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International Trade

Total U.S. exports for 2014 are $1.62 trillion. Automotive products represent 8.70% of that total, or more than $140 billion in 2014. Automakers and suppliers are America’s largest exporters, beating the next best performing manufacturing sector by more than $80 billion over the past 5 years. In 2013 alone, FCA US, Ford and General Motors exported nearly 1 million American-made vehicles to more than 100 different foreign markets.

Top Five U.S. Exporters (2014, in billions)


As America’s largest exporters, FCA US, Ford and General Motors have supported every U.S. free trade agreement ratified. These agreements have reduced tariffs and eliminated numerous non-tariff trade barriers in key markets. The Trans-Pacific Partnership (TPP) could generate similar benefits for U.S. exporters, but only if key issues are addressed:

  • Eliminate all auto non-tariff barriers in all TPP-member countries.
  • Include strong, enforceable currency manipulation disciplines (This is vital, due to Japan’s participation in the TPP).

Currency Manipulation by Japan undermines global competition in three ways:

  1. Makes it harder to export American vehicles to Japan;
  2. Provides Japanese automakers with an unfair competitive advantage in the United States; and,
  3. Makes it harder for American companies to compete with Japanese automobiles in other markets, like South America, China, Europe and the Middle East.

AAPC developed a proposal supported by leading non-partisan trade experts that is based on International Monetary Fund commitments already agreed to by all TPP member countries. It asks three simple questions to determine if a TPP member manipulates its currency:

  1. Did the TPP member have a current account surplus over the six-month period in question?
  2. Did it add to its foreign exchange reserves over that same six-month period?
  3. Are its foreign exchange reserves more than sufficient (i.e., greater than three months normal imports)?

If a TPP member is found to have breached its currency commitments under the agreement, the other TPP members shall be entitled to suspend the tariff benefits of the agreement with respect to the violating TPP member.

In an industry where automakers earn about $1,500 on a typical vehicle, Japan’s undervalued currency represents thousands of dollars per vehicle.

Weak Yen Subsidy Per Car in U.S.


Based on the October 1, 2012 rate of 78 yen/$, when Abenomics started.
3-4% profit margin on sedan. Source: McKinsey & Company, 2003 Preface to the Auto Sector Cases

 

Aug 04 2014
Written by Matt Blunt | Posted on The Wilson Center

In an ever-shrinking world, a popular refrain among some skeptics is that American manufacturing is not competitive in the global economy. A new report by the American Automotive Policy Council (AAPC) reveals that is simply not the case. Led by Chrysler, Ford and General Motors, American manufacturing is on the rise, creating jobs and expanding opportunity at a rate that hasn’t been seen in years.

Jul 17 2014
Written by Mitsuru Obe | Posted on Wall Street Journal

With an ultimate goal of stimulating economic growth, hopes are high that the proposed Trans-Pacific Partnership free trade agreement will lead to a spike in cross-border business deals among member countries. Assuming that’s the case, Japan’s chief TPP negotiator posed an interesting question: why does the pact sidestep a key factor that affects practically all international business activity?

Jul 07 2014
Written by Vicki Needham | Posted on The Hill

More than a dozen leading manufacturing groups on Thursday called on the Obama administration to include currency manipulation provisions in all future trade agreements, especially the Trans-Pacific Partnership (TPP).

The 13 groups, including the American Automotive Policy Council (AAPC), sent a letter to Treasury Secretary Jack Lew and U.S. Trade Representative Michael Froman, as TPP talks begin in Ottawa.

Jul 01 2014
July 1, 2014
 
Secretary Jacob J. Lew                                              Ambassador Michael Froman
Secretary of the Treasury                                           United States Trade Representative
Department of the Treasury                                        Office of the U.S. Trade Representative
1500 Pennsylvania Avenue, NW                                600 17th Street, NW
Washington D.C. 20220                                             Washington D.C.
Jul 01 2014

For Immediate Release:

July 1, 2014
Contact: Colin Dunn
info@americanautocouncil.org
202-400-2609

Coalition of Business Leaders Urge Obama Administration to Address Currency Manipulation