Public Hearing on Section 232 National Security Investigation of Imports of Autos and Auto Parts

Public Hearing on Section 232 National Security Investigation of Imports of Autos and Auto Parts


>>Good morning, everybody. Ladies
and gentlemen, we are about to start the hearing. Please take
your seats and please silence your cell
phones. We will get started in a minute.
>>Good morning, everybody. Welcome
to the public hearing of the department, — Department of
Commerce on automobiles and automotive
parts. I am the Assistant Secretary for the Department of
commerce industry and analysis office. Joining us today are
experts from across the U.S. government. I would like to
recognize and thank the following individuals for
providing their expertise for our hearing today. They are all
seated up front. There is Michael [ indiscernible name ],
director of the office of strategic industries and
economic security of the Department of Commerce Bureau of
industry and security, Andre [ indiscernible name ], automotive
team leader at the department’s international trade
administration, Julie Abraham , director of the office of
international transportation and trade at the U.S. Department of
Transportation, Nicole [ indiscernible name ], Senior
advisor in the office of international
transportation and trade at the U.S. Department of
transportation. And there’s Robert Reed, director of
industrial assessments for the Deputy
Assistant Secretary of Defense for manufacturing and
industrial-based policy at the Department of Defense. It is now
my honor and great pleasure to introduce the secretary of
commerce, Secretary Wilbur Ross . Secretary Ross was sworn in as
the 39th secretary of commerce in February, 2017. He is the
principal voice of U.S. businesses and the trumpet
ministration. And he has steadfastly been
devoted to assuring that U.S. industries run a globally
competitive. And he has ensured that U.S. mentors and businesses
have the tools they need to create good jobs and economic
opportunity for every American both today and tomorrow. I will
tell you from my own personal experience that Secretary Ross
cares deeply about growth opportunities for both large and
small American businesses. I have been in the room with him
when he is in a meeting or has taken calls from these companies
personally. I have watched as Secretary Ross so diligently
worked to implement expeditious and practical solutions to their
concerns. It is truly remarkable how dedicated Secretary Ross is to serving our
country and the interests of American companies and workers.
Further, Secretary Ross is the former chairman of the chief
strategy officer of UL Ross and Company and has more than 55
years of investment banking and private equity experience. He has been
the chairman or lead director of more than 100 companies,
operating in more than 20 different countries. Named by
Bloomberg markets is one of the 50 most influential people in
global finance, Secretary Ross is the only person elected to
both the private equity Hall of Fame and the turnaround
management Hall of Fame. We truly cannot ask for a better
person to serve as the secretary of commerce. And I personally
cannot ask for a better leader to serve under. We are pleased
to have him open today’s hearing. Please welcome
Secretary Ross. >>[ applause ]
>>Thank you for that kind
introduction. We are fortunate to have people of your
high-caliber here in the Commerce Department. I welcome
everyone to this discussion about the all-important American
automobile industry. It is obvious by the attendance here
this morning how vital this industry is to the U.S. and the
global economy. President Trump decided on May 23 to initiate an
investigation into the potential national security impacts of
imports of automobiles and automobile parts. The federal
register notice seeking input from the industry and from the
public was issued a week later on May 30. And we have received
more than 2300 comments. Thank you, all, for being
engaged with us in our formal investigation into the state of
the U.S. automobile and automotive parts industries and the industry’s impact on
national security. It is clearly too early now to say if this
investigation will ultimately result in a section 232
recommendations on national security grounds as we did
earlier with steel and aluminum. And as we have initiated
regarding the uranium industry. But President Trump does
understand how indispensable the U.S. automobile industry is.
This industry had been a major driver of innovation. It
provides a backbone for our industrial economy. It supports millions of
Americans with high-paying jobs. And the industry is central to
the advancement of new technologies such as autonomous
vehicles , fuel cells, electronic motors,
battery storage, composites, and other new materials and advanced
many factoring processes. The intention of our hearing today
is together information on the current strength of the domestic industry. We are
interested in hearing about the global market and technology
trends that are important to our assessment as to whether
government action is required to assure the viability of U.S.
domestic production. And whether resin conditions constitute a
potential threat to our national security as defined in section
232 of the trade expansion act of 1962 is of interest. We are
carefully analyzing all of the information that you are
providing and that our analysts are gathering from other
sources. We are looking at every comment that has been filed. We
need to understand the complexity of the industry, the
global nature of supply chains, and production systems. So I
look forward to a very productive day and suggest we
now begin with the first panel. >>Thank you, Mr. secretary. I also
wanted to take a quick opportunity to mention some of the other
leaders at the Department of Commerce who are here. We have
Peter Davidson, chief counsel at the Commerce Department,
undersecretary Gail Kaplan for the international trade
administration, and I think I saw Gary Tabron acting as assistant secretary for
enforcement and complaints and numerous other leaders from both
the Department of Commerce and other government agencies taking
the time to join us today. This is truly a collaborative effort
among agencies at the industry to conduct this investigation
and share the information we all have to ensure our analysis is
robust. Now I would like to turn it over to Sarah Park Sue . She will be serving today as
our moderator. I will call Sarah up to explain the hearing
process for today. Thank you. >>Good morning. Thank you. As we hear from various groups
and stakeholders as they present their testimonies on the effect
of imports of automobiles and automotive parts on our nation’s
security, before we begin, I would like to go over a few
administrative rules for both our presenters and our audience. For
presenters, each panel will present their testimony in order
as it appears on the agenda. When you begin, please state
your name and the organization you represent. You will each
have five minutes to present your testimony. I will then
inform you when you have one minute remaining by raising a
green card. 30 seconds remaining will be when I raise the yellow
card. And when your time is up, I will raise a red card. Please
do not go over your allotted five minutes as a help to allow
equal time for all who are here to testify today. Please note
that no outside equipment such as cell phones is allowed during
your testimony. Once the entire, I am sorry, can everybody hear
me? Please note that no outside
equipment such as cell phones is allowed during your testimony.
Once the entire panel has provided their testimony, there
will be an opportunity for the United States government
panelists to seek clarification on specific points you have
raised or seek further insights into your areas of expertise as
it relates to this hearing. For the audience, due to time
constraints, we will not be taking any questions from the
audience. We also ask that you remain quiet and turn your cell
phones to silent mode or off during the testimony. We ask
that you refrain as much as possible from entering and
exiting the auditorium during the testimony . there
will be brief pauses between panels. We encourage you to use
it if you must enter or exit the auditorium. Lastly, please
remember that if you leave the building complex for whatever
reason, you will need to pass security to reenter the complex.
At this time, with the United States government panelists, and
the presenters for the first panel, would you please come up
and take your seat. For the first panel, we welcome the
Alliance of Automobile Manufacturers , Jennifer Thomas,
American Automotive Policy Council , Governor Matt Blunt,
the National Automobile Dealers
Association, Peter Welch, and the national Association of
Manufacturers, Linda Dempsey. >>Good morning. Welcome. Can you
hear me? Great. Ms. Thomas, you may begin.>> Can you hear me?
>>Yes, I can. Thank you. >>Good morning. My name is
Jennifer Thomas. I am the vice president of federal government
affairs at the Alliance of Automobile Manufacturers . We
are a trade association comprised of 12 automakers, both
domestic and international. I appreciate the opportunity to be
here with you today. Let me start by dispelling the
notion that cars are a threat to national security. Americans
have always had a love affair with cars. Buying cars is such a
common aspiration that it has become part of the American
dream. Getting your drivers license is
a right of passage. Everybody can remember their first car.
The auto industry is part of the very fabric of America. It is
one of the most powerful engines driving our economy through
jobs, facilities, R&D investments. On 911, one of our
darkest days, the companies I represent immediately responded
with donations of vehicles and charitable contributions. Sadly,
there is a long list of products that are no longer made here in
America like TVs, laptops, cell phones, even baseballs. But cars , millions of cars are made in
America. And our footprint continues to grow. Right now, 14
automakers are operating 45 assembly facilities across 14
states. Those are both domestic and international automakers. We
support more than 7 million American workers, generate $500
billion in annual paychecks, $200 million in state and
federal taxes, and every year, automakers in the U.S. invest
$20 million in R&D, transforming mobility through automation and
electrification. >>I am here today to reiterate our
strong opposition to this unprecedented, unwarranted
investigation any potential imposition of higher auto
tariffs. We appreciate the desire to strengthen our trade
agreements to better achieve a level playing field . But tariffs are the wrong
approach. Our view is shared by over 2200 comments that were
filed for this hearing. In fact, we were only able to find three
investigations, through three organizations who are supporting
this inquiry. The opposition is widespread and deep because the
consequences are alarming. Higher tariffs will harm
American workers, families, and the economy. Simply put, auto
tariffs are a massive tax on consumers. Our analyses show
that the 5% tariffs will increase the
price of an imported car nearly $6000 and the price of a US-made
car $2000.>>I am getting a signal that
the audience is having a little bit of a hard time hearing.
Could you please speak a little louder for folks in the back , I would appreciate it.
>>This would equate to an $83 billion tax on consumers and
that would trigger a domino effect throughout the industry
and the economy. When vehicle prices — prices rise, demand
drops. Lower demand means less production. And when production
declines, job losses follow. Eight Peterson it should
analysis protects the job loss of 2000 to 200,000. Of
other countries retaliate, they estimate American job laws to
exceed 600,000. That is about 10% of this country’s auto jobs.
Tariffs also strike at the heart of American technological
leadership by Chile R&D investments. Today, the U.S. is
a leader in the global race to develop electrification and
automation technologies. But if auto tariffs raise costs and chill investments, the U.S.
may well is that leadership. Other countries are already
chasing automakers investments and encouraging them to build R&D facilities overseas.
Retaliation would further threaten U.S. auto exports. Last
year, more than 100 billion in autos and auto parts were
exported from our ports to other countries. Retaliatory
tariffs would restrict international markets and
oppress auto exports, reduce jobs, and threaten the
industry’s competitiveness in the global marketplace. Speaking of competition in the
global market, we understand that the agency has sent
detailed questionnaires to automakers requesting
information about their production. Companies are
working on responding. But it is challenging due to the highly
sensitive information that has been requested. We urge the
administration to take critical precautions to ensure that this
competitive business information remains confidential and secure.
In closing, automakers support the administration’s efforts to
level the playing field and strengthen our trade agreements
to grow American jobs. But we respectfully contend that there is a better
way to do this that raising tariffs. Our economic security
could be strengthened by modernizing NAFTA, concluding a
U.S. EU trade pact to reduce trade barriers on both sides of
the Atlantic, and we encourage the administration to seek other
opportunities to expand market access for exports. This is the
winning formula for continuing the economic success of the
Trump administration and we look forward to
partnering with you on her goals. Thank you very much.
>>Thank you, Ms. Thomas. Governor plans?
