Wednesday, August 6, 2014
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.
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:
Currency Manipulation by Japan undermines global competition in three ways:
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:
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 $1,500 on a typical vehicle, Japan’s undervalued currency represents thousands of dollars per vehicle.
Based on the October 1, 2012 rate of 78 yen/$, when Abenomics started.
3-4% profit margin on sedan. Source: McKinsey & Company, 2003 Preface to the Auto Sector Cases
Wednesday, August 6, 2014
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.
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?
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.
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