After weeks of voicing a clear position on behalf of its members regarding renegotiating or modernizing the North American Free Trade Agreement (NAFTA), the Motor & Equipment Manufacturers Association (MEMA) testified before the United States Trade Representative (USTR) during a June 28 public hearing.
“MEMA members operate in a global industry with suppliers, customers, and facilities worldwide,” said Steve Handschuh, MEMA president and CEO. “Our testimony aims to communicate in no uncertain terms that open markets and integrated supply chains provide the framework for economic growth and jobs in our industry. NAFTA has served our industry, the American worker, and the U.S. economy well.”
MEMA stressed the current economic impact of our vehicle industry and the role that NAFTA plays in its growth.
“MEMA supports a balanced modernization of the NAFTA that creates a 21st Century trade agreement. It must foster a competitive U.S. manufacturing environment and avoid unintended risks that may impact domestic jobs, increase production costs, and disrupt supply chains,” MEMA Senior Director of Regulatory Affairs Leigh Merino said in her testimony. “MEMA members operate in a global economy that depends on a on a strong North American trading economy and a worldwide network of suppliers and customers for continued viability and growth. Our industry’s 19 percent job growth can be attributed, in part, to the NAFTA model. NAFTA -enabled ‘nearshoring’ of an interconnected supply chain between the U.S., Canada, and Mexico has allowed the U.S. manufacturers to compete with the rest of the world.”
During the testimony, MEMA urged the administration to keep in mind additional industry challenges dealing with capacity, sales volumes, and skilled workforce.
“Both OEMs and suppliers are operating current manufacturing facilities at peak capacity. Any new capacity would require new or expanded facilities at a time when U.S. sales volumes at their peak and the economic viability of opening new facilities is minimized,” Merino said. “Like many manufacturing industries, suppliers are having a difficult time finding enough skilled tradespeople to fill open positions. Despite these challenges, our collective objective is to maintain and increase the existing higher value-added manufacturing in the U.S. where we already have a competitive advantage”
Lastly, as the NAFTA undergoes an update, MEMA said it would support the following criteria:
- Establishing a level playing field for all parties, and strongly supports initiatives that would eliminate unfair trade practices globally.
- Increasing and encouraging cooperation between countries and the industry to improve international trade.
- Allowing flexibility in key NAFTA provisions on how to qualify items because of the substantial manufacturing process in the region and to update the rules of origin that reflect current and future manufacturing environments.
- Including investor-state disputes and other NAFTA forums that could speed conflict resolution including tariff classifications.
- Enforcing Intellectual Property Rights (IPR) protection.
- Aligning data protection and privacy laws so that data can freely flow within NAFTA.
- Ensuring that U.S. Federal Motor Vehicle Safety Standards and other similar provisions are accepted in treaty countries.
- Promoting a harmonized regulatory system, particularly working with Mexico to implement safety and environmental provisions that are in line with the U.S. and Canada.
- Regulating the move and residence of laborers, their dependents, and business visitors across NAFTA (for example, allowing for additional inner-NAFTA work visas beyond the current program).
- Requiring that imports of all aftermarket parts − including remanufactured goods − not to be treated differently from new goods imports.
- Utilizing draft components of previous trade agreements that are beneficial for all three countries (e.g. services, IPR).
The June 28 testimony was just one of many actions MEMA has taken in recent weeks to ensure that MEMA’s members are well represented in the lead-up to NAFTA discussions. In comments submitted June 12 to United States Trade Representative Robert Lighthizer, MEMA took a firm stance on behalf of its members arguing that great care be taken in renegotiating or modernizing NAFTA.
MEMA’s extensive communications regarding NAFTA to the Trump administration is part of an on-going effort to raise concerns about newly proposed tax and trade policies. MEMA adamantly supports reasonable tax and trade policies that will increase American competitiveness in a global economy while continuing the 19 percent job growth the supplier industry has seen in the last five years.
MEMA meets with Chao
MEMA also met with new Department of Transportation Secretary Elaine Chao on Friday. Chao was nominated by President Donald Trump and confirmed by the Senate in January.
In the meeting, MEMA reasserted its support of President Trumps’ $1 billion public/private infrastructure plan and emphasized that expediting long-term investment in transportation infrastructure will support new critical technologies such as vehicle-to-infrastructure communications. A long-term, sustained infrastructure improvement plan is critical for the overall U.S. economy and for our member companies to remain globally competitive, MEMA said.
The meeting also addressed issues of top importance to motor vehicle parts suppliers including: existing advanced driver assistance systems and the ways they increase driver safety; the next generation of vehicle safety technologies and highly automated vehicles that can communicate with one another (V2V communications); and harmonizing emissions standards.
The meeting served to create greater awareness among the Trump administration of the motor vehicle parts supplier industry, which manufactures and remanufactures parts, components, and systems for use in passenger cars and heavy-duty vehicles and represents the largest manufacturing sector in the U.S., directly employing more than 871,000 Americans, MEMA said.
“This meeting is timely,” said Handschuh. “Ms. Chao has said that the administration could release an infrastructure plan as soon as May. Since suppliers play a leading role in job creation and investment growth and are a major contributor to the national economy, our participation in discussions on the future of infrastructure and new safety technologies is critical.”
This was the second of many expected conversations between MEMA senior leadership and Trump administration officials in the coming weeks and months. On March 24, MEMA met with White House senior staff members of the National Economic Council (NEC).
Motor vehicle component manufacturers are the largest employer of manufacturing jobs in the U.S., contributing nearly 3 percent of the U.S. gross domestic product. Employment by suppliers is up 19 percent since 2012, generating a total direct and indirect employment impact of 4.26 million jobs.
In January, MEMA released an important economic impact study that clearly defines the critical role motor vehicle parts suppliers play in the U.S. economy. A mini version of that report is also available.