>>Thank you. I am at Blunt. I am the president of AAPC, the
American Automotive Policy Council which represents the
common public policy interest of Fiat Chrysler FCA , Ford, General Motors. We want
to thank you for this opportunity to share our views
on the section 232 investigation. While AAPC and
its member companies share the administration’s goals
of maximizing the economic contributions that America’s
auto sectors makes to the U.S. economy, we are opposed to any
increase in import tariffs on automobiles and auto-parts that
could result from this investigation. Iconic brands and deep American
rates, FCA, Ford, GM produce more of the vehicles here in the U.S. at source more of
their parts from American suppliers that our foreign
competitors. As a result, FCA, Ford, GM employee nearly two out
of three American autoworkers and they operate three out of
five auto assembly plant in our country. Since the industry is
restructuring a decade ago, these companies have thrived
with significant growth in investment, sales, production,
export, and deployment. Over the past decade, FCA, Ford, and GM
domestic car and light truck induction and sales share have
held steady at 53% at 45% respectively. We hope to see our
U.S. production number increase through expanded access to
export markets and the removal of trade
barriers that place American-made vehicles at a
distinct disadvantage in key regions around the world.
President Trump in his administration have clearly made the auto industry a priority.
And we are thankful for this leadership and policy areas that
are critical to the audio to the auto industry including successful
corporate tax reform. We are, however, very concerned that the
positive effects of the administration’s policies could
be undermined by the imposition of tariffs on imported vehicles
and parts. Our companies are extremely proud of the
contributions they have made the United States in peace and war.
From our perspective, there is no evidence that automotive
imports pose a threat to our national security. In addition,
we believe there is sufficient capacity to meet any national
security requirements. We do fully understand that economic
security is a vital part of our nation’s national security. And
in fact, we have concluded that tariffs under section 232 would
diminish the economic contributions that FCA, Ford,
and GM make to our nation’s economy today. This is an
outcome that would be counterproductive to the
administrations intended goals for the auto industry. Our analysis
shows that a tariff increase under section 232 coupled with
the existing tariffs on imported steel and aluminum including
from our North American allies will
result in a net loss of American jobs, lower capital investment,
and lower exports by the U.S. auto sector. By increasing the cost to manufacture and car,
tariffs will lead to higher vehicle prices for all
automakers, foreign and domestic. These higher costs
will, in turn, lead to lower demand and lower auto sales and
production. Ultimately, this will lead to fewer jobs in the
auto industry. Our analysis also shows that America’s automakers,
along with their suppliers and strategic partners in the
technology industry are leading the way in the development and
application of advanced vehicle technologies. This includes
cutting-edge EV and AV technologies. Other countries
are tempting to attempted to close the gap — other countries
are attempting to close the gap. We have created a strong
foundation for further advancements in leadership in
the coming years. To help ensure a bright future for the U.S.
auto sector, while at the same time avoiding the negative,
unintended consequences of higher tariffs, we strongly
recommend a joint industry government effort to help
support our global competitiveness and expand U.S.
auto imports — exports. We urge the completion of a modernize
NAFTA that includes acceptance of vehicles to the U.S. auto
safety standards and enforceable disciplines against currency
manipulation. We also urge the administration to consider new free-trade
agreements with our allies while expanding U.S. auto export
opportunities by knocking down trade barriers. Our American automakers currently
face these about. These suggestions and several other
recognitions are described in further detail in the written
comments APC — AAPC submitted on behalf of automakers. We look forward to working with
the United States government to advance our shared goals of
further strengthening the U.S. auto industry and our nation’s
economy. Thank you. >>Thank you, Mr. Blunt. Mr.
Welsh? >>Thank you and good morning.
My name is Peter Welch. I am the president of NADA, the National
Automobile Dealers Association. NADA are present more than
60,800 commercial truck dealers and automobile dealers
representing domestic and international SSL
used and new automobiles and engage in service, repair, part
sales throughout the United States. Last year, our dealer
members sold 17.1 million new cars and an additional 15.3
million used cars. It aggregates, we employed over 1.1
million Americans and in well-paying jobs and are
responsive for that many indirect jobs through suppliers,
contractors and others. Franchise dealers are retailers.
They stop, sell, service what the American consumers want to
buy, out, drive, and more portly, what they can afford. I
would like to share with you today any study that was
released this morning by the Center for automotive research
that we commissioned. A copy is attached to the written version
of my testimony. I suggest you look at it and use it as a
resource. Before I turn to the new study, I would like to
reiterate two important issues that were covered in the written
comments. First, NADA believes there is no basis for a finding
by the department that the importation of autos or
auto-parts to the United States threatens the country’s national
security. Second, National Automobile Dealers Association
recognizes the imports Shiite state of leveling the trade
playing field and eliminate unfair trade practices in
keeping America’s automotive industry strong. We are
committed to working with the administration and pursuit of
those goals and written comments set forth in the number of
strategies to do so. Turning to the study, let me first say the
Center for automotive research is the premier canonic research
firm in the automotive world. Dissenters new study to the
center’s new study — the centers new study is bifurcated
into six different scenarios which looks at the imposition of
a 25% tariff, 10% have, and the alternative 80% quotas if
imposed on import autos and auto-parts from all countries. Then it examines the same
scenarios if imports from Canada and Mexico are excluded. Here
are some key findings. 25% tariff applied to all
imported vehicles and auto-parts at 100% of that tariff passed on
to consumers, the following would occur. The average price
of all new cars sold in the United States would rise by
$4400. Prices would rise $6875 for imported vehicles and $2270
for U.S. built vehicles due to the imported part content.
Annual new vehicle sales would plummet by 2 million units. U.S.
Chris domestic product would fall by $59.2 billion and nearly
715,000 Americans with looser tops. Dealerships alone, annual
revenues fall by $66.5 billion which is
about $4 million per dealership at 117,000 dealership employees
would have to be laid off. That is about 10% of our workforce.
25% tariff on all imported autos and
auto-parts would harm everyone. Auto manufacturers, dealers,
consumers, and the economy as a whole included. The hardest it
would be customers. It includes over 2 million active and
reserve military members and their dependents. The average
price of a new car already covers around $35,000. According to Edmonds,
in the past year, interest rates on new carloads have risen 86
basis points and now average 5.80% with more increases on the
horizon. The average monthly car payment for a new car now stands at $533 a month with
an average loan term of 69 months. Our customers are
already strapped to make this payments. The tariff on top of
that would increase the car payments to $611 a month. That
is $78 a month more. The purchase of a new car would be
out of the reach of many Americans. It would also reduce
competition, consumer choice, increase the cost of used
vehicles, raise the cost of getting vehicles serviced and
repaired. So what is NADA’s request today? The initiation
should fully consider the new study I am submitting with my
testimony but all the data analysis during this
investigation should be reviewed carefully. As a nation, we can
and should work together to address it went trade concerns
without hurting American consumers and small
businesses. On behalf of NADA, we thank you for your
consideration. >>Thank you, Mr. Welch . Ms.
Dempsey? >>Thank you. Mr. Secretary,
members of the U.S. government panel, my name is Linda Dempsey, vice
president for international economic affairs at the national
Association of Manufacturers pick the NAM’s largest manufactory Association in the
United States were presenting 40,000 benefactors, small and
large, and all manufacturing sectors across all 50 states.
Not only does manufacturing employee 12.7 men and women
across this country, but the average worker earns more than $82,000 annually pay and
benefits, about 27% higher than average earnings for all
non-foreign jobs. The NAM is committed to achieving a policy
agenda that helps manufacturers grow here in the United States
and create new jobs. It’s exactly why we welcome the
opportunity to provide input today. Manufacturers agree with
President on the need to promote free and fair trade. Since the
challenge is to commercial in nature, manufactures also
believe that those challenges are best addressed effectively
with targeted tools, designed to address them, either those tools
that exist already or new ones such as inventive new trade agreements.
Let me explain why. The U.S. manufacturing economy has hit
its stride over the past year with solid growth and demand
output and hiring. As the NAM quarterly Outlook survey
continues to show , it’s a strong outlook for the
future. Domestic production and jobs have increased as have
exports of benefactors goods generally and automotive
exports specifically. Indeed, our countries automotive sector , as you have just heard, is
strong and growing. U.S. automobile and automotive parts
production has expanded substantially over the past
several decades. International trade and investment
unsurprisingly has been critical to that robust growth. This
includes foreign investments and includes not only exports but
also imports. Both manufacturers and consumers benefit substantially from
imports that help drive innovation, productivity, and a
stronger economy overall. Of particular note in this regard
our imports are from materials, components, other inputs that
enable manufacturers to produce high-value goods more
competitively here in the United States and to support
higher-paying jobs. We are — discrimination that puts our
benefactors and workers and communities at a disadvantage,
the NAM has long supported robust U.S. government action to
address the underlying causes of those distortions. We believe
that the tools I referenced a moment ago and in my written
testimony represent the best way to advance the
important goals we share with the administration of promoting
free and fair trade and protecting U.S. national
security. That is because the broad unilateral import
restrictions, b-day tariffs or quotas, that a section 232
investigation could authorize, however
well-intentioned, would ultimately be counterproductive,
giving and edge to for production at the expense
of U.S. manufacturing pick negative impacts from tariffs
and quotas include the following. There’s import
instructions — import restrictions, tariff of
25% on importation of auto-parts, for example, could
increase the average cost to manufacturers of passenger
vehicles in the United States by about $2000 and 35% of the value of average automobile, about
$8000 is made of imported parts. Tariff some parts also increase
costs to other things made in America from a wide range of
other manufacturers for aggregate limit,
construction, mining, and marine equipment. A tariff would also
increase the cost to import the average passenger vehicle into
the United States by about $5800. Import restrictions will
also reduce exports. The increased cost to
manufacture vehicles and some major automotive parts will
reduce export opportunities as foreign producers will not face
similar cost increases. And we would also expect to see foreign
retaliatory action in the form of new tariffs on U.S. export.
Import restrictions will reduce domestic production jobs and
consumer demand. Import restrictions will increase costs
benefactors with higher costs for domestic and foreign
automobiles, demand for these products is expected to decline,
meaning fewer U.S. automotive sales, reductions in
production, and job losses. Import restrictions will also
reduce domestic demand for other manufacturing subsectors that
rely on the U.S. automotive sector. No one doubts that
challenges existing international trade. The question is not whether to
address the challenges but how. Manufacturers believe that the
approach I’ve outlined today and in my written testimony
represent the best way forward. It’s best for the automotive fat
— automotive sector, the industry, the workers and communities, and
that’s for the country we love. The NAM looks forward to
continuing to work with the administration on advancing
these goals as part of our ongoing efforts to grow U.S.
manufacturing. Thank you. >>Thank you, the steps he. At
this time, I would like to open the floor to the United States
government to ask any questions the panel may have.
