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Trans-Pacific Partnership Fears Hover Over Detroit Three

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The Detroit Three are among those expressing concern over the Trans-Pacific Partnership free-trade agreement, specifically what it would do to the industry.

Last week, both houses of Congress approved President Barack Obama’s request for an up-or-down vote to fast-track the free-trade agreement involving 12 nations and affecting 40 percent of the global economy, The Detroit News reports. The urgency comes amid warnings that if the TPP isn’t put into effect as soon as possible, China, not the United States, would be the one creating similar trade deals.

Though the TPP has few fans among unions, activists, and most Democrats in Congress, the Detroit Three have their own concerns about the fast-tracking proposal: once enacted, the 2.5-percent tariff on cars and parts, as well as the infamous 25 percent “Chicken Tax” on imported light-duty trucks, would disappear over a period of time. The latter has been used to protect the domestic truck market by keeping competitors out unless the latter were willing to build trucks in the U.S.

According to the trio, were the tariffs – which they want to keep around for 25 more years at minimum – to disappear, and if Japan weakens its currency to better compete against them, domestic automakers would eventually be undercut by Japanese automakers. In turn, the Detroit Three would face considerable pressure to return fire, with those on the factory floor likely to be the hardest hit.

Another issue surrounding Japan is importation of U.S. vehicles, which the trio state has been difficult to accomplish over the years due to a number of trade barriers, tariffs not being among them as far as Japan’s importation policy is concerned. Japanese automakers counter that so few U.S. vehicles are imported annually because the Detroit Three haven’t made much of an effort to sell them to Japanese consumers in the first place. While the former has spent billions and employed thousands to build vehicles in the U.S., Detroit hasn’t done the same at all.

Currently, their lobbyists are working to add an enforceable currency provision to the TPP to protect Detroit’s standing. So far, the provision has yet to be added to the pact.

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