America’s automakers depend on free and open international trade. FCA US, Ford and General Motors export about a million vehicles per year to over 100 countries. In fact, one out of five American-produced vehicles by FCA US, Ford and General Motors are exported. Because exporting is so important to the domestic auto industry, American automakers supported every U.S. Free Trade Agreement (FTA) that has been negotiated.
The U.S. is engaged in the Trans Pacific Partnership (TPP) FTA negotiation with 11 other countries, including Japan. While AAPC has supported every past U.S. FTA, it is seeking as a top priority a TPP that includes strong and enforceable currency disciplines in the agreement. Several countries in the TPP negotiations have a history of using currency manipulation to gain an unfair trade advantage over their trade partners, which would undermine the expected benefits of a TPP agreement to the United States.
Currency manipulation acts as a significant non-tariff barrier to our exports. It subsidizes for exports from the country manipulating its currency that can be worth thousands of dollars per vehicle, as well as creating a competitive disadvantage for U.S. exports to that country as well as third party markets where U.S. products compete with the manipulating country’s products. As a result, currency manipulation can be worth billions of dollars for foreign automakers at our expense.
At more than $140 billion in exports per year, automotive products (vehicles and parts) are America’s largest export sector. However, several of the TPP countries included in the talks have markets closed to U.S. auto exports. Obtaining access to these growing auto markets, such as Malaysia and Vietnam, is essential to maintaining and expanding America’s already robust auto exports.
Because of the size and importance of the TPP, as well as the countries involved in the negotiations, it is critical to get it right. That means gaining meaningful access to the region’s closed auto markets and addressing, in a strong and enforceable manner, the biggest 21st century barrier to free and open trade – currency manipulation.