>>We appreciate everybody’s comments. I personally want to
say that I appreciate our common position that we are all
interested in enhancing the strength of the U.S. automotive
industry. To the point about the economic data, we appreciate
your sending economic data. We are in the process of reviewing
all of that. All of the data that you have provided and
certainly all of the comments everybody has provided are
included. We also wanted everybody to know that we have
got a number of economists that are looking at the economic
implications of any potential remedies. So to
supplement what you are providing, we are also doing
very rigorous analysis on our end to look at the economic
impacts from a variety of different niggles. We want to
have a whole 360 degree picture . If there will be remedies
ultimately, what those remedies look like and how they impact
the economy, all again with the same goal, I want to underscore,
strengthening the U.S. auto industry. To the point about
highly sensitive information, that company has been asked to
provide, couple of points on that, these are worth
emphasizing, the type of data that has been requested is
pretty routine in terms of the U.S. government agencies
investigations. Certainly that’s by the U.S. Department of
commerce and Bureau of industry and security and enforcement and
compliance. And their investigations and the U.S.
government has very robust mechanisms in place to safeguard
that data. So I want everybody to rest assured that the data
will be safeguarded and there is a lot of years of experience
as a very the data and a lot of expertise and sophistication of
mechanism. So please rest assured that the data will be
handled properly. To kick it off with a question, if I may, this
question is for all of the presenters, domestic content
data suggests that foreign firms that manufacture automobiles in
the United States generally tend to rely more heavily on imported
auto-parts for U.S. auto assembly that U.S. owned firms.
With foreign firms accounting for a growing share of U.S.
automotive production , is the U.S. automotive supply
chain eroding and becoming overly reliant on imports and
how does this trend continue to appoint where it may impair
national security?>>I would be happy to start. I
am Jennifer with the auto lights. We would
first point out that most of the imported vehicles come from our national security allies and
trading partners. Half of them come from Mexico and Canada and
the restaurant EU, Japan, Korea, et cetera. The global nature of
our industry has allowed us to compete and it also allows us to
provide a variety of products for our customers at affordable
prices. And I know you will hear in the
next panel I believe from the supplier industry and they will
speak more to the reliance on imported parts, but we would
argue that the supply chain allows us to remain competitive
in this global market. >>I would just add to that that
there is indeed a global supply chain for certain components . It is necessary to have those
imports. It does allow us access to those components and allows
us to be competitive as Jennifer said. Our companies are very
proud of the fact that we source heavily from the United States.
We believe on a sales weighted average, we
have about twice the domestic content as our foreign
competitors. Even with the deep roots that we
have in the United States and deep structure we have and
supply chains so heavily focused on the United States, we are
convinced that the imposition of these tariffs would indeed be
harmful and would increase the cost for our companies to build
a car in the United States by as much as $2000. And those are for
vehicles that have domestic content probably more than two
thirds of the domestic content from the United States. So we still
think it would be extremely harmful, raise cost, and make us
less competitive globally as we work to export more and more
product that is a simple here in America.
>>I would just like to reiterate couple of points that
were already made. First of all, roughly 60% of the content are
domestically produced here in the United States which still
leaves a large percentage that is not. But the vast majority of
those parts , it is a global supply chain,
they come from trusted allies and many are NATO members and
they are very dependable part manufacturers. So the only other
point I would like to make for the retailers perspective on
this, our biggest problem right now is our customers and their
affordability. The relentless drive to key parts and vehicles
affordable for Americans is crucial.
>>Let me expand a little bit. As I mentioned in my opening
statement , imports help drive innovation.
They help drive production. They also help us keep higher value
manufacturing here if you are importing
particularly low value parts from overseas . Right now in factoring,
according to the Department of Labor, we have 441,000 open jobs
. The biggest challenge our manufacturers are facing across
the industry is finding workers to fill those
jobs with the average age of the manufacturing worker in the
United States at about 55. So we want to have better production,
higher value production here in the United States. And that is
what the imports allow us to do. The problem, the only problem
with imports is when they are unfairly traded in
which the Department of comments certainly has the tools to
address that, when they are counterfeit where DHS, the ITC
and other mechanisms, we need to make sure that all of those
rules are well addressed . But just because we are
importing, that is not a bad thing. That has helped
strengthen this industry both for manufacturing were broadly
but the automotive industry in particular.
>>Thank you for your points. We certainly are going to look at
your points in detail and to supplement your points with some
of the analysis that we have been conducting over the course
of the past many weeks. >>Another question for all the
presenters, as many have described the comments and as
some of you mentioned are your presentations this morning,
there is an intense global race to lead automotive technologies
like electrification and automation. These technologies
will drive the future of the auto industry and also have
potential military applications. When you look at the major auto
producing nations around the world, the U.S. auto industry
has much higher import penetration appear to foreign
competitors. For companies account for much larger share of
domestic auto production than in other leading auto
producing nations around the world. How do these
discrepancies impact the U.S. competitive position in the
global race for advanced automotive technologies? Second
–>>As I indicated in my cement,
we think that imposing higher tariffs on imported autos and
auto-parts will ultimately chill investment in those critical
areas like automation and
electrification which hold tremendous promise for our
society in regard to safety and meeting our environmental goals.
So we would argue that there are better ways to encourage that investment and development of
those technologies. For example, we are working closely with the
department of transportation other autonomous vehicle
guidelines. That will help establish the third iteration of
it and that will help establish the rules of the road for driverless car’s. And we are
also working and encouraging Congress to pass legislation to
speedy deployment of autonomous vehicles. So we believe that
areas and efforts like that are more effective in speeding the
development of those technologies and maintaining our
leadership as such. Second if you look at
countries on average, our import penetration around 40% is
essentially the same as many of those OECD countries. In fact it
is right at the average level. Certainly our companies have
plans capable of producing millions of vehicles and are
proud of the role that they serve as a part of the arsenal of democracy in the
past. And they’re always willing to work with the department of
defense if there are key technologies that are identified
that need to be safeguarded or certain capabilities that need
to be preserved. We believe that, in terms of the race to
create the vehicles of the future, the United States is
well positioned with the significant percentage of the
automotive R&D that is being spent globally here in
the United States largely by our three members , and also a real advantage when
it comes to information, communication, technology,
research and development with the United States producing
nearly half of the global research and development in that
category. And much of that is now of course being done by
firms not necessarily historically connected with the
auto sector. But this is important R&D that the United
States is in a leadership position. The United States is a
perfect environment, at least a leading global environment, in
terms of reporting that sort of R&D and protecting it and
providing sort of legal environment that makes people want to invest
in research and develop it here. If we are going to maintain that
global leadership in these technologies, we think it is
critical that accompanies our strong and prosperous so that
they can make those vital investments that keep the United
States at the forefront of creating the vehicles of the
future. >>There’s only so many pricing
strategies you can develop if you have tariffs imposed. You
can pass it through to the vehicles, you can pass it
through to all of your product to try to equalize it out, you
can withhold the product because the tariff makes the product too
expensive, or you can try to absorb the tariff through your
profits. And of course, R&D comes out of the manufacturer
dealers profits dealers do not do R&D actually on the cars. We
are joined at the hip with the manufacturer partners. So to the
effect that there is less money to invest in R&D and most of the
R&D these days is going for safety products for
environmentally better cars, electrification, automation, it
is going to be detrimental, pure and simple.
>>To two points, what is foreign
investment, as I think the very successful select USA conference just hosted, it is
critical to the growth of the U.S. economy and for many
factoring at four auto manufacturing specifically.
Manufacturing that is part of the United States many of our
trading partners in the automotive space, these are
allies who are investing here, brings with it a
lot of that R&D that is being done here in the United States
because of that. If there are national security issues related
to foreign investment in the United States, we have those
tools within the city is process that we are urging the countries
up on Capitol Hill even this week to update and modernize
their schools as part of the firm of legislation we want to
see get done and move forward. We have the tools
already to deal with those a sensitive national security
issues to the extent that it is raised here. We do not need
import tariffs, import quotas to do any of that. Second, on the
issue of the import penetration, I just want to note that when we
are looking at the data, particularly the manufacturing
important expert data, what we are not seeing very clearly is
R&D. R&D is not reflected in that. What we are seeing as governor but was saying, it
is a huge amount of R&D being done in the United States. At
that is just not reflected in the data that the import expert
data, the data that you have got.
>>Thank you very much. I believe we have two minutes
maybe one more minute remaining.>>I want to make one point. We
appreciate the comments. I think the distinction between [ indiscernible word ]
and the 2032 investigation, [ indiscernible word ] is
transition focus and the 232 investigation is looking at the
national security threat for the whole industry. So while we
appreciate that the [ indiscernible word ] exists at
our office plays a key role in the commerce department in that
process, we make sure that we are not completing the two
things. As part of everything we are looking at, again, we
appreciate the comments. To the panelists have any questions? I will end with one question.
Maybe Mr. Welch can comment on this. What have we been doing in
terms of, I just returned from Europe and I was really shocked
to see the lack of any real presence of U.S. cars in Europe,
but what has your organization done or actually any of the
panelists, to deal with the barriers that are trade partners
have imposed. What about our trade partners barriers to
getting U.S. cars oversee so we can enhance our R&D and
competitive position globally? >>I would like to defer to one of
the other panelists because we only sell vehicles primarily to
Americans. >>Yes. Maybe Governor Blunt,
this should be directed to you. >>Europe is an important export
market for us. If you think about our experts, have go to NAFTA
partners. We are the leading expert sector in the U.S.
economy. Half of them go to our NAFTA partners. Europe and China
would each receive about 250,000 vehicles on an annual
basis for the United States. We are exporting about a quarter
million vehicles a year to Europe. That is a number that
can grow. That is one reason I think it is important, and
appropriate juncture. I would urge as it is possible to
restart the [ indiscernible word ] discussions because reducing
the tariffs we have with Europe at perhaps, more portly,
providing some sort of regulatory convergence and
harvesting some of the work that’s already been done in that
process could help us to grow and expand that number.
>>Thank you. With that, actually, — second if I could
just echo those comments, we would strongly support and
encourage the administration to restart the negotiations with
the EU to hopefully conclude a bilateral trade pact because it
is critical to really make, push to try to reduce those trade
barriers that are on both sides of the
Atlantic that we were making tremendous progress just a few
years ago on the front. And so a lot of work has already been
done. We can build a network. >>Thank you. With that, I will
call time with the first panel. Thank you very much.
>>You. >>Now I would like to welcome
the second panel to the stage. We have the Motor & Equipment
Manufacturers Association , Ann Wilson, Specialty Equipment
Market Association , Daniel — 1020, auto care Association,
Bill Hanvey, the certified automotive parts Association,
1023, UAW , Jennifer Kelly, and Automotive Body Parts
Association , [ indiscernible name ].
>>Welcome. Ms. Wilson, whenever
you are ready. >>Thank you. Good money. My
name is Ann Wilson. I in the senior vice president of
government affairs for the Motor & Equipment Manufacturers
Association. Thank you for the opportunity to appear before you
today. 10 nine represents more than 1000 vehicle suppliers that
manufacture new original equipment and aftermarket parts
components, systems for use in passenger cars and commercial
vehicles. Vehicle suppliers are the largest sector of
manufacturing jobs in the U.S. directly employing over 871,000
Americans in all 50 states. For the past several years, supplier
manufacturing jobs have actually been increasing, up 19% since 2012. This is in large
part because the player investment in new innovative
technologies that are dependent upon a global supply-chain. MEMA
is very concerned about potential outcomes of the
department investigation. Strongly opposed implementation
of tariffs on imported passenger vehicles and motor vehicle
parts. The message from our industry is clear. The importation of motor vehicle
parts is not a risk to our national security. However, the
imposition of tariffs is a risk to our economic security,
jeopardizing supplier jobs and investments in the United
States. Last week, we surveyed our motive — our automotive
supplier chain and impact it would have and what actions they
would take their almost 80% of the respondents said that if the
tariff on automotive parts occur, it would have a negative
impact. Respondents indicated that they would cut U.S. jobs,
cut or delay U.S. R&D investments, shift
production outside of the U.S., and/or modify sourcing in
reaction to the tariffs. Most job cuts would occur within the
first six months of the tariffs. Investment and sourcing
decisions Whitaker throughout the first year and beyond. The results of the survey are
deeply troubling and should be of concern to this panel. MEMA
member companies operate in an integrative global supply-chain
with both suppliers and customers inside and outside of
the United States. This model has contributed to continue
growth of the vehicle protection and here, jobs in the U.S. I
will turn your attention to charts in the written testimony.
