Although publicly available details are in short supply regarding the precise negotiated terms at this point, industry insiders are optimistic that the pending Trans-Pacific Partnership (TPP) will benefit the American aftermarket along with the overall automotive industry.
Domestically spearheaded by the Office of the United States Trade Representative (USTR), the U.S. and 11 other nations are multilaterally involved in formulating the TPP’s specifics: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Controversy continues to accompany the pact’s progress amid a contentious array of political machinations going into the presidential campaign cycle. Supporters had anticipated that the agreement would have been wrapped up in March.
“International trade is front and center in 2015 – such as the proposed Trans-Pacific Partnership debate and the unlikely alliance pitting the White House and Congressional Republicans against liberal Democrats and some elements of the Tea Party on this issue,” according to Jerome Ashton, managing editor of international trade at Bloomberg, which has prepared a 40-plus page report covering an assortment of worldwide trade policy issues being pursued by the U.S.
“If concluded in the ambitious manner conceived, the TPP can greatly benefit the auto care industry by joining together nearly 800 million consumers and almost 40 percent of the world economy in a deeper and more formalized trade and investment relationship,” says Andres Castrillon, senior counsel for international affairs at the Auto Care Association.
“TPP offers the opportunity to counterbalance the major inroads that our Chinese competitors have made throughout the Asia-Pacific region. A strong TPP will open closed markets, eliminate barriers, secure strong IP (intellectual property) protection and ensure enforceability,” he explains.
“Our industry is increasingly global and our members need fair treatment, strong standards and open markets if we are going to grow our industry and workforce here at home. With 95 percent of the world’s consumers and 80 percent of the purchasing power outside of our borders, we need to do a better job of growing overseas markets. Free trade agreements are key to this effort,” according to Castrillon.
“Last year, 80 percent of U.S. auto parts exports went to free trade agreement (FTA) countries. And, while we have been idle in completing new FTAs, our competitors overseas are benefitting from the many agreements negotiated by China, the EU, Mexico and others that exclude and disadvantage manufacturers in the U.S.,” he contends.
When conceived,” says Castrillon, “TPP was intended to be the gold standard FTA for the 21st century. We are watching the negotiations closely and hope to see strong outcomes on a number of outstanding issues; apart from the occasional leaked draft chapter, the TPP texts are closed.”
Seemingly more secret than Iran’s alleged efforts to build an atom bomb, the lack of clarity over the pact’s provisions is inviting a cacophony of uncertainty and criticism. A source with familiarity of the TPP topic observes “we have to be careful how we talk about it in public.”
Depending on additional automotive elements being finalized and accessible for discussion, the Motor & Equipment Manufacturers Association (MEMA) is expressing confidence that the end results will be positive based on the known preliminaries.
“I would say there has been an open dialogue, and since negotiations continue we aren’t privy to the details at this time,” says MEMA Senior Vice President Ann Wilson,” noting that “we support free trade agreements but will need to review the TPP before we can comment on the specifics.”
Easing automotive imports and exports among the 12 nations is likely to deliver a desirable outcome. “MEMA supports trade agreements that promote a free and open market. We believe TPP will open markets in the participating countries by addressing non-tariff barriers to trade and other hindrances to suppliers,” she explains.
“The aftermarket is growing in many of these countries and the agreement will apply to them. The supplier industry is a global industry. As countries collectively address these trade issues together, barriers are confronted,” says Wilson, pointing out that progress is being made.
“There are many provisions that apply to the OEMs and suppliers,” she reports. “We have always been able to maintain an open dialogue with the negotiators. MEMA member companies have not raised any specific objections that we have been unable to address.”
Enacting TPA comes first
“I know that large auto parts associations such as MEMA are working cooperatively with industry groups and coalitions to offer input into the negotiations,” says U.S. Assistant Secretary of Commerce for Industry & Analysis Marcus Jadotte, who spoke at the State of the Auto Care Industry Forum in April at the U.S. Chamber of Commerce.
“TPP would assist in supply chain integration, intellectual property rights protection and regulatory issues that impact trade. TPP will also address competitive issues in specific countries such as Malaysia’s Auto Plan, which has inhibited auto and auto parts imports,” Jadotte tells Aftermarket Business World in a recent interview update.
“Today, there are 525 million middle class consumers in Asia. By 2030, there are expected to be 3.2 billion. That’s more than six times the size of what the U.S. market will be at that point,” he says. “TPP would open trade with countries which account for more than 40 percent of the world’s GDP (Gross Domestic Product). TPP would offer significant growth opportunities for American companies.”
Jadotte goes on to emphasize the importance of the U.S. House and Senate coming to terms with suitable Trade Promotion Authority (TPA) legislation that calls for direct up or down votes on negotiated trade pacts rather than calling for changes to be made in the completed document terms. Adding amendments in Congress could lead to the other 11 TPP nations insisting on their own alterations.
“To help ensure that TPP can be enacted, TPA must first pass. Updating TPA ensures our trading partners know U.S. negotiators have the support of Congress when we call for stronger, high-standard trade agreements,” he says.
“This is particularly important on current issues affecting our ability to compete in the global economy, such as leveling the playing field between state-owned enterprises and our private firms,” says Jadotte. “To keep strengthening our economy, we need better trade rules that protect American jobs and workers, and open markets to Made-in-America goods and services.”
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