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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

 

Oct 03 2013
Written by Adam Snider | Posted on Politico

HITTING THE PAPERS TODAY: The American Automotive Policy Council has a full-page ad running in today’s POLITICO and The Hill papers noting that majorities of both chambers of Congress support strong provisions against currency manipulation in the Trans-Pacific Partnership debate. Give it a look: http://politico.pro/1fHdNWp. And POLITICO Influence reports that Ford has hired Hoppe Strategies to lobby on TPP issues: http://politi.co/19kozbZ

Oct 02 2013

WASHINGTON, D.C. - The American Automotive Policy Council (AAPC) today ran full-page ads in Politico and The Hill highlighting that bipartisan majorities in the U.S. House and the U.S. Senate support the inclusion of strong and enforceable rules in trade agreements that will prevent currency manipulation.

"A broad, bipartisan majority of the U.S. Congress is calling for strict currency manipulation rules in the TPP," said Matt Blunt, president of AAPC. "Enforceable, strong rules are critical to reaching a high-standard agreement that can be supported by the U.S. auto industry."

Oct 01 2013
Written by Doug Palmer | Posted on Politico Pro

Toyota Chairman Takeshi Uchiyamada on Monday challenged Detroit-based automakers to spell out exactly what barriers they face selling in Japan’s market as negotiations between the United States and Japan on a regional free-trade pact intensify.

“We would like to hear specifically what kind of problems they are seeing. And listening, we’d like to work together in a forward-looking way, including confirming what they’re saying is a fact,” Uchiyamada told reporters after a speech to the Economic Club of Washington.