Tier 1 suppliers provide 77% of the content value of new
vehicles. These suppliers are dependent on inputs from around
the world which allows them to work with vehicle manufacturers
to provide new technology to consumers. This in turn provides
important jobs in the United States. The supply base is why
we share — widely shared among vehicle many factors. For tier want to be successful,
they have to have a variety of customers. Furthermore, suppliers dependent on
cost-effective components in order to provide consumers with
new technologies and competitive
manner, suppliers and vehicle manufacturers have little choice
but to move production elsewhere if access to cost-effective
inputs is constrained. New technology manufacturing is
often completed in a 10 year cycle. If we lose the
opportunity to develop and manufacture new technologies in
the U.S., we will have little opportunity to recoup the losses
for a decade. It is important to consider this impact as we had
the previous panel talk about, on the resurgent of elements of
automotive technologies. If the industry is unable to import
inputs because of tariffs, that work will be done elsewhere . Moreover, the impact of
tariffs or quotas will be felt up and down the supply chain.
Smaller more localized companies which are typically tier 2 and 3
suppliers are likely to feel the increased cost immediately. As
our survey respondents indicated, job cuts would occur
within the first six months after a position of the tariffs.
Many of our members have privately indicated that they
would need to make changes in the workforce in even less time.
Keep in mind that many of the same suppliers already feel the
impact of a 40% to 50% increase in steel and aluminum costs as
well as tariffs from China. MEMA supports other alternative
actions to reduce tariffs and focus significant resources
toward workforce training to fill existing manufacturing
and engineering jobs. In closing, the imposition of taps
will have a negative impact on U.S. vehicle parts suppliers.
This impact is on employment and the U.S.
economy. Thank you for the opportunity to testify. I look
forward to your questions. >>Thank you. Mr. Daniel Ingber?
>>Good morning. My name is Daniel Ingber, the managing
director of governmental legal affairs for the Specialty
Equipment market Association, SEMA. 1011 welcomes this opportunity
to testify and to provide information about the industry
and why imports of specialty auto parts do not pose a
national security risk. Basin California, this is the primary
organization with membership including more than 7500
businesses that manufacture, history,
market, and sell specialty auto parts . contributes about $43
billion to the U.S. economy annually at approximately 92% of
numbers are small businesses. The industry employs over 1
million Americans. SEMA believes in fair and
reciprocal trade and support efforts to protect national
security. However, SEMA opposes tariffs on automobiles and parts
contemplated under this organization. The market for automotive parts
generally falls into three categories, OEM, original
equipment market parts, replacement part and specialty
market. SEMA market specially parts for customization, safety,
comfort. Parts are added after the original sale of the motor
vehicle. They are purchased by hobbyists and collectors
primarily. Examples our custom wheels and tires, exhaust
systems, secessions, turbochargers, lighting
agreement, mobile electronics. Specialty auto equipment install
in all types of vehicles, domestic and international.
After World War II, returning soldiers user knowledge to
improve performance of our then aging automobile fleet by
inventing parts for the cars pick this activity spawned our
quintessential industry which is closely identified with the
United States and celebrated American pop culture. Today a significant segment of
the industry is tied to parts for collector parts, a symbol of
America’s love for parts. From prewar classics to muscle cars, this is a testament to American
ingenuity and harassment ship. They serve as a resources — to
serve as a resource [ muffled audio ] and collectors. Given
the nature of the specialty parts market, there is no nexus
between the manufactured specialty after market parts in
national security. The specialty parts market is comprised mostly
of domestic small businesses and does not indicate the capacity of our country pick
the imposition of any section 232 terrified specialty
aftermarket parts will provide no appreciable benefit to
national security while at the same time leading to loss of
manufacturing jobs. Access to international markets is
essential for the industries to remain
competitive. Specialty parts manufactures rely on global
supply chains to procure parts and materials that are used for
manufacturing in the United States. Auto parts factors send
several resources in identifying, vetting, and
suppliers . Most of these benefactors are
small businesses that cannot absorb 10% to 25% tariffs on the
importation of component parts and continue to function let
alone grow their businesses nor can they whether the impact to
supply chains. We are also facing increased disruption to
the steel and aluminum tariffs which have now taken effect. The
impact of the combined tariffs have been higher production
costs resulting in potential loss of domestic jobs. U.S.
automobile and auto-parts have been driving.
The position of tariffs and increasing uncertainty will
divert U.S. manufacturers from investing in research and
development of new technologies and leave them to merely trying
to survive. SEMA members parts are generally for enthusiasts. The
recession had hit devastating impact on sales with the
industry contracting over 20% each year leading to lost
businesses and jobs. The industry is once again driving
and the tariffs now being contemplated are already making
an impact. Rather than impose additional tariffs, we urge the
ministration to remove various to fair and reciprocal trade. We
are confident that members of the industry can continue to
thrive in the international marketplace
under fair, open, predictable conditions and producing jobs
for U.S. workers and high quality parts for consumers.
Thank you for this opportunity. >>Thank you. Mr. Bill Hanvey?
>>Thank you. I am Bill Hanvey. I am proud to be president and
CEO of the Auto Care Association which is the voice
of the $392 billion and more auto care industry. Our nearly
be thousand member companies represents some 150,000
independent automotive business is that manufacture, distribute,
and sell motor vehicle parts , accessories, tools, equipment,
materials, and supplies and local shops on the corner of
Elm and Maine that perform vehicle services and repairs. Commonly referred to as the
automotive aftermarket, our members represent greater than
70% of the vehicle repairs and maintenance conducted every
single day. The U.S. auto care industry is a strong and
integral sector of the U.S. economy, employing 4.6 million
people, 3.2% of the workforce, and comprising 2% of the nominal
GDP in 2018. We are a technological industry with a
stable growth rate averaging 3.2% per year with only one down
year occurring during the recession of 2008. As you know, the auto industry
has an international footprint and comprises integrated supply
chains that are long and global. How industry relies upon greatly
from imports including raw materials and intermediate goods
to remain competitive while supporting a broad range of U.S.
jobs. The imposition of tariffs, additional tariffs on imported
autos and auto-parts would have a significant impact on the U.S.
economy and jobs , our global competitiveness,
and U.S. consumers and families. We can examples where industry
provides a better choice for the consumer while adding both
management and manufacturing jobs to the U.S. economy. A
recent economic study completed for the auto care
Association found that a 25% tariff on imported auto-parts
would cause a reduction of 17,800 jobs in the auto parts
manufacturing sector, resulting in $1.4 billion in lost wages.
The study further predicts that 6800 jobs would be lost by
vehicle repair shops , those shops at the corner of
Elm and Maine. And an additional 85,200 jobs would be lost in the
auto care closer and retail segment due to underperformed vehicle maintenance. These are
mostly small, family-owned businesses like the shop that
would suffer severe economic harm should the 25% tariff be
levied on autos and auto-parts. Additionally, the auto industry
operates on a global platform where goods are rarely designed,
manufactured and consumed in one country. Countries have become
more efficient and productive when specializing in certain
tasks, resulting in parts and components crossing borders
multiple times before final assembly. Imports have lower
costs and improve product quality, allowing our industry
to remain competitive domestically and export
globally. Because sourcing determinations are made
months in advance and years and — years in advance, minimal
adjustments and tariffs would require significant investment
in force members to modify their supply chain, find new sources
for parts, and likely face new capacity or quality issues. The
resulting costs of the tariffs likely will be passed on to the
end consumer in higher parts and repair versus that may result in
the consumer’s delaying medical vehicle maintenance . These factors and disruptions
could cause companies to be less competitive in the U.S. and
global markets while posing a safety risk on the roads. In
conclusion, we support the trumpet ministration efforts to
improve U.S. competitiveness in the global market place. But we
strongly recommend that the administration refrain from
trade restrictions that would undermine the auto industry. We
urge the administration to seek solutions that protect U.S.
investments, facilitate trade, and create competitive value
chains that benefit the global growth of our industry. We
appreciate the opportunity to testify today. And we are
available for questions. >>Thank you. Next, Mr. Clark
Plucinski? >> Good morning. My name is
Clark Plucinski. I serve as the chairman of the certified
automotive parts Association. It’s commonly known as CAPA. On
behalf of the CAPA numbers which include insurers,
consumers, collision repairs, distributors, and the general
motoring public, I am grateful for the opportunity to testify
today. Joining in the audience is Mr. Snyder from the PCI or
property claims insurance Association of America.
Together, we urge the Department of Commerce to consider the
unintended impact of potential automotive parts tariffs and the
cost of auto insurance repair claims. We believe the impact of
any tariffs on certified automotive parts will have a
significant adverse effect on the economic impact for the
consumer’s, especially the auto repair providers, businesses,
industry as a whole. Like commodities that may be subject
to the 232 tariffs, automotive parts are for specific vehicles. So
you cannot simply obtain his parts for domestic source as he
would steel or aluminum. Tariffs would likely cause disruption in
the supply chain of replacement parts and could impede the ability of
the vehicle owner, collision repair facilities, and the auto
insurers to properly repair vehicles and get them back on
the road. That’s one of our more serious issues which is the
delays. In 2017, 31 individual countries exported more than 100
million in automotive parts to the United States. While the
country of origin will vary depending on parts of the
repair, any increase on these cost of parts will increase the
cost of the repair. To illustrate this point, each
year, approximately 50% of the vehicles — 15% of vehicles involved in
accidents causing damage to one or both vehicles, consider that
60% of parts are imported. 25% tariff could increase insurance
vehicle damage caused by as much as 2.7% or $3.4 billion. That
estimate is included in the joint written comments submitted
by PCI along with the other insurance trade associates. Keep
in mind that the estimate only reflects insurance claims lost.
It does not reflect the increased cost that would be
born directly by households and businesses that paid for appears
on their own I paid for repairs on their own. — Households and businesses that
paid for repairs on their own. Nor does it consider the cost of
[ indiscernible word ] whose vehicles become a total lost
which is a large percentage, about 10% of the
total and might be as much as 12% and as high as 50% with the
aging fleet. — As high as 15% with the aging fleet. Further impact will be felt on
the economy as a whole. Workers depend on their automobiles for transportation needs,
getting to jobs, getting children to school, a myriad of
other tasks. Vehicles need time, repairs, maintenance. Any delays
or costs, increase to repairs , the demand on budgets, they
will find themselves having to make dangerous choices. On
behalf of the consumer and thousands of businesses that
provide certified after . parts — aftermarket parts, we ask the
needs of the hard-working Americans and
consumers to be considered in the analysis regarding the
importation of automobile parts. We urge the department of
commerce to look for ways to open global markets and increase
exports, increase the price of automotive parts and causing
delays across can cause harm . Should restrictions be
opposed, weirds the ministration to exempt closely aligned
markets and supply substantial percentages of automotive import
parts or to establish a process through which interested
domestic parties could addition for exceptions in a timely and
transparent manner. Thank you for the opportunity.
