National Dialogue on Jobs and Trade
Harley-Davidson: A Success Story for American Trade
November 10, 1999
The Success Of Harley-Davidson Is Evidence That American Innovation
And Effective U.S. Trade Policy Can Reap Rewards For American Companies
And American Workers. Harley-Davidson is one of many U.S. companies
that have benefited greatly from U.S. trade laws. In 1983, facing a
surge of Japanese imports, the company received temporary relief under
U.S. trade laws. Harley used this time to readjust and become more
competitive. It improved manufacturing efficiency and product quality,
and, as a result, was able to significantly increase its market share.
Today, Harley-Davidson is the clear market leader, with a 56% share of
the large motorcycle market.
The Harley-Davidson Experience Is An Example That U.S. Trade Policy
Can Work. When the motorcycle market shrank due to the 1981-1982
recession, Japanese producers continued to ship motorcycles, creating a
glut of unsold bikes that artificially depressed prices and threatened
Harley's viability. Following an investigation under Section 201 of the
1974 Trade Act, the U.S. International Trade Commission found in 1983
that increased imports of heavyweight motorcycles threatened serious
injury to the domestic industry. This finding gave the President
authority to impose temporary import relief to allow the industry time
to adjust. A 45% tariff surcharge was imposed with a scheduled
phase-out of five years. Harley's recovery was so successful, however,
that it took the unprecedented step of asking that the tariff surcharge
be repealed one year ahead of schedule, in 1987. Harley-Davidson has
now gone on to further success as U.S. exports of motorcycles and parts
have grown 15 percent annually from 1987 to 1998, reaching $626 million
last year or about 35% of industry sales.
Harley-Davidson Has Been A Great Success Story Of The 1980s And
1990s. Today, Harley-Davidson motorcycles are in demand not just in
this country but throughout the world. Twenty-two percent of
motorcycles produced in the York, PA final assembly plant are produced
for export, and much of Harley's growth is due to exports. In Japan,
for example, the market for Harleys has been growing at an annual rate
of 43% since 1996. Motorcycle exports have helped create numerous jobs
for American workers, and by 2003, Harley-Davidson expects to double
production from 1996 levels. The company has received numerous
accolades, including being named one of the 100 best-managed companies
by Industry Week magazine. At the same time, Harley-Davidson has also
demonstrated good corporate citizenship, having recently received the
Minority Suppliers Council's First Step Award in recognition of its
commitment to racial and cultural diversity among suppliers. The
company's biggest challenge now is to meet the growing demand for its
The Clinton Administration And U.S. Industry Have Worked Together To
Create A Level Playing Field For American Exports. With the U.S.
industry leading the way in innovation, and the U.S. government helping
to open markets for American exports, we can continue to expand U.S.
sales overseas and create more jobs for American workers. The Clinton
Administration has worked with Harley-Davidson to develop its export
strategy -- a major part of its strategic growth plan now that the U.S.
market has matured - and to identify and remove obstacles to their sales
in foreign markets such as Japan, Taiwan, Brazil, Malaysia, Thailand,
Indonesia, and the EU. Market-opening initiatives include:
Taiwan: The use of large-size motorcycles is banned in Taiwan.
Taiwan had proposed ending the ban, but had suggested enforcing engine
emission standards similar to those on small motorcycles. This would
have resulted in Taiwan's engine emissions standards being the strictest
in the world and would have effectively served as a trade barrier for
large-size motorcycles. As a result of negotiations regarding Taiwan's
entry into the World Trade Organization, the U.S. industry will be able
to sell large-size motorcycles in Taiwan soon after accession. The
Administration is continuing to work with industry to remove the ban of
motorcycles on Taiwan's two major highways.
Brazil: In 1995, Brazil unilaterally increased tariffs on imported
motorcycles to more than 70%. The Administration addressed this issue
during its participation in the 1996 Hemispheric Summit, and, as a
result, Brazil decided to immediately reduce these tariffs by half --
and gradually lower the tariff to 20%.
Japan: Although Japan is the second-largest foreign market for U.S.
exports of motorcycles, Japan currently has regulations that hamper
sales opportunities for large-size motorcycles -- including prohibitions
on tandem riding (carrying a passenger) and a differential, lower speed
limit for motorcycles on highways. These regulations do not appear to
provide any safety benefits, and the Administration is working with
industry to convince Japanese authorities to modify these rules.
Previously, the Administration and others helped effect a change in
operator licensing procedures for large-size motorcycles that were
Upcoming WTO Round: During the upcoming round of negotiations, the
Administration will likely be placing a high priority on lowering
motorcycle tariffs. In particular, the U.S. will push for the lower
tariffs in major markets like the European Union -- which has tariffs
that are over twice as high as U.S. import tariffs (6 percent versus 2.4