Auto bailout gets little criticism from abroad

Foreign auto companies and their home governments are offering more support for President Bush’s bailout of General Motors and Chrysler than opposition.   

The $17.4 billion in loans to the two companies, $13 billion of which will be delivered on Monday, is a subsidy not available to foreign automobile producers. Yet the help is prompting few complaints from trading partners or trade associations representing foreign producers.   

{mosads}“We’re generally supportive of anything that brings about a stable industry,” said Wade Newton of the Alliance of Automobile Manufacturers, which represents U.S. and foreign automakers.

The Japanese Automobile Manufacturers Association has not criticized the bailout, while a trade association representing international auto dealers spoke out in support of the loans.   

“These loans are the first step toward stabilizing the U.S. auto industry,” said Cody Lusk, president of the American International Auto Dealers Association, which fights protectionist legislation.

Lusk in a Dec. 19 statement called for additional steps to help the entire industry weather the storm.

The tacit support of trade associations and in some cases foreign governments for the help being given to GM and Chrysler is notable because after Senate Republicans rejected legislation providing loans to the industry, the United Auto Workers charged Southern Republicans with doing the bidding of foreign auto producers.

Foreign plants in the U.S. generally are not union plans, and have lower wage and benefits costs.   

Toyota, Honda and other foreign manufacturers, however, would suffer from the collapse of any of the Big Three, according to industry sources and government officials. This is because foreign and U.S. companies depend on the same parts suppliers to manufacture in the U.S.   

“This entire industry depends on a complex set of suppliers that is very integrated,” Newton said. One reason foreign automakers have come to the U.S. to produce cars is the supplier base, he said.

If GM collapsed, U.S. parts suppliers could also go under, which would pose problems for foreign companies manufacturing in the U.S.   

Japan’s government has offered quiet support for the Bush administration’s actions. “The Japanese government is hoping the U.S. government assistance to the U.S. auto companies will help stabilize the auto industry,” a Japanese government official told The Hill.

He said Japan hoped the assistance would lead to a recovery of the U.S. economy, given the impact on Japanese auto companies that depend on sales to U.S. consumers.

European governments have also had a muted reaction to the bailout. The European Commission, which represents France, Germany and other countries in the European Union on the issue of trade, has not publicly criticized the bailout. Last month, however, the president of the European Commission warned governments to be careful to not subsidize their domestic manufacturers.

Foreign auto companies are experiencing some of the same pains as U.S. manufacturers, although Toyota and Honda have more capital to ride out the storm. Toyota’s president last week announced his company estimated it would suffer a $1.7 billion loss in the fiscal year ending in March because of the international financial meltdown. It had been expecting huge profits nine months ago.