>>Thank you. Ms. Kelly? >>Good way. My name is Jennifer
Kelly. I am the director of research for the United
automobile workers. I would like to thank you for the opportunity
to share the UAW’s comments on section 232. The UAW process workers in both
auto assembly and auto-parts factoring. Decades of disinvestment and off shoring of
U.S. jobs by multinational corporations has weakened our
economic security as a nation and has inflicted great harm on
American workers and communities. Massive job losses
have had ripple effects throughout the communities. It
has idled able-bodied workers, weekend economies and diminished tax
returns. Trade has also hurt workers at the bargaining table.
Wages and benefits have been held hostage to the threat of
moving work to low-wage countries like Mexico and China.
We believe a comprehensive investigation into the impact of
the loss of auto manufacturing and its consequences for
national security and economic well-being is long overdue. Over the past several decades,
the U.S. automotive and auto-parts trade deficit has
grown significantly. In 1997, the U.S. had a globally auto
trade deficit of $57 billion. White 2007, that deficit had ballooned 60% to $91.5
billion. By 2017, it had grown an additional 38%. In total,
over the past two decades, the U.S. automotive trade deficit
has grown 121%. In more concrete terms, we have seen the number
of simply plans and quantity of vehicles produced in the U.S.
fall even as sales have remained about the same. In 2000, the U.S. produced 12.8
million vehicles and applied about 1.3 million workers. In
2017, production fell to 11.2 million vehicles and employment
was 940,000. In 2017, we also know the U.S. imported 2.5
million vehicles from Mexico where wages are one dollar to
three dollar per hour . A typical assembly plant
employs 4000 workers we have also seen an increase in
auto-parts produced in the U.S. In 2000, the U.S. imported $22
million of parts . With 2.8 million vehicles
produced, that is about $2000 of imported parts per vehicle
produced in the U.S. In 2017, imports grew to almost $67
billion in production fell to 11.2 million vehicles. That is
nearly $6000 of imported parts per vehicle produced in the U.S.
What is not captured in these numbers is the change in
sourcing of the parts that has occurred over the last two
decades. In 1996, high wage countries like Canada and Japan
and Germany provided nearly 70% of imported parts. By 2007,
the majority of all parts imports were produced in
low-wage countries like Mexico and China. Not only have U.S.
jobs been displaced by imports, but the remaining U.S. workers
wages have been depressed by competing with low-wage
countries. Our concern about trade and industrial policy as
it applies to auto industry goes beyond the past and present to
the future. Much of the production footprint of
tomorrow’s advanced automotive technologies overseas , today, the USL produces about
13% of the world semiconductors. 2021, it is projected that the U.S. will
produce only 14% of the world lithium-ion batteries. This is
important because these components are key to the
electric vehicles and autonomous vehicles of the future. For
example, it is estimated that an EV or AV will have over $1000
with semiconductors and a lithium-ion battery cost about
$50,000 per vehicle. — $15,000 per vehicle. American industries
are competing with many countries. We would
argue that this is also a threat to U.S. manufacturers abilities
to provide the military with cutting-edge technologies. At
the conclusion of this process, it is our hope that the Trump
Administration will take targeted measures to boost
domestic manufacturing. We know the automotive industry as a
global industry with long, complicated, well-established
supply chains. We caution that any rash actions could have
unforeseen consequences, including mass layoffs for
American workers. But that does not mean we should do nothing.
Thank you. >>Thank you. Mr. [
indiscernible name ]? >>Thank you. Good morning. I am
Christopher Northrup representing the Automotive Body
Parts Association and its membership of parts to
bidders, consumers, collision repairs, benefactors, and
insurers. Automotive Body Parts Association is made up of independent bidders along with
the above group of constituents who are part of the service
industry and supply chain that keeps America’s personal and
commercial vehicles in use every day. Trade barriers or tariffs
as part of national security or any other heading will
negatively impact the automotive economy and the millions of
private sector jobs affected by cars and trucks each day in our
country. Over 4 million U.S. citizens are
employed in some form of the automotive sector. Over 70,000
of those reside in the parts space, plastics, electronics, forecast metal apartment
factoring and related logistics and distribution workers who
deliver the products every day. Conservative economic estimates
place the employment multiplier for OEM activities at 10 with
related automotive employment at 4, disruptive tariffs risk this contribution
to the overall economy and workforce. It is easy to ask
have we really consider the outcome of tariffs as they
disrupt the auto space? Parts and related services of the fuel
that keeps the repair process and motion and productive, the risk
of tariffs is our ability to effectively and economically
repair America’s vehicles. National security is a real and
valid concern. U.S. Customs and border protection enforce laws
and an act search and seizures effectively each day without the
use of tariffs. At risk is an annual blue and white collar
household income and tax revenues related to these
automotive effective — affected jobs. Tariffs that are proposed
will greatly harm the U.S. economy and the overall economy. Trade has been the backbone of
the global economy. Competition is embedded in our American
spirit. America’s ability to manufacture certain parts and
products changed decades ago with the knowledge of the
advantage of global sourcing as part of that change. The repair
of consumer and commercial vehicles and parts sourced from many points around
the globe, the delivery supply chain and the economic advantage
provided keeps Americans at work , stay employed, provide for
family and contribute as taxpayers. Tariffs as a means to
correct trade imbalance without understanding the unintended
consequences would merely serve to harm international
relationships and cause American households to suffer. Taxes and tariffs did not work
that long ago, they did not work long ago in Boston, and they
have no place here today. The administration needs to consider
the impact of tariffs on the greater motoring public,
the transportation sector, plus those connected.that support our
overall economy. This issue is about keeping America great. But
it is not about disrupting it. We object to the tariff as
tariffs only serve to harm America’s automotive economy.
Thank you for this time and I appreciate everything you guys
do for us. >>Thank you. Now I would like to open the
floor for any questions or comments from the U.S.
government. >>We appreciate everybody’s
comments. We certainly appreciate everybody’s desire to
enhance the strength of the U.S. automotive and parts industry.
We appreciate , as I mentioned a little
earlier, we are carefully looking at the data the have
provided and we have got a lot of economists replicating the analysis and conducting
their own analyses to look at the economic impact again from
all the angles. I will start with posing the same question I
posed to the earlier panel. Let me start by saying that a number
of the panelists, you mentioned that countries have become more
efficient and better at our Indian auto-parts and the U.S.
has increased reliance on those parts. So we know that foreign firms
that are manufacturing automobiles in the United States are
becoming more heavily reliant on foreign sourcing of auto-parts.
So the first question is what does this look like a course of
the last two decades and how have increased automotive parts,
especially the high-tech ones, what does that mean for ID that
is taking place in the United States vis-à-vis abroad? How
much of that R&D share, global R&D share that is happening in
the United States has eroded and from your vantage point, how
much has eroded? How do you see this impacting
the long-term viability of the U.S. automotive industry? I will open the question up to
all of the panelists. Thank you for your responses.
>>Those are a lot of questions in a question. Let me see if I
can sort of give the 40,000 foot view from
our membership. One thing to realize is that when we look at
the tariff codes on automotive parts that are imported, there
are a lot of them that are aftermarket parts. They go to
the shelves of retailers around the country for the vehicles
that are being serviced by individuals
everywhere. The average age of a car in the United States exceeds
11 years. That is the average age. Consumers decide how they
are going to maintain or repair the car in very different ways.
That is one piece of what we need to look at. Let’s look at
the conversation that we had a little bit with the first panel
and that I brought up about automotive technology. There are
vehicle suppliers for the OE industry that are at tear 1, 2,
3. Tear 1 are the most part global suppliers they situate
themselves close to final simply with the vehicle manufacturers.
It is also very important that they are able to get inputs from
around the world and do research and development on U.S. grounds.
We have now in automotive technology is a wonderful
opportunity . Jennifer mentioned the
legislation is going on on Capitol Hill , D.O.T. is doing it, we have
testbeds, we have work going on at the state levels. But we need
to have sensors that are manufactured not by our parts
benefactors but by others, brought into the United States.
And the real value of the sentences when they are
programmed to the U.S.. As governor Blunt mentioned before,
we have protection, research and develop is going on so when the
sensors hit our facilities, they are appropriately programmed and then they are used on
vehicles. And we are doing testing on the. We have a great
opportunity to continue to lead the world to that. And I was
just in Europe also. And Europe understands that. And they are
moving forward with with her — moving forward with the
migratory schemes. They know they need to catch up. We are
all aware of what China is a I would tell you what one of our
largest suppliers says. This differs from break technology, which
shall a technology, technology involved. You are not going to
be able to afford to do this in multiple places. You can do in
the United States, do it in Europe, you can do it in Asia.
But the cybersecurity requirements, the other
technical requirements are so expensive, firms are going to
have to decide where they will develop it. What we are hearing
and what we understand is we may lose our leadership role if we
take these types of actions because the inputs that we need
that are being developed globally will not be available
in a cost-effective manner for our members.
>>I would like to echo a lot of
what Ms. Wilson said. But I would like to add our membership
is 7500 businesses in the United States, most — the most high percentage in
the United States. Most research is done domestically.
