 A former governor of Missouri,
Matthew Blunt is the President of the
American Automotive Policy Council. The council represents Ford, General Motors and Fiat Chrysler Automobiles and thus an industry with an enormous stake in the trading arrangements for North America. Those arrangements are due to change now that all three North American countries-the United States, Mexico, and Canada-have signed the agreement meant to replace NAFTA, namely the United States-Mexico-Canada Agreement or USMCA.
The future of the USMCA was one of two intertwined policy initiatives that were the focus of the GBD event last week. The other was the tariffs on steel and aluminum from Canada and Mexico, which the Trump administration began collecting on June 1, 2018, in the name of national security. Those tariffs are still in place, notwithstanding the signing of the USMCA agreement on November 30. The GBD event was
A North American Checklist:
The Metal Tariffs and The USMCA
Washington, DC
January 24, 2019
Sponsored by
Governor Blunt was the first speaker, and today's featured quote underscores the deleterious effects the metal tariffs are having both on current automobile production in North America and on the outlook for U.S. legislation to implement the new North American agreement, USMCA. Here is more from the Governor's remarks last Thursday:
We're earnest supporters of the USMCA, and we'll be encouraging the Congress to pass the implementing legislation as quickly as possible. But we do so with some caveats, and that is that the continued imposition of the steel and aluminum tariffs, particularly on Canada and Mexico, are extremely harmful to our industry and risk undermining all of the potential benefits of the USMCA.
They are also unnecessary. In the automotive sector, the new rule of origin has a first ever aluminum and steel provision, which, we think, does everything you need to do and more to ensure that an appropriate amount of North American steel and aluminum - more than 70 percent in fact - is from North America.
As he explained, steel prices in the United States jumped "the moment the President announced the tariffs." As a result, it costs roughly $464 more to produce a passenger vehicle in the U.S. now than it did before the steel and aluminum tariffs went into effect. Cars are low margin products, and U.S. cars are now less competitive as a result of the national security tariffs on imports from Mexico and Canada, Governor Blunt said.
BENEFITS OF THE AGREEMENT
Governor Blunt began his presentation with some of the reasons why the American Automotive Policy Council strongly supports the USMCA and why he and his colleagues will be urging Congress to approve the agreement and pass an implementing bill. Specifically, he praised the USMCA for:
Market Access. "The market access we have in NAFTA was preserved, and that's important to us," he said. He explained that there are only 14 markets in the world that support sales of a million or more vehicles a year, and Canada and Mexico are two of them.
Standards. "The U.S. never had an agreement that explicitly stated that our trading partner would accept products built to U.S. safety standards, and the USMCA does that," he said. And
A Currency Provision. The American Automotive Policy Council has long argued for the inclusion of currency language in trade agreements, that is, language to address the challenges that arise when a trading partner manipulate its currency to gain a trade advantage. "The currency provisions of USMCA," Governor Blunt said, "are the strongest of any free trade agreement in the world."
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