Leaders of the Detroit Three automakers met Monday with Vice President Mike Pence and the Trump administration's top trade official to discuss their differences over continuing the North American Free Trade Agreement.
CEOs Mary Barra of General Motors and Sergio Marchionne of Fiat-Chrysler, Joe Hinrichs, Ford president of global operations, and leaders of several industry advocacy groups met Pence, Robert Lighthizer, U.S. trade representative, and Gary Cohn, director of the National Economic Council, in Pence's office.
Auto Industry leaders want the pact covering tariff-free movement of vehicles and parts across Canada, the U.S. and Mexico to continue. The administration has threatened to withdraw from the agreement unless the other two nations agree to substantial changes.
Lighthizer is overseeing the renegotiation of NAFTA. The latest round of negotiations of the three-nation trade deal ended last week with little progress.
“We view the modernization of NAFTA as an important opportunity to update the 23-year-old agreement and set the stage for an expansion of U.S. auto exports," said Matt Blunt, president of the American Automotive Policy Council, in a statement. "We believe achieving inclusion of strong and enforceable currency discipline and ensuring foreign markets accept products built to our standards are important components of a modern NAFTA agreement."
Automakers have been lobbying against an administration proposal to raise from 62.5% to 85% the minimum level of parts that must be made in one of the three countries in order to avoid hefty tariffs.
Mexico and Canada have rejected that proposal as well as another that would require half of vehicle content to be from the United States.
Most production of small passenger cars has already been moved from the U.S. to Mexico. FCA has stopped making small passenger cars altogether.
If the U.S. were to enact a 35% tariff on light vehicles imported from Mexico, the Center for Automotive Research in Ann Arbor estimates Americans would buy or lease 450,000 fewer vehicles over a year. That would lead to a loss of nearly 6,700 North American assembly jobs.
But when the reduced production of parts that now flow tariff-free across the borders in both directions is taken into account, another 31,000 U.S. jobs could be lost.
Last month, a coalition of manufacturers, parts suppliers and dealers called Driving American Jobs formed to preserve NAFTA in its current form.
“Our biggest concern is for American workers and customers,” Jennifer Thomas, vice president of federal affairs at the Alliance of Automobile Manufacturers, said in a statement. “Pulling out of NAFTA would lead to a decrease in vehicle production, a decline in jobs and an increase in what our customers spend when buying a new vehicle. Not to mention this would also have an impact on our abilities to export vehicles to foreign markets.”
The UAW, however, has largely supported Trump's anti-NAFTA rhetoric.
In the August edition of its Solidarity magazine, the union cited data from the Washington, D.C.-based Economic Policy Institute that showed NAFTA caused the loss of 360,000 auto industry jobs between 1999 and 2013, while Mexico gained 620,000 jobs.
"Simply put, the center of automobile vehicle and parts production has been moving south for quite some time thanks to NAFTA," the UAW publication stated. .
But the proximity of Detroit and Windsor, Ont., could make Michigan particularly vulnerable if the three countries fail to reach a compromise. More than $70 billion of vehicles, parts and other items travel between Michigan and Ontario each year.
In August, Fitch Ratings, a global provider of credit ratings and research, said Michigan would likely be impacted most by potential changes to NAFTA because "its economy is the most interconnected" with the trading partners.
Contact Greg Gardner: (313) 222-8848 or firstname.lastname@example.org. Follow him on Twitter @GregGardner12
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