Fresh spat over ‘cash for clunkers’ scheme

The US criticised guidelines issued by Japan for its “cash for clunkers” programme, as a disagreement over American carmakers’ access to the plan flared up again.

Ron Kirk, US trade representative, said he was “disappointed” with Japan’s decision to judge the eligibility of US cars according to their emissions in city traffic only, instead of combined city and highway traffic. This, Mr Kirk said, would “limit the number of US auto models that qualify” for the programme.

Washington and Tokyo have been arguing for months over access to Japan’s year-old “eco-friendly vehicle purchase programme”, and appeared to have found common ground last month when Japan said it would open up opportunities for American carmakers, such as General Motors, Ford and Chrysler.

But the guidelines issued by Japan on Wednesday dampened hopes of a deal. Opposition in the US to Japan’s cash for clunkers plan grew after last August, when Japanese carmakers such as Toyota and Honda benefited heavily from the US cash for clunkers programme.

“This is completely unacceptable. The Japanese have broken their promise. They said they would allow American cars to participate in their programme but now have rigged the rules so that few can,” said Gary Peters, a Michigan Democrat.

Charles Rangel and Sander Levin, senior Democrats on the House ways and means committee, which has jurisdiction over trade, have written to Mr Kirk requesting that he continue his “engagement with the government of Japan in order to ensure that imported US vehicles are eligible for the eco-car programme not only in theory, but in practice”.

Stephen Collins, president of the American Automotive Policy Council, which represents the “Big Three” US carmakers in Washington, said: “This change does not begin to approach the openness of the US cash for clunkers programme that provided Japanese automakers with nearly half of the benefits.”

Japanese officials have attributed the fact that no US car models qualified for the programme to their dirtier engines. The Japanese embassy in Washington could not be reached for comment but one aide quoted by Reuters said the guidelines reflected “really technical, scientific decision-making”.

Imported cars accounted for only 7 per cent of vehicles sold in Japan in 2008, with US carmakers selling 14,000, according to the importers’ association.

Source: FT.com