An editorial from
Scripps Howard News ServiceDetroit's Big Three auto makers rolled up record profits in 1988 - a total of $11.2 billion, almost $1.5 billion more than ever before.
How did General Motors, Ford and Chrysler respond to their good fortune? Did they perhaps cut prices to win a larger share of the market from foreign manufacturers?
Not exactly. They went quietly to Washington to lobby for an arcane change in customs regulations that would fatten their profits and boost the prices of imported vehicles.
The Big Three found the ears of the Customs Service, which did not hold hearings before it reclassified popular and hot-selling imported sports utility vehicles and mini-vans as "trucks" instead of "passenger cars."
The innocent sounding rule change would have increased tariffs on the imported vehicles by 10 times - to 25 percent from 2.5 percent. It would have lifted their sales price by an average of $2,500 each.
Not surprisingly, the Japanese, West German and British governments protested. The Treasury Department, of which the Customs Service is a part, reviewed the action. Last month it handed down a modified, less bad decision.
Solomonlike, Treasury ruled that mini-vans were "cars" if they had windows on the sides and rear, doors on the rear sides and passenger seats behind the front seat. These will be eligible for the 2.5 percent duty. But small Jeeplike sports utility vehicles remain "trucks" and must bear the 25 percent levy.
A spokesman for import autodealers said the revised ruling would save consumers about $250 million a year on imported vehicles and $1 billion annually on domestic ones.
As the Big Three earn record profits, how much longer should consumers have to pay extra for the "temporary" quotas that shield domestic auto makers from Japanese competition?
The so-called voluntary quotas have been in effect since 1981. They were supposed to give Detroit time to modernize to meet the Japanese challenge. But they have turned into a permanent crutch.
The International Monetary Fund has estimated that American consumers paid $17.7 billion more for automobiles in 1981-84 alone than they would have without the quotas. That is quite a subsidy for GM, Ford, Chrysler and their unions. It's time for them to get off the consumer's back and stand on their own feet.