Understanding the weight of especially parts market working
with respect to OEM, a lot of features , vehicle technology features,
safety features, comfort features begin as aftermarket
parts, options the people at their cars, options to purchase,
even performance features, et cetera. Over time, the OEM often
integrates these features into the standard auto be else the
purchase as part of your car. These tariffs would hurt the ability of these
domestic businesses to do research and development and
develop this which keeps the U.S. automotive market
competitive. As for the long-term viability of the U.S.
automotive market, as I explained to Mike comments, the
highly elastic market for the specialty market, these tariffs
can have a devastating effect on the actual viability of these
businesses. And as it is part of a global supply
chain, as it is part — as it is part of the process,
it will have a long-term effect on the viability of the U.S.
market. >>
[ captioners transitioning ] >>>>
>>You brought up a very good
question about the long-term implications of trade tariffs
and first I’d like to address the R&D side and we represent
the companies that produce parts that are used for repair and
many of our companies produce parts for the original equipment
side and many of those parts are the same part they just go in
different boxes. However the investments that many of our
supplier companies are making in the research and develop inside
within our group are significant . Many of the companies have 3-D
printers, they have the technology and investing in
sensors and I would urge many of you to visit some of these
companies and see the investments they’ve made and I
certainly would be able to provide some of those names to
you. But the question on the long-term viability is that we
currently have 282 million cars on the road and as and said
there’s 11.7 years old, what’s interesting though is
really where we feel the focus should be is on training those Americans
to be able to fix those technologically enhanced
vehicles and in order to ensure that when you bring your vehicle
into be fixed, that it comes in a part is ordered, a part is
available, and it is ready within the hour in many cases
within our industry so we feel that the focus really should be
on training the American work force to be able to meet those
technological demands of today, tomorrow’s vehicles and that is
critical. That’s where we feel the effort should be spent in
terms of our activities and preparing ourselves for [
Indiscernible]>>I think to answer your question
directly about the R&D erosion and paraphrase, in our industry which is
primarily focused on exterior parts, when your vehicle or my
vehicle is involved in a collision, our primary customer
in our association is the collision repair commonly
referred to as a bodyshop it I know is not a pleasant
experience but it is something that goes on every day and part
of America’s motoring economy. The R&D erosion — I think when
we look at that potential impact of tariffs, as being discussed,
really could have a negative impact on the R&D piece because
in the investment world, and in the investment dollars, that
economy is going to be hurt and everything will be likewise hurt
or affected. It’s a sensitive point that doesn’t always — in
the weed somewhere and doesn’t always come out in our economic
studies and everything else but I think it’s an important part
and in the aftermarket commonly the R&D is a shared platform and license and agreed upon and
there’s something that goes on that takes place there so let’s
keep that in mind the aftermarket is a viable part of
the automotive repair and — economy. The long-term impact I’m from Southern California
and we love our vehicles — and public transportation although
getting better compared to parts of our country and world and any
time we slow down or affect the automotive economy the motoring
economy, we affect that economy we affect people’s ability as I
mentioned earlier to go to work, to provide for their families
and yes to pay taxes. Thanks. >>So we are probably too many
apps today and semi retired I decided to take on
this challenge and become a charmingly certified automotive
parts Association or Kappa and I was a shop where we had 46
businesses in four states over 700 employees and almost 100
million in sales. We started out with 30,000 and trust me when I
tell you that parts have always been a major issue for us. A few
years ago our organization see APA has been in place for a few
years now and a few years ago when we set out to look at these
parts and testes parts, and do the work on the R&D side that we
needed to do, to make sure they were like kind quality which is
a term that’s used frequently, in many cases they weren’t
anything other than like kind quality very scary things
happening but on the R&D side we are using the same testing
facility that the OE’s use to make sure that they parts are as
good if not better so in our Payson business and most repairs
have a lifetime guarantee and that means something to us. We
can be in severe jeopardy if you watch any of the — it’s scary
for repair to be given parts that don’t fit, that don’t or
not tested and we have problems we find so our entire focus is as an
organization on the see APA side is to make sure I 65
manufacturers follow-up every step and done a magnificent job
and I believe the panel would probably agree there’s almost
nothing they can’t do if we ask for a certain standard which is
what we do we get that standard. Very happy with that.
>>Actually we in this room appreciate your
contributions to ensuring our safety when we get into cars
also. Thank you.>>I’ll make a couple comments
on what’s happened in part sourcing and one we’ve seen as
there is born automakers manufacturing or assembling
vehicles in the US and often it’s led to an increase of parts
increase imports — more importantly I think is that
we definitely see a supplier will advertise this as a selling
point to the investment community to pursue low-cost
country strategies so they will market the fact that they can
produce parts in a variety of low-cost countries which means
low-wage countries often countries with very little labor
protection and that’s been going on and that hurts US workers.
When it comes to thinking about the future, the UAW are
concerned about the industry will develop and
have concerns that only the US as an important location for
future vehicles and parts that go with that. And we think
though while trade is a piece of addressing that that there’s
other policy prescriptions as well and we see Germany and
China other countries in Europe having industrial policies that support the domestic
manufacturing of the vehicles in the parts but also support the
demand side it is one of the things we here in the US is that
the demand is not here for these — electric vehicles or higher
fuel-efficient vehicles. Because there isn’t a mandate — the
same number of incentives, we think there needs to be a
multidimensional approach to fostering a strong domestic
industry trade is one piece of that.
>>Good I just address the global supply chain global
competitiveness? Indeed there is manufacturing that goes on in
various places and less take the Napa Region 4 incense we know
wire harnesses on Capitol Hill as he — carrying them around
they are for the most part manufactured outside the United
States they are very — intensive labor issues not
highly technological and at the same time their inputs into the
wire harnesses become from the United States it is important we
keep that in this Region to be able to produce all jobs and mostly tier 2 and tier 3 jobs
like plastic connectors and things like that that go from
the United States in to Mexico for final wire IRS that
harnessed manufacturing and from the US perspective there’s three
areas in the world that are really the global places where
vehicles are manufactured, NAFTA Europe and Asia. Europe and Asia
both have access to lower wage countries to be able to do
things like that. If we are not able to be able to have access
to that, we are no longer going to be able to be competitive and
when you look at it that way the job we are creating here the
ones that are higher technology, higher [ Indiscernible] higher skill
levels all of those type of things and that’s why you see
the jobs in our sector actually increase in OE automotive sector
over the last five years our jobs have increased over 20% and
those are the jobs that we need to have to be good paying jobs
for American workers. >>Thank you and let me ask a
follow-up question likely to that point I want to
transition from talking about R&D to what the US auto parts
manufacturing footprint looks like in the United States. In
1985 we are net X better of auto-parts and we are net we are
a net importer we have a $60 billion trade deficit in
auto-parts and so we are becoming increasingly
reliant on auto-parts for US auto assembly and getting to
your point about the need to have access to the low value inputs imports
to create the high-value high-technology manufacturing
footprint in the US, when we look at that current trade
deficit, it is been in part driven by high-value, high tech
products like electronics, and electrical components so how at
risk are we of not having US sources not for those low value
product but for those high-value high-tech LG products and how that the supply chains currently
being established in other countries and we are not going
to have domestic sources for the types of products that both the
first panel and you folks have said are the important products
for US auto assembly and for the
future of the auto-parts manufacturing footprint in the
US? >>If you look at electronics
princes, that for instance that are the ones that come from
non-supplier so they are suppliers to our suppliers they
have determined to manufacture different parts of the globe
there’s no doubt about that but you look at their auto is only
one portion of their whole footprint so the sensors that
come in and sensors go out of factories in vacuum cleaners and
in your televisions and the phones they are everywhere. The
real value of manufacture brought into the US and [
Indiscernible] for whatever automotive technology we are
trying to do. Again we do believe there’s a value in that
and we do believe that that value is being done in the US.
So we are less concerned than you are about the electronics
able to come here accepted if we no longer have that free flow of
electronics you will find the ability to go
ahead and program those and do those other places around the
world and that’s where we will lose jobs and we will lose that
R&D. >>I just want to emphasize that
automobiles and auto-parts industries driving right now on
a very competitive marketplace. And as Andrew said the ingenuity
and entrepreneurship of the US manufacturers in the US
businesses helps drive that. Terrance Tara’s to Tara —
that’s a blunt instrument for trade deficit in fact backfire
when it comes to being able to produce high tech industries in United States and
to foster US up entrepreneurship.
>>Thank you Daniel and I would concur with and Daniel on that
and there’s a couple things here
making sure that we keep our allies close NAFTA Mexico Canada
it’s an integral part of the supply chain and we have to make
sure we keep them close as well. I think intellectual property
protection is something that we would agree upon here that
really would cement our relationship around the globe,
insure our research and development is protected the
investments we make here in the US and the technology side
whether we decide to produce that here in the US or some
other Region but we have to ensure that that IT is
protected. I think that’s an important thing we really have
not addressed here and that goes hand-in-hand with what we are
talking about and I think I don’t want to speak for
everybody here but I think that everybody would be in support of
that as well. >>Yes I agree with everyone
what they said. That point we brought up earlier
on R&D I bring up here again is the development technology the
creation is occurring here in our country. The outsource of
manufacturing is a decision is made downline and then on the
rebound effect it is programmed here. So I think that supply
chain in itself must remain intact for us to have an
effective automotive economy and that is again one of those
critical pieces that can be overlooked.
>>I don’t really have anything to add.
>>So I share the concern that you articulated and I think my
comments I pointed you to pieces in particular semiconductors and
lithium batteries assuming that the trajectory you are on comes
to fruition where we have electric vehicles in our future
means the loss of engines and transmissions those are two big
pieces of automobiles today that employ a lot of workers
domestically intent to be sourced where the vehicle is
assembled by and large and where we think about effects of
employment as workers are making engines and transmissions today
and their jobs will be eliminated when we make a
transition to electric vehicles. The replacement powertrain if
you will is the lithium-ion battery and a motor and those
products are not by and large produced here. So we look at
considerable net job loss just in that technological
transition. So I think while R&D is important, programming is
important, I think having the physical
ability to produce those products here in the United
States, not in the NAFTA Region — NAFTA is useful but a job in
Mexico is not a job in the US. So I think that thinking about
where that supply chain is developed is very important and
I am very concerned about what the future holds.
>>Thank you.>>[ Applause ]
>>Now I’d like to welcome the third panel for this morning
Doctor Hogle Engelman Miller & Company Marshall Lee Miller,
Hyman, LTD Mark Hyman, Cosdel International
Transportation, Mark Hyman on behalf of Martin Button, Polaris
Industries, Paul the trial. Paul Vitrano —
>>>>Thank you, and I’d like to
remind the panelist to SPE speak into the microphone or
interpreters are having a hard time hearing and speak into the
mic we would appreciate it. Without further delay I’m going
to start with Doctor Engelman when you are ready.
>>Good morning to all of you and thank you very much for
giving me the opportunity to present our point of view with
regard to the section 232 investigation as automotive
supplier was significant US footprint. My name is Horgan
Ackerman and I am the CEO of the group one of the world’s leading
automotive suppliers base in Germany. We have totally six
sites in the US including America’s headquarters based in
Rochester Michigan and we are currently employ more than 1800
highly skilled employees in this country. We have been supplying
the world’s automotive industry for nearly 100 years and have
continuously expanded our presence here in the US since
1970s. We just have added a new member to our US company by
making a strategic acquisition [ Indiscernible] efficient energy
system is a segment headquartered in California and
important solution supplier for the automotive and industrial
sectors and also conducting significant research into
innovative federally implications — continues to be committed to
further expanding its footprint in the United States. We have
enormously loyal to our US employees with we have count
colleagues [ Indiscernible] furthermore has always been at
the forefront of innovation for the automotive industry and we
are currently the experts in various fields of — [
Indiscernible] now investing in mobility solutions as well as
technologies. To nearly every oleum in the
world including the US manufacturers and are facilities
in the US utilize approximately 200 products from US suppliers
located in the US and we guarantee long-term employment
for their employees and further growth in their respective
businesses. It is part of our philosophy that we source as
much as possible in the countries where we manufacture
our products. So we sell our products in the
US we purchase our components in the US. We have over the last
five years successfully localized more and more parts in
the US as a result we have reached localization rate of
more than 80% but further organizations difficulties are
because of the need for extensive investment into
suppliers to deliver quality OEM — not competitive with regard
to [ Indiscernible] in our competitive industry. Therefore
parts we must continue to make our products manufactured here
less attractive negatively impacting the future investments
in the US my current productions that US$12-US$18 million
annually within policy we would face a situation which puts
enormous pressure on our US facilities and this potentially
could lead to [ Indiscernible] including investments no R&D US
and significant work loss reduction and alternatively
could try to pass increases to US customers based on our
experience this could be challenging — let me summarize
in general suggested reasons for this investigation [
Indiscernible] automotive industry has been driving in
recent years the 25% tariffs would add uncertainty and
economically harm the automotive industry operated in the US and
also rise the cost of US consumers. Personally I truly
believe that Tara’s are not in line — of this — you have
taught us how important free trade and open markets are and
we learned as always a driver therefore I hope you would take
the right decision based on thank you again for your time>>Mr. Miller?
