Wednesday, 16 September 2009 12:42
2009 has surely been one for the record books. Events like Cash for Clunkers and industry-wide restructuring have combined to create one of the most turbulent years we dealers have ever seen.
In the midst of these challenges, it has been easy to overlook the growth of a very real protectionist threat. Earlier this year, language was included in the $787 billion stimulus bill requiring municipalities who used stimulus funds to purchase strictly American-sourced materials. Protectionism was laid on the table again when North Carolina Representative Larry Kissell inserted language into the House version of the Energy and Water Appropriations Bill requiring the Department of Energy to only purchase Ford, GM, or Chrysler vehicles.
There was even an attempt to make the Cash for Clunkers program only eligible to those purchasing a Detroit Three vehicle!
Most recently, on Friday evening, President Obama announced that he would impose a steep 35 percent tariff on Chinese tires imported into the United States, arguing that the move will favor U.S. jobs and stem the surge of cheap Chinese tires into the domestic market. China replied with plans of its own to limit U.S. chickens and auto parts.
International auto dealers should sit up and take note. While the President's decision does not specifically regard the automotive industry, it represents what many, including myself, see as an ominous threat to the principles of free trade that drive the international nameplates we sell. Until the economy improves, we at AIADA believe that support for protectionist measures such as this will continue.
And as long as protectionists wield influence in Washington, D.C., the South Korean-U.S. Free Trade Agreement (KORUS FTA) will remain in limbo, un-ratified by Congress. International nameplate dealers are paying close attention to the KORUS FTA, which has been waiting for a Congressional vote for TWO YEARS. It's a fair deal, between two countries that would benefit both economically and strategically from the agreement. And yet, Congress can't seem to bring itself to vote for the agreement.
Maybe Congress doesn't know that if ratified, the agreement would eliminate tariffs on nearly 95 percent of consumer and industrial product trade within three years of ratification and add some $20 billion to bilateral trade.
Maybe Congress doesn't know that as an additional component of the KORUS FTA, a bilateral working group on autos will be put in place. The working group will contain a built-in transparency requirement to prevent future trade problems and promote coordination between the U.S. and South Korea on regulatory and technical issues.
And maybe some in Congress aren't aware of the role that America's international auto dealers play in our economy. But we at AIADA are working to let them know. After all, more than 50 percent of all vehicles sold by international nameplate dealers are made in the U.S., representing more than $39.3 billion invested in the U.S. economy through manufacturing facilities.
To bring it a little closer to home, AIADA's 10,000 franchised dealer members provide jobs for more than 500,000 Americans across the country, with the average dealership employing 50 individuals and investing millions of dollars in their real estate and facilities. In addition, international brand automakers had invested $40 billion in the U.S., operating over 70 facilities with more to come. Direct employment for these automakers had reached 103,000, an increase of 52 percent since 1995. Together with suppliers, the international brand auto industry in the U.S. employs roughly 1.7 million Americans.
Don't be fooled. Protectionism under the guise of "Buy American" is on the horizon, and very soon it could be at our door. And protectionism is a direct assault on our economy. AIADA is committed to ensuring the voice of America's international nameplate dealers continues to be heard on Capitol Hill and beyond. Click here to learn how you can remain informed on "Buy American" issues as they arise.
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