Japan's cash for clunkers plan to include U.S. cars

TOKYO - Japan's Trade Ministry changed the terms of its car scrappage incentive scheme on Tuesday to include vehicles imported from the United States, after complaints from Washington that U.S. vehicles were being excluded.

Tokyo's version of the 'cash for clunkers' program, intended to help the environment while boosting the ailing car market, provides government cash to help people replace old cars with models that meet specified fuel efficiency standards.

Last week U.S. Secretary of State Hillary Clinton told Japanese Foreign Minister Katsuya Okada that concerns were rising in the U.S. Congress about Japan's scrappage scheme, Japanese media reported.

But Japan's Trade Ministry reiterated in a statement on its website that although it was altering the program, the system made no distinction between domestic and foreign-produced cars, and 43 percent of imported vehicles met the conditions.

The new provisions allow the scrappage incentives to be applied to suitable cars imported under the Preferential Handling Procedure, a deal agreed with the United States in 1986 to speed the import of models that sell less than 2,000 units a year, the ministry said on the web site.

Last week, U.S. Congresswoman Betty Sutton introduced a resolution calling for the U.S. Trade Representative to start talks with Tokyo and urged Washington to bring a WTO case against Japan if it does not open up its program to American cars.

U.S. automakers Ford Motor Co (F.N), General Motors Corp GM.UL and Chrysler CCMLPC.UL complained to U.S. Trade Representative Ron Kirk in December that Japan's scrappage program effectively barred U.S. firms from participating.

The Japanese scheme, under which the government pays up to 250,000 yen ($2,750) in cash to people replacing vehicles more than 13 years old, started last April. It is scheduled to end in March but is likely to be extended by six months.

Japan imported about 14,000 cars from the United States in 2008, according to the Japan Automobile Importers' Association web site, compared with a total of 3.2 million new cars sold in Japan that year.