UPDATE 2-U.S. chides Japan over auto scrappage program

* Michigan lawmaker urges push to open Japan’s auto market

* Japan says car choices based on local mileage standards

(Adds Japan embassy comment, other details)

By Doug Palmer

WASHINGTON, Feb 3 (BestGrowthStock) – The United States criticized
Japan on Wednesday for excluding too many American cars from
its auto scrappage program in a sign of mounting frustration
over problems U.S. automakers have long faced in that country.

“We are disappointed with Japan’s announcement today to
limit the number of U.S. auto models that qualify for its
“cash-for-clunkers” program,” U.S. Trade Representative Ron
Kirk said in a statement.

“This is particularly unfortunate in light of its recent
announcement to open opportunities for U.S. autos to qualify
for its program, which was a welcome step,” Kirk said.

Meanwhile, the chairman of the House of Representatives
Trade Subcommittee said he looked forward to working with
President Barack Obama’s administration “to open what has been
an essentially closed market for the U.S. auto industry.”

“We need to vigorously engage with Japan in order to secure
greater access for U.S. auto exports in that country’s market,”
said Representative Sander Levin, a Democrat from the hard-hit
auto manufacturing state of Michigan.

The dispute over Tokyo’s Eco-friendly Vehicle Purchase
Program comes as U.S. automakers take advantage of a drop in
sales by Toyota Motor Corp (7203.T: ) on the heels of its recall
of eight models because of faulty accelerators.

LONG-HELD COMPLAINT

Toyota’s U.S. sales fell 16 percent in January to its
lowest level in four years, allowing rivals Ford Motor Co (F.N: )
and General Motors Corp [GM.UL] to regain at least temporarily
some U.S. market share lost to the Japanese auto giant.

U.S. automakers have long blamed their failure to make more
sales in Japan on unfair trade barriers.

Those complaints came to a head again recently over Japan’s
fleet renewal program, which they said effectively excluded
American cars while last year’s $3 billion U.S. cash for
clunker program was open to all foreign vehicles.

Japan announced changes last month that it said would
allow more U.S. cars to participate in the program.

But Kirk said the list of qualifying U.S. models released
on Wednesday by Tokyo fell short of expectations since it was
based on U.S. Environmental Protection Agency “city” mileage
ratings, instead of “combined city/highway” ratings.

“We will continue to urge Japan to implement its program in
a manner that is transparent and as inclusive of U.S. autos as
possible. We will also continue to monitor developments closely
to ensure U.S. autos indeed benefit from Japan’s
‘cash-for-clunkers’ program,” Kirk said.

A lobby group for the “Big Three” U.S. automakers also
weighed in, complaining that Tokyo excluded a number of U.S.
vehicles that get better mileage than their Japanese
counterparts. The Big Three includes Chrysler, now under
management control of Italy’s Fiat (FIAL.MI: ).

“The fact remains that the new Japanese policy does not
provide meaningful market opening, especially in light of Japan
earning the OECD (Organization for Economic Cooperation and
Development) title this year as the most closed auto market in
the industrialized world,” said Stephen Collins, president of
the American Automotive Policy Council.

But an official at the Japanese Embassy in Washington said
the changes announced on Wednesday would allow about half of
American cars imported under a “preferential handling
procedure” established in 1986 for U.S. automakers to qualify
for the scrappage program, compared to zero previously.

Also, he said, Tokyo used EPA’s city mileage rating because
that best reflected Japan’s own system for estimating mileage
and actual driving conditions in Japan. “It was really
technical, scientific decision-making,” the embassy aide said.

Money

(Reporting by Doug Palmer; Editing by Doina Chiacu and Eric
Walsh)

UPDATE 2-U.S. chides Japan over auto scrappage program