>>My name is Marshall Miller on the President of Miller &
Company on behalf of our clients and myself, my testimony focuses
on a very small segment of what you’re looking at. That is the
vintage car motor vehicle industry which I don’t believe
anyone even considers when the initial documentation was sent
out. With motor vehicle industry and parts, this 25% duty would
have enormous negative impact on the vintage motor vehicle
industry in the US. Our law firm is solely focused on import
export and foreign trade and reporting eight years I represented most of the
original equipment manufacturers when they established their
assembly plants in the US starting in the 1970s. So I have
a wide range of knowledge about the motor vehicle industry and
the growth of the motor vehicle industry in parts and all this
is focused on establishing foreign trade zones which is the
Department of Commerce and the foreign trade zones in the
building. Work with. I am also a collector of vintage cars some
17 of them and one of them and I put it as an exhibit is that
trade expansion act of 1962 the original CHP and bored pickup
truck where this all started and this is a 1963 Volkswagen pickup
truck and when I found it in Rochester New York 25 years ago
I had to have it. I used it constantly in this building at
treasury and for various examples it’s a very good truck
there are not very many of those because once the duty went on
the 25% no more were imported into the United States. That was
55 years ago. So I caution this panel if you are considering this all
of this is always supposed to be temporary is what the trade
expansion act of 1962 in vision. Envisioned that this is still in
effect if the five years later. The vintage motor vehicle
industry is estimated to be between 80 and $160 billion
industry and there’s some 29 million vintage vehicles in the
United States and they represent a wide range of vehicles from
$10,000 in value to 70 million in value. It doesn’t matter if
you have a 25% duty rate against a 10% — $10,000 car or a $70 million
car it is still stops the business and the parts that are
related to it. There are approximately nine harmonized
tariff schedule numbers that relate to all types of motor
vehicles that would be vintage vehicles or used vehicles and at
least 60 HTS chapters because of parts of course are all waterfront from the standpoint
of HDS classification and the industry involves the import,
restoration displays sales and export of motor vehicles.
Nationwide millions of US citizens are engaged in vintage
motor vehicle restoration sale distribution collection and
display. The Section 232 National Security Investigation
to determine the effect of motor vehicle imports and parts should
not in any manner involve vintage motor vehicles and parts
. They just should be excluded from your report. They are
irrelevant to any kind of issue involving national security.
These are vintage vehicles. There is no threat to the
national security by these, it would cause an authority
negative chilling effect and I also included designs and
photographs of the first example of that is how it will be used in
1963 in several articles from vintage magazines, publications
have been published in the last few weeks indicating that if
they were to go into effect, the industry would be significantly
reduced and would be a very major effect of why range of
people with absolutely no national defense implications.
We believe there is ways of managing this
effectively from the standpoint of the technology of the import
process and the system already that has been implemented for
the trade actions in 2018 and there can be — HTS for this to
exclude these types of vehicles. For these reasons we believe
that vintage motor vehicles and parts should not be part of this
investigation, should be excluded and have no [
Indiscernible] thank you. >>Mr. Heimann?
>>Mr. Heimann? >>My name is Mark Hyman I’m the
owner of Heimann limited classic cars in St. Louis Missouri and
Heimann limited is one of the largest vintage automobile
dealers in the United States. The purpose of my appearance
here today is to request an exemption for classic vintage
and collector grade vehicles and parts from the proposed 25%
tariff on all imported vehicles and parts regardless of age or
origin considered under the Section 232 National Security
investigation of imports of automobiles and auto-parts. I
would first like to provide a brief background on myself and
my business. Starting in 1989 I began building Hyman Limited
from the ground up my business started with the purchase of one
car which incidentally I sold to an overseas buyer and exported.
Nearly 30 years later, and thousands of transactions
later, I built one of the largest businesses of its kind
in the United States. Hyman Limited is highly active in the
global vintage and collector car trade in the US, EU, Middle
East, South America and Asia. And at times as much as 70% of our
business has taken place on an international level and the
buying importing and selling and exporting of vintage
automobiles. According to Newell capital and investment banking
firm that focuses on the vintage automotive industry
classic vehicles encompass an $80-$160 billion industry which
interest in all 50 states. Hagerty insurance one of the
world’s leading specialty vehicle ensures estimates that
as many as 29 million classic or vintage vehicles exist in the
market. Every one of those vehicles will require parts and
maintenance items many of which are manufactured outside the US
that are subject to the proposed 15% tariff. Americans alone purchase more than one and a
half billion dollars worth of vintage vehicles at auction
which represents just 5% of total annual market activity. If
these 25% tariffs are allowed to proceed, the resulting slowdown
of trade and for the fall of vintage automobile values will
have lasting negative effect on our economy.
Our industry encompasses not only dealers like myself but
also auction houses restoration shops, parts manufacturers and
retailers and insurance companies importers exported
transportation and trucking companies break forward is
customs brokers and countless small business and individuals
who support what we do everyday. The proposed 10 fold increase of
duties on vehicles and parts will in all likelihood put a
stop to the importation of collector vehicles. Likewise I
am also seriously concerned that retaliatory tariffs will be
imposed by our trading partners which has the potential to
affect exports in a similar fashion. Such restrictions will
cause American interest to be effectively cut up from our
international partners. In turn the cost to buy sell and restore
vintage vehicles will sort which in turn will cause as a
potential to cause values to collapse. As an example of the
potential ripple effect are travel and hospitality
industries for support during the hundreds of events held
across America on an annual basis. Shows rallies public auctions
Museum events and similar events support the local economies of
the cities and towns that graciously host us. These events have the potential to
attract hundreds of thousands of visitors and their dollars from
around the world. But they rely on a healthy class market with the collapse of the
industry fewer and fewer of these events will be viable in
the economic impact will trickle down to the host cities and even
to the numerous charities that benefit from our events and in
conclusion the proposed tariffs on vintage
vehicles and parts have the potential to cripple a
multibillion dollar industry that relies upon a healthy and
open trade environment free of unreasonable boundaries. The
importation of vintage vehicles and associated parts poses no
threat to national security and the imposition of the proposed tariffs would only serve to harm
American businesses and individuals and one final note,
every year since at least 2009 both Congress and the Senate
have passed unanimous resolutions for instance Senate
resolution 574 from 2018 designating a July date as
collector car appreciation day. Expressing support for and
emphasizing the vintage vehicle industry specifically
recognizing that the collection and restoration of historic and classic cars is an important
part of preserving the technological achievements and
cultural heritage of the United States.
>>Thank you, Mr. Hyman. Now Mr. Hyman I believe you are on
behalf of Mr. Martin Button from the costal international
>>Mr. but was unable to attend due to health issues.
>>Whenever you are ready. >>This is a statement of Mr.
Martin Button President of Cosdel International
Transportation the purpose of this appearance
is to request an exemption from the proposed 25% customs duties
under Section 232 for imports of vintage motor vehicles and
parts. We do not believe there is a justifiable National
Security basis to oppose any trade measures under Section 232
on imports of vintage motor vehicles and parts. Cosdel International is focused
on importing and exporting classic collector in vintage
motor vehicles and parts as a license customs broker and
freight forwarder. Cosdel represents a wide range of
auction houses major collectors dealers and museums and the
hobbyist in the US and has done so since the mid-80s. The
vintage motor vehicle and parts industries and
multibillion dollar enterprise in all 50 states, nationwide
millions of US citizens are directly engaged in vintage
motor vehicle restoration sale distribution collection and
display. The industry or hobby as it is more generally known,
involves the ownership by individuals and families and
many sections 501(c)(3) museums with a wide range of vintage
motor vehicle cars. These individuals are involved in the
display of these vehicles in all 50 states for the public a wide
range of events for the vehicles driven and tours and raises in a
vigorous vehicle restoration business nationwide to restore
and maintain vintage vehicles. There is numerous museums
throughout the US that display vintage motor vehicle just like
art museums vehicles are shipped globally for display in museums,
vehicle shows and restoration throughout the world. The purchase and sale of these
vehicles and parts are by individuals as well as by
auction companies and firms engaged in buying and selling.
Vintage motor vehicles are provided for in the following
nine harmonized tariff schedule headings and parts for such
vehicles and are covered by more than 16 chapters. 8701 tractors, the National Security
Investigation will determine the effect on National Security of
motor vehicle and parts imports. Allowing imports of vintage
motor vehicles and parts cannot in any manner
be viewed as a threat to national security. A significant portion of the
vintage motor vehicle and parts industry involves individuals
and families that are focused on the history design of vintage
motor vehicles. The interest in the import restoration sale and
export of vintage motor vehicles in no manner involves any threat
to national security. The impact on the vintage motor
vehicle and parts business by the imposition of Section 232
additional customs duties up to 25% could be overwhelming.
Generally values for vintage motor vehicles and parts will
range from just a few thousand dollars to tens of millions of
dollars. The most valuable car ever to change hands sold
recently to a major American collector for $70 million. The
most the sale would certainly not have happened if that 25%
duty were imposed. The National Security
Investigation to determine the effect of motor vehicle and
parts imports should not in any manner involve vintage motor
vehicles and parts there is no threat to the national security,
and the negative impact on the
vintage vehicle industry in the US would be enormous. As the preeminent shipper of
classic and collector cars in the world, we ship collector
cars worldwide on a daily basis. Both importing and exporting the
large array of carriers by air and Ocean many of the shipping
lines and airlines are US carriers and we generate many
tens of millions of dollars worth of freight for these
carriers. Supporting their viability and longevity and
competing with foreign carriers. In this way the importation and exportation
of collector and classic car supports the national security
by keeping US carriers in business. Since the notice was published,
there’s been several articles published by key publications in
the vintage motor vehicle and parts industry attached as
exhibits are articles from Hemmings and automotive news.
Both of these articles make it clear that the impact of the
proposed additional customs duties will be overwhelmingly
negative. Thank you. >>Thank you, Mr. Hyman Mr.
