U.S. finds Japanese minivans fairly harmless Trade agency rules U.S. does not need to impose tariffs.

WASHINGTON — WASHINGTON -- The federal government's trade agency ruled yesterday that Detroit's automakers had not suffered significant harm from imported Japanese minivans, a verdict that prevents the Commerce Department from proceeding with plans to impose tariffs on the imports.

The decision by the independent agency, the International Trade Commission, to reject a highly political case is a landmark in U.S. trade policy.


It reflects the presence of a new majority, more skeptical of industry claims, on the little-known body, which has the power to block U.S. industries from receiving Commerce Department protection from imports.

Three new commissioners -- two Republicans and a Democrat -- have joined the six-member body in recent months, and the two Republicans appear to be taking a much narrower interpretation of the nation's trade law than their predecessors.


Their terms will last as long as nine years.

"You'll find a pattern of results a little more consistent with the actual data on what the imports are doing to the industry, and not that the industry is doing badly," said Ronald A. Cass, the commission's Democratic vice chairman in 1989 and 1990 and now the dean of Boston University's law school.

But Mr. Cass, like other trade experts, cautioned that the commission may not have been captured by staunch advocates of free trade, but rather by lawyers who make a very narrow reading of the law.

A test of whether the commission has actually moved all the way into the free-trade camp will come today, when it must rule on whether the U.S. softwood-lumber industry has been hurt by Canadian imports.

The U.S. industry has lost many jobs, and the Commerce Department has tentatively set a 6.5 percent duty on the imports.

The commission, which is headed by a Democrat, decided by a vote of 4-to-2 yesterday that minivan shipments by Mazda Motor Co. and Toyota Motor Corp. had not inflicted "material injury" on U.S. automakers and did not threaten to do so.

Federal law requires the commissioners to consider in each case the domestic industry's output, market share, sales, profits, productivity, capacity, employment and seven other indications of economic health.

The decision was a setback for General Motors Corp., Chrysler Corp. and Ford Motor Co., which filed the case last year.


Detroit executives and top officials of the United Automobile Workers gloated in recent weeks about the Commerce Department's tentative decision to impose a duty of 12.7 percent on Mazda minivans and 6.75 percent on Toyota minivans.

The Commerce Department found in December that these minivans were being sold below "fair market" prices and determined in May the margin of underpricing, which set the planned tariff.

Thomas H. Hanna, president of the Motor Vehicle Manufacturers Association, an auto industry trade group, said the fact "that the ITC was unable to see a connection between proof of unlawful trade practices and harm to the U.S. industry is incomprehensible."

General Motors also called the decision "incomprehensible." Ford characterized the ruling as "a sad development for the American worker." The decision signaled to "Japan that it's OK to defy the international rules of trade, and what's more, that it doesn't hurt America," Ford said. Chrysler, whose minivan dominates the U.S. market, called the decision "a great disappointment."

Mazda, one of the targets of the domestic industry's complaint, said in a statement that it was "gratified." It added, "We have maintained since the beginning of this proceeding over one year ago that our position would ultimately be vindicated."

Detroit's automakers had no immediate comment on whether they would appeal the commission decision to the Court of International Trade, a federal tribunal in New York.


No duty is collected from Japanese automakers during any appeals, and deposits collected for the last six months against eventual duties will be refunded to the importers.

Despite the commission's decision, Detroit may eventually receive import protection from Congress.