of the computation.

SEC. 204. SENSE OF CONGRESS REGARDING ACHIEVEMENT OF MERCHANDISE TRADE 
              DEFICIT REDUCTION TARGETS.

    It is the sense of the Congress that representatives of the United 
States and Japanese Governments should undertake continuing discussions 
regarding the means and measures, to be selected by the Japanese 
Government, to achieve the merchandise trade deficit reduction targets 
required under section 201(a). During the discussions, the Trade 
Representative should particularly address market access priorities for 
United States exports to Japan.

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