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October 25, 2017

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Auto industry urges Trump not to exit NAFTA

Major automakers, suppliers and auto dealers were launching a new coalition yesterday to urge President Donald Trump not to withdraw from the North American Free Trade Agreement.

Auto trade associations representing General Motors Co, Toyota Motor Corp, Volkswagen AG, Hyundai Motor Co, Ford Motor Co and nearly every other major automaker, are part of the coalition dubbed “Driving American Jobs” and backing an advertising campaign to convince the White House and voters that the agreement has been crucial in boosting US automotive sector production and jobs.

Trump has threatened to withdraw from the trade deal with US, Canada and Mexico, which is heavily utilized by automakers who have production and supply chains spread across the three countries.

In the most recent round of talks to renegotiate NAFTA last week, Trump proposed changes to the rules of origin for autos, which are used to determine how much of an auto is made in a certain place. The proposed rules were viewed as untenable for automakers, as well as Mexico and Canada.

The auto industry joins the US Chamber of Commerce and other large business groups that have become more vocal in recent weeks about Trump’s efforts to change the 23-year-old accord, saying they would be detrimental to American jobs.

The auto coalition, which includes the Motor & Equipment Manufacturers Association and American International Automobile Dealers Association, said ending NAFTA, which underpins US$1.2 trillion in annual trade between the three countries, would put US auto sector jobs at risk.

They pointed to US$9.5 billion in new investments announced this year by the auto and auto parts sector and feature the personal stories of auto sector employees throughout America — from plant workers to auto dealership personnel.

“We need you to tell your elected officials that you don’t change the game in the middle of a comeback. We’re winning with NAFTA,” the group said on its website.

The campaign comes amid rising concern that the Trump administration could opt early next year to withdraw after giving six months notice, a move that could expose automakers who are building trucks in Mexico to high tariffs and impose new tariffs on parts and cars made throughout North America.

Trump told the Fox Business Network in an interview that aired Sunday he thinks the deal will “probably” be renegotiated, but said he will withdraw if it is not fair. “We can’t allow the world to look at us as a whipping post. Not going to happen anymore,” Trump said.

The Chamber of Commerce accused the Trump administration of trying to sabotage the talks with “poison pill proposals,” including demands for more favorable treatment for the US side on car production, and a “sunset clause” to force regular negotiations.

US Trade Representative Robert Lighthizer said earlier this month the Trump administration was focused on trying to get an agreement that was fair but said he had “seen no indication that our partners are willing to make any changes that will result in a rebalancing and a reduction in these huge trade deficits.”


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