NAFTA renegotiation must be to strengthen US…

NAFTA renegotiation must be to strengthen US…

Dec 7, 2017

“NAFTA renegotiation must be to strengthen US manufacturing competitiveness”

By Steve Handschuh and Cody Lusk, The Hill

Some might assume that, from an automotive industry perspective, the North American Free Trade Agreement (NAFTA) is a “Michigan automaker issue.” But in fact, the positive impacts of NAFTA in the automotive industry touch every state — and just about every neighborhood — in the U.S.

Motor vehicle parts manufacturing facilities are located across the country and directly employ more than 871,000 Americans. Of course, many are in or near Michigan, but tens of thousands of motor vehicle parts manufacturing jobs are in states like Ohio, Indiana, Tennessee, Kentucky, Alabama and Illinois. Nearly 32,000 motor vehicle parts manufacturing jobs are in California — and that number does not include the fast-growing automotive technology industry that has swept through Silicon Valley and beyond. Just think about automated and autonomous vehicles, smart cities and grid capabilities enabled by vehicle-to-infrastructure communications and vehicle-to-vehicle communications — these current and emerging technologies are motor vehicle parts revolutionizing how we use motor vehicles. NAFTA has made these innovations and job growth possible.

Americans learn about and access these incredible technologies in new cars at their neighborhood auto dealership. Last year, 16,708 auto dealers operated in every corner of the United States, providing 1,131,900 well-paid American jobs ranging from supervisors to salespeople to technicians, all while selling a record 17.4 million light vehicles. That’s 2 million more vehicles than were sold the year before NAFTA went into effect. Dealers in all 50 states deliver an important service to their communities, offering a wide variety of competitively priced vehicles and developing strong relationships with their customers, an important factor in effectively executing safety recalls and ensuring that the vehicles on our roads are properly serviced.

From parts manufacturers to community dealer showrooms, a free trade environment and an open supply chain have kept the cost of automobiles down while giving the consumer access to safety and other technologies that save lives, reduce emissions, ease traffic congestion and improve quality of life. That is why keeping NAFTA intact is so important and why we are part of the Driving American Jobs community of auto trade associations, manufacturers, retailers and small businesses. This coalition represents an auto industry completely aligned on one issue: preserving NAFTA in order to save and create American jobs.

NAFTA helps American companies stay competitive in a global marketplace through the elimination of tariffs and other barriers to trade and investment in these very technologies. Since NAFTA has been in effect, domestic and international manufacturers and suppliers have invested hundreds of billions of dollars in new and renovated U.S. facilities and job creation right here in the U.S. Dealers have done likewise, while growing their payroll nationally to $64.86 billion. While modernization of a 23-year old agreement is welcome, the objective of NAFTA renegotiation must be to strengthen U.S. manufacturing competitiveness by maintaining the robust and open supply chain that has helped fuel the 19 percent increase in motor vehicle parts manufacturing jobs and the 17.5 percent increase in dealership jobs we have seen over the last four years.

Unreasonable changes to the NAFTA rules of origin will hurt American companies and put U.S. jobs at risk. NAFTA’s rules of origin were never intended to create jobs. They were intended to create an interconnected supply chain and allow American businesses to remain competitive in a global economy — and they have worked. Unrealistic rules of origin would increase the cost of manufacturing, raise prices for consumers and, a recent study shows, eliminate as many as 50,000 U.S. jobs.

Americans rely on their local dealerships for access to fairly priced vehicles. With the advent of important new safety technologies, the price of the average new car has risen $5,700 in the last decade to $34,449 — a significant cost to American families. NAFTA helps keep those monthly payments from skyrocketing even higher by consolidating manufacturing, encouraging competition among automakers and refining supply chains. A withdrawal from NAFTA would amount to a double whammy against middle-class Americans who would see jobs disappear even as the price of critical goods, including safe transportation, rise steeply. 

The Trump administration has said many times that new rules and regulations should help American businesses compete. Significantly changing or withdrawing from NAFTA does not accomplish this goal. In fact, all evidence shows that it will have the opposite effect. Modernize NAFTA yes, but do so with care. 

Handschuh is president and CEO of the Motor & Equipment Manufacturers Association and Lusk is president and CEO of the American International Automobile Dealers Association.

 

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