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New U.S. Car Labeling Law Criticized as Being Confusing

Autos: Canada is counted as part of domestic market. U.S. auto makers insist disclosure is full and fair.

September 25, 1994|DONALD W. NAUSS, TIMES STAFF WRITER

DETROIT — Looking for a new car and you want to buy American?

Good luck.


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Buyers have long been confused about what actually constitutes an "American" car. Is a Pontiac Firebird made in Canada with a U.S.-built engine more American than a Nissan Altima made in Tennessee with an engine from Japan?

Such questions have only gotten harder to answer as the auto industry becomes more global, foreign auto makers move more production to the United States and trade tensions periodically erupt.

And now, the confusion is about to get even worse.

Beginning Saturday, the federal government will require auto makers to state the total domestic content--defined as U.S. and Canadian--of a vehicle's parts and to identify foreign countries that supply significant amounts of those parts.

The new law, known as the American Automobile Labeling Act, also requires car makers to reveal where the transmission and engine parts came from and the vehicle's point of final assembly.

Sounds simple enough. But critics--foreign auto makers, dealers, some suppliers and consumer groups--say the law is poorly crafted and deliberately skewed to favor Detroit. The content labels appearing on new vehicles this fall will be confusing, misleading and in some cases inaccurate, they say.

"It is going to give a lot of misinformation to consumers," said Joan Claybrook, president of Public Citizen, a Washington-based consumer group.

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For example, Canadian parts are counted the same as U.S. parts, and identical cars made on the same line but badged differently--such as General Motors' Geo Prizm and the Toyota Corolla--could be credited with widely varying domestic content.

The new law takes effect as trade tensions between Japan and the United States are entering a sensitive phase. The Clinton Administration has threatened to impose trade sanctions on Japan by Friday0 unless it lowers trade barriers in key industries, including autos and auto parts.

It also comes as Japanese and European auto makers are moving more production to the United States and stepping up their purchase of U.S. auto parts. Still, Detroit argues that the vehicles made at so-called transplant factories are foreign, because many of their parts come from abroad.

"This is a way to have a bit more truth in advertising," said Andrew Card, president of the American Automobile Manufacturers Assn., the Big Three's lobbying group.

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