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Trade agreements expand aftermarket suppliers’ global reach

Tuesday, March 31, 2015 - 07:00
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The motor vehicle supplier industry is truly global in reach today. Suppliers have global manufacturing footprints, exporting and importing products and components to serve customer needs around the world.

Automotive suppliers export $62 billion dollars in automotive parts to Pacific countries, including South America and Asia. Automakers export 2 million vehicles a year from the U.S, at an additional value of more than $51 billion dollars – and nearly 70 percent of a vehicle’s value today is made by suppliers.

International trade agreements are vital to opening new markets for North American suppliers and maintaining a level playing field for trading partners. The Motor & Equipment Manufacturers Association (MEMA) is the nation’s oldest and largest association representing the North American motor vehicle parts supplier industry and has a long history of advocacy for opening global markets to suppliers.

Two high-profile trade agreements are currently in negotiations: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP). The 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. Membership among Asia-Pacific nations is expected to grow after the agreement is finalized and interested counties agree to meet TPP’s principles. T-TIP negotiations seek greater economic integration between the U.S. and the European Union (EU), the largest economic relationship in the world.

The TPP seeks to set 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 growth opportunities for aftermarket suppliers in a critical market.

The T-TIP agreement also opens opportunities for aftermarket suppliers. The top priority of this agreement is regulatory cooperation. Failure to achieve this cooperation will severely limit its economic potential for the vehicle industry. 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 eliminating tariffs and 25 percent of existing U.S. and EU NTBs would increase EU vehicle and parts exports to the U.S. by 149 percent and increase U.S. vehicle and parts exports to the EU by 347 percent.

Both trade agreements have gone through several rounds of high-level meetings. The TPP agreement is expected to be completed in 2015, but the timing of T-TIP’s completion is less certain. However, Congress must pass Trade Promotion Authority (TPA) legislation before these treaties are completed. Also known as “fast track,” TPA allows the president to submit trade agreements to Congress for a vote without amendments. Congressional Republicans and the Obama administration agree on the need for TPA, but congressional Democrats oppose TPA without specific conditions.

MEMA is working cooperatively with industry groups and coalitions to influence the negotiations. The association also consults regularly with the U.S. Trade Representative (USTR), Congress and other stakeholders to ensure the interests of motor vehicle parts suppliers are served in the final agreements.

For more information about the Automotive Aftermarket Suppliers Association (AASA) and its global outreach services, visit www.aftermarketsuppliers.org.

Editor’s note: AASA is the light vehicle aftermarket division of MEMA. AASA exclusively serves manufacturers of aftermarket components, tools and equipment, and related products that support 710,000 employees in the United States. AASA is a recognized industry change agent – promoting a collaborative industry environment, providing a forum to address issues and serving as a valued resource for members.

MEMA represents more than 1,000 companies that manufacture components and systems for use in motor vehicles and equipment in the light vehicle and heavy-duty, on- and off-highway commercial vehicle markets for the original equipment and aftermarket industries. Motor vehicle component manufacturers are the nation’s largest manufacturing sector with a total employment impact of 3.62 million employees – for every direct job in the motor vehicle supplier industry, another five jobs are created. MEMA represents its members through 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.

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