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U.S.-Japan Dispute Gives Little Early Cheer to European Luxury Car Makers

May 17, 1995

BERLIN (AP) _ While opposed to punitive tariffs like those Washington has threatened to put on Japanese luxury cars, European automakers said Wednesday they’re poised to take advantage of them.

``Our basic philosophy is free trade and open markets,″ said Mercedes-Benz spokesman Wolfgang Riecke. ``But if taxes were to create an opportunity, then Mercedes would be interested in increasing our market share.″

BMW issued a similarly cautious statement saying BMW on principle is opposed to a punitive tariff ``although the company could profit from it.″

The Clinton administration announced $5.9 billion worth of punitive tariffs on Japanese-made luxury cars Tuesday, charging Japan with blocking American cars and car parts from a fair share of the Japanese market.

Tokyo fought back Wednesday by filing a formal complaint at the World Trade Organization in Geneva. ``The United States must realize that it cannot freely employ illegal tactics,″ said trade minister Ryutaro Hashimoto.

Washington’s threat to impose 100 percent tariffs on 13 luxury Japanese models could make Mercedes and BMWs seem cheap in comparison.

However, the Federation of the German Automobile Industry voiced strong opposition to the U.S. plan. Spokesman Winfried Grzenia said German automakers also want improved access to the Japanese market but the U.S. tariffs threaten to make the world trade system ``come apart at the seams.″

Shares of German automakers have risen in recent days. Auto industry analyst Klaus-Juergen Melzner, of DB Research GmbH in Frankfurt, said that was due partly to the stronger U.S. dollar and partly to speculation that the trade dispute could benefit German companies.

``It’s rather positive″ for German automakers, he said.

In London, analyst Peter Caldwell of the Barclays de Zoete Wedd brokerage said Ford-owned Jaguar could sell more British-made cars in the United States if the trade dispute worsens.

``But the downside could be if the Japanese look for markets for cars they can’t sell in America, and they try to place them in Europe,″ Caldwell said.

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