Restraining Japan’s Auto Exports to Save American Jobs – Association for Diplomatic Studies & Training

After growing up in Atlanta, Georgia, Aurelia “Rea” Brazeal earned degrees from both Spelman College and Columbia University, joining the Foreign Service in 1968. A decade later, she was assigned to Tokyo as an economic officer and given the troubled automotive portfolio. She soon found herself coordinating negotiations that would be crucial to the survival of the American automobile industry. Brazeal would become the first black woman to rise from the entry levels of the Foreign Service to the rank of ambassador, serving as the U.S. Ambassador to Kenya, Ethiopia, and Micronesia.

When Brazeal arrived in Tokyo in 1979, the U.S. auto industry was in peril. The oil crisis of the 1970s,which brought rising gas prices and long lines at the pump, had made small, fuel-efficient Japanese cars increasingly popular in the United States. American automakers were suffering record losses and Detroit’s Big Three demanded protection–tens of thousands of American manufacturing jobs were on the line.

U.S. politicians threatened tariffs on Japanese cars, but the administration was also reluctant to start a trade war, given the multifaceted nature of our economic and military relationship with Japan. Talk of tariffs, however, brought Japan to the table, and Brazeal was part of the negotiating team that hammered out a solution that would protect the jobs of American auto workers but not start a trade war with one of our top partners in commerce and security.

The result was what became known as the Voluntary Export Restraint agreement, when for a period of time Japan voluntarily limited the number of cars it exported to the United States. In exchange, we did not impose tariffs. The agreement was originally for three years, but it was extended repeatedly until it was fully phased out in 1994. The agreement only limited the number of cars exported from Japan, so Japanese carmakers began investing in their own U.S. assembly plants, creating tens of thousands of additional American jobs.

“Both sides [saw] a maturing of the relationship to the point that you could get to talk about the structural issues. [Japan] could be an engine for growth globally, as opposed to the U.S. having the only engine. They could burden-share the responsibility for growth.”

Ambassador Aurelia “Rea” Brazeal.

“Both sides [saw] a maturing of the relationship,” recalled Brazeal, “to the point that you could get to talk about the structural issues. [Japan] could be an engine for growth globally, as opposed to the U.S. having the only engine. They could burden-share the responsibility for growth.”
But when Ambassador Brazeal reflected on the agreement later, she thought the one mistake was the U.S. government missing the opportunity to pressure the auto industry to modernize and become more competitive. “It’s very difficult for governments to pick winners and losers;” she said, “and ours, by and large, shouldn’t try to do that, because we’re really not very good at it. But if you are going to give protection to an industry…as a government, we should extract something from that American industry that would press it to take steps to become competitive.”

See more in Aurelia Brazeal’s oral history.