The automotive aftermarket is truly global today and trade agreements are vital to open free trade in international markets for suppliers. The United States is currently involved in two high-profile trade negotiations that could have far-reaching benefits for suppliers: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP).
The Motor & Equipment Manufacturers Association (MEMA) and the Automotive Aftermarket Suppliers Association (AASA), MEMA’s light vehicle aftermarket division, are working to advance suppliers’ global business on these two measures.
TPP is a regional free trade agreement that comprises the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. TPP is expected to grow its membership of Asia-Pacific nations after an agreement is finalized and interested countries agree to meet principles of the TPP.
T-TIP negotiations seek greater economic integration between the U.S. and the European Union (EU), the largest economic relationship in the world.
Both TPP and T-TIP have gone through several rounds of high-level meetings. The TPP negotiations were concluded in 2015, while the timing for completion of T-TIP is less certain. Also in 2015, Congress passed Trade Promotion Authority (TPA) legislation, also known as “fast track,” which allows the president to submit trade agreements to Congress for a vote without amendments.
The TPP seeks to be a model “high standard” 21st century trade agreement that addresses greater supply chain integration, improved protections for intellectual property rights and regulatory coherence. The strategically important Asia-Pacific region, representing roughly half of world trade and 60 percent of world gross domestic product, offers significant opportunities for suppliers to grow in a critical market.
The TPP agreement contains provisions on “rules of origin” for automotive components. MEMA produced and shared with the membership an extensive analysis of the agreement and expects a position on the agreement to be adopted soon.
A successful T-TIP agreement will be an opportunity for suppliers to access EU markets through a strengthened worldwide harmonization process. T-TIP would improve regulatory stability and streamline resources, while respecting U.S. and EU sovereignty and without sacrificing vehicle safety or environmental performance. Regulatory cooperation and harmonization is a top priority for suppliers – failure to achieve it will severely limit the economic potential of T-TIP.
According to EU Impact Assessment Reports on T-TIP, current auto non-tariff barriers (NTBs) between the U.S. and EU are equivalent to an ad valorem tariff of 26 percent. In addition, the reports project that eliminating tariffs and 25 percent of existing U.S. and EU NTBs would increase EU vehicle and components exports to the U.S. by 149 percent and increase U.S. vehicle and components exports to the EU by 347 percent.
In January 2016, MEMA and AASA released a statement of support for the TPP agreement because it positively addresses tariff reduction and elimination, non-tariff trade barriers and intellectual property protection. MEMA and AASA will work closely with the administration and Congress to address initiatives that support and protect the domestic industry. MEMA also is working with European counterparts in CLEPA and with the vehicle manufacturers to adopt a rigorous and impactful T-TIP agreement.
For more details on these trade agreements and MEMA’s advocacy efforts, contact Ann Wilson: [email protected].
Editor’s note: MEMA represents vehicle suppliers that manufacture and remanufacture components and systems for use in passenger cars and heavy trucks providing original equipment (OE) to new vehicles as well as aftermarket parts to service, maintain and repair over 256 million vehicles on the road today. Suppliers are the largest employers of manufacturing jobs in the U.S. directly employing over 734,000 Americans with a total employment impact of 3.6 million jobs. MEMA members lead the way in developing advanced, transformative technologies that enable safer, smarter and more efficient vehicles, all within a rapidly growing global marketplace with increased regulatory and customer demands. Ultimately, about two‐thirds of the value of today’s vehicles come from suppliers. MEMA represents vehicle suppliers through the following four divisions: AASA, Heavy Duty Manufacturers Association (HDMA), Motor & Equipment Remanufacturers Association (MERA) and Original Equipment Suppliers Association (OESA). For more information on the motor vehicle component supplier industry, visit www.mema.org. AASA exclusively serves manufacturers of aftermarket components, tools and equipment, and related products that support 710,000 employees in the United States.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
