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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

 

Jan 03 2014
4-Traders

Americans headed for local car dealers en masse last month, taking advantage of year-end closeouts, sweet leases and inexpensive financing to boost the industry log its strongest sales year since 2007.

Most major automakers, who report sales on Friday, were expected to report gains for the year. But there were signs in December that 2014 could bring more price competition and better deals for consumers as U.S. auto sales growth starts to slow.

Jan 03 2014
Written by Phil LeBeau | Posted on NBC News

Ford has developed a concept model that runs primarily on solar power, which could bring the world one step closer to having a vehicle for everyday driving that is not dependent on traditional energy sources.

The C-MAX Solar Energi Concept is a collaboration between Ford, SunPower Corp. and the Georgia Institute of Technology. The concept car is expected to be unveiled next week at the Consumer Electronics Show in Las Vegas.
 

Dec 17 2013
Ford Media Page

The most technologically advanced version of Ford’s iconic pony car will take center stage at the 2014 International CES® as the all-new Mustang is recognized as “Official Car” of the world’s largest hands-on showcase of emerging innovation. 2014 International CES will be held Jan. 7-10, 2014, in Las Vegas; the show is owned and produced by the Consumer Electronics Association®.

Dec 16 2013
Written by Damian and Siobhan Hughes | Posted on The Wall Street Journal

House and Senate negotiators have reached agreement on legislation to speed congressional approval of foreign trade pacts, including a major Asia-Pacific agreement the administration hopes to complete early next year.

The Trade Promotion Authority legislation, also known as "fast-track," would include language directing trade negotiators to consider currency issues as a "negotiating objective" in future trade talks, according to people familiar with the deal. The language is an attempt to...
 

Dec 16 2013
Written by David Shepardson | Posted on The Detroit News

Two key senators said Friday they want Congress to include provisions discouraging currency manipulation in legislation on fast-track authority on free trade agreements.

Sens Carl Levin, D-Detroit, and Rob Portman, R-Ohio, co-chairs of the Senate Auto Caucus, want Congress to include strong, enforceable currency provisions in the forthcoming Trade Promotion Authority bill, which will give the administration fast-track authority to negotiate trade deals and get up or down votes.