Medtronic expect my name is Paul Vitrano Senior Assistant General
Counsel for Polaris Industries Polaris is an American
manufacturing global market leader for power supports
vehicle including ATV snowmobiles and off-road
vehicles. Polaris also is the largest
supplier specialized ATVs and no RVs for light tactical mobility
to the US military the companies headquartered in Minnesota we
have over 8700 US employees across facilities and 39 US
states including vehicle and engine factories in Alabama
California Indiana Iowa Minnesota and Wisconsin. I’m
here today to request confirmation that the scope of
the Section 232 investigation does not cover consumer ATVs
snowmobiles and no RVs or US military orgies military for
title mobility such as those manufactured by Polaris. Assuming that is the case I wish
to draw your attention to specific recommendations in her
written comments which will ensure that no RVs and
associated parts are not unintentionally covered by the
departments final determination. The clearance tent of this
investigation to focus on the potential national security
threat posed by imported automobiles defined to include
cars SUVs and vans and light trucks along with the parts used
in such vehicles. Purpose built off-road utility vehicles like
the players Ranger and off-road recreation vehicles
like the Polaris razor and sportsmen are neither
functionally similar to or competitive with automobiles. These vehicles are designed for
off-road use and are not intended to be driven lawfully
on roads. Since off-road vehicles are
fundamentally different from automobiles it appears that no
RVs and ATVs are not intended to be covered by this
investigation. That said in the recently
concluded Section 232 investigations on scale and
aluminum the scope of the investigation as well ultimately
defined with reference to broad six digit subheadings which
within the HTS US. If a similar approach is adopted here,
structure of the tariff schedule is such that it may result in an
orderly being unintentionally glitter with the final scope of
the investigation. If it is the presidents intention to focus this
investigation unconventional on road automobiles we have
provided specific recommendations in a written
comments regarding how this goal may be defined to avoid
encompassing product such as oh RVs which should be excluded.
Specifically we asked two things first however the scope is
defined with respect to tariff classification the department should limit the scope of the
investigation and any resulting action to four-wheel vehicles
satisfying federal safety and emission standards with permit
unrestricted on your produce. This limitation would not
exclude any conventional cars SUVs
dancer trucks but would ensure that oh RVs and other vehicles
manufactured by Polaris are not inadvertently included second
the investigations applicability to auto-parts and component
should be limited to such parts as are actually used in Ensco
vehicles. This would ensure that parts and components of oh RVs
@invite a 16 inch tires with aggressive off-road tread or ATV
suspension components are not unintentionally covered. Finally
there is noted Polaris is the largest supplier
of specialized ATVs and ORVs for light tactical mobility to the
US military. I would like to emphasize two points with
respect to these military vehicles. First these vehicles
are commercial off-the-shelf and are produced in US factories but
they benefit from the company’s global supply chain. The
vehicles in their parts and components are classified under
HTS codes in common with passenger cars. So like a
consumer ATVs and ORVs they are at risk of inadvertently being
within the scope of the investigation. Second as a US
military supplier, Polaris typically produces over 2000
military vehicles per year in the event of a national security
crisis however Polaris has the infrastructure and capability to
increase production substantially in order to
support increased demand buyer military. Thank you for your
time and consideration. >>Thank you, Mr. the trial and
I’d like to open the floor to the US government for any
questions or comments. >>[ Indiscernible] question is as
a manufacture for off-road vehicles for the military, what
I’d like a sense for is how much of the supply chain that you
utilize in your off-road vehicles actually coincides with
the supply chain for automobiles?
>>Quite a bit of that supply chain
is overlap because the history of off-road vehicles it’s a
relatively new segment if you look at the HTS codes their
specific codes for snowmobiles and ATVs but off-road vehicles
which are more broadly defined as our Ranger in razor produce
razor which we supply the US military are more recent vintage
and so as a historical legacy they were lumped in with similar
auto codes both the vehicle level and also many of the parts
shared common codes with on Vehicle Components.
>>There’s a little follow-up to that. In terms of the
technologies, do you find that technology standpoint a lot of
times you’re borrowing the technology of the automotive
industry to incorporate into the off-road vehicles?
>>There certainly is some overlap
as result of fundamental footprint of the vehicles, but
there’s a lot of innovative technology that goes into our
vehicles and the suppliers that support us. A key to our success
in recent years is we have grown exponentially has been our R&D
investment in a a particular industry we view ourselves as a
global leader in that and we have many many engineers
engineering dollars spent in the US to support that unique
vehicle program. >>So from the technology
standpoint especially those incorporated in your systems at
a high level can you identify what some of those type of
technologies may be such as possibly [ Indiscernible]
>>Certainly not an expert in engineering but I can say stimulating handling is an
important aspect of our vehicles one of the reasons why the
military just of them so suspension, components are very
important, the electronic controls of the vehicles the
ECUs, and the other throttle by wire technologies Inc. some of
which are similar to Otto and some which are different for
specific application are among those components.
>>Thank you very much. >>I have a question for Doctor
Engelman here your fax of supplier base you have a data
point the reduction of the source
parts from Europe is down 17% in China down 86 present within the
last three years could you elaborate on that point?
>>Yes as I said before the philosophy of ours is always to
produce in the country where and source in the country and Region
were [ Indiscernible] philosophy is to manufacture in the Region
we sell is we actually pick up the suppliers we need and see
how competitive they are and we — qualification of suppliers in
the US if we were able to shift the share of important parts
produced in the US from roughly 60% up to 80% and come to a
wrench where you don’t find sufficient suppliers anymore and
therefore 20% imported either from Mexico or from Europe
because they are specialized or sometimes you have a case where
you have a common part which is used in different [
Indiscernible] tool to produce that and for example if you have
in one Region 800 are utilized then you would not set up a
second in the US and import the part out of China into America
and could be vice versa it is mostly used in the US and then
you export these parts into other regions. If you would
force us to produce these parts in the US have to add additional
tool a lot of investment which is never utilized for the market
we serve here and therefore it’s always in the supply chain try
to optimize this and overall 20% would have a significant impact
on our total P&L so we have to adapt and as you know the
overall profit wrench in the automotive industry is not very
high it is very likely that we have to pass this through to our
customer which finally ends up in [ Indiscernible] of course
hits the consumer. >>Another question for Doctor
Engelman take advantage of your expertise as a tier 1 automotive
supplier. I noted in the last panel and you mentioned in your
comments the importance of positioning the United States as
a leader for the future electrification of vehicles and
I noted that the last panel we have a very large trade deficit
in auto-parts trade and a significant chunk of that is
made up of electronic components and electrical parts and I’m
wondering to your point about positioning the US as a leader
for those technologies, how do you view the USS current
position as a leader for the future electrification of
vehicles and should we be concerned that the supply chain
for key components for those products and for electrification
generally are being established largely outside of the United
States? >>– Components first of all
from R&D this is a question the R&D sitting in US our case we
have really R&D locally so we have our R&D capabilities for
the US here in the US and heaven R&D center with the testing and
this is what — it’s really in the US we tried to be as near to
the customer as possible in regards to electronics, the one
reason especially [ Indiscernible] software example
in the business in the US has capable companies and therefore
we bought one company and we going to expand our center for
example for the charging business of [ Indiscernible]
based this in the US in engineering and greet R&D in the
US and there’s a balance and see a lot of strength especially if
it goes to software development and hardware development in the
US where this is really us strength of the US. And I see really a good balance of
competence across the globe for specific areas and honestly I
don’t see so much the threat for the US regarding [
Indiscernible] you have strengths in electronics and you
are competitive here. >>Thank you.
>>At this time I’m going to call [
Indiscernible]>>Thank you very much>>[ Event is on a short break.]>>
>>My name is Erik Autor President
of the national Association of foreign trade zones and the FEC
is a voice of the US worn freight created by Congress in
1934 to help US-based companies be more globally competitive maintain US-based manufacturing
and distribution activity and jobs attract investment and
employment opportunities into the American communities and
bruised exports through special duty benefits and customs
procedures. FTC’s account for significant portion of total US
trade 5.2% or $76 billion of US goods
exports and 10.2% or 225.3 billion of US goods imports in
2016. Over 420,000 American workers
are directly employed at FTC’s in all 50 states and Puerto
Rico. On behalf of any and its members my testimony focuses on the
national security issues in this investigation under section 232
of the trade enhancement act of 1962 and the impact on
automotive companies manufacturing in US foreign
trade zones if Section 232 tariffs are imposed on imported
automobiles and automotive parts. The automobile and
auto-parts industries are among the largest and most important
users of the F DEZ program and are a major FEC manufacturing
and exports of sex story F DEZ manufacturers in the automotive
and parts sectors have been instrumental in creating
preserving and expanding many thousands of American
manufacturing jobs and reviving a growing state and local
economies>>[ Silence ] [ No Audio ]>>The more real imminent threat to
the US automotive sector comes from Section 232 tariffs
artificially imposing significantly higher cost on
making automobile in United States. The result will be
diminished global competitiveness of the US auto
sector, decreased export sales, higher prices oppressing US auto
sales strong disincentives to manufacturing in the United
States undercutting core FTZ program policy goals and an
estimated direct net loss of 150,000 American jobs. BMW is
already considering moving part of its US production to China
one of its main exports Marcus to mitigate tariffs and avoid
retaliation against US-made products these are cost the
country can ill afford all to solve a nonexistent problem.
Finally a critical issue for FTZ manufacturers is to ensure
finished goods substantially transform the US own are treated
as US origin and explicitly exempted from
additional duties in this and all trade remedies actions.
We’ve noted in our submissions examples where quirks in the FTZ
entry requirements have resulted in zone manufactured goods being
flagged for duties in the section 201 cases on washers and solar cells and
panels in section 301 cases on imports from China. The department addressed this
issue with presidential proclamation language in the
Section 232 cases on steel and aluminum stating articles shall
not be subject upon entry for consumption to the duty
established in this proclamation merely by reason of manufacture
in the US foreign trade zone. This or the language we
recommended that a written submission are critical to
ensure that additional duties are not inadvertently imposed on
final products made in the United States thank you for your
attention. >>They can
>>Thank you,
>>Mr. gar >>My name is Brian Garst I’m
here on behalf of the center for free and prosperity of
Virginia-based tech. For advocacy group and our objective
is to ensure that the interests of consumers are represented and
we also believe their welfare in the nation security are deeply
intertwined. Traditionally Section 232
investigations have been limited to strategic resource of the
components used for wartime activity mostly under the
assumption that heavy reliance on imports could be less
probable to shortages should they become inaccessible the
note nature of global markets today
is such that this scenario is likely to occur only in
extremely unusual cases as such these investigations have been
run and and acted remedies rarer still. The current investigation
represents a radical departure from past practice. There is no
clear national security for automobiles and automotive parts
nor any reasonable expectation that modern warfare would
necessitate the industries of the structure be rapidly
redeployed toward wartime production. The
entire investigation and other which is based on a primarily
economic argument that global competition weakens American
industry. This is not merely a week basis on which to conduct
Section 232 investigation but one that is profoundly and
dangerously wrong. The idea that industry is strengthened by
shielding them from global competition is at odds with
centuries of aches and tariffs and other policies. As economist [ Indiscernible] jurisdictions
that are for the most pro-trade by Singapore Hong Kong Singapore
enjoy rapid growth of high levels of prosperity likewise
nature that impose high levels of protectionism like Australia
and New Zealand after World War II stagnated and fell behind.
Both ascents seen positive results after dismantling trade
barriers. At its core protectionism bars
consumers by making them pay more for goods that are of equal
or lesser quality in certain circumstances it can provide
short-term benefit to an industry albeit typically not
just foreign competitors but also other domestic industries
in the long run even the protective industry suffers as
reduce competition lessens the need to innovate and adapt. To
see white Arabs are harmful to national security when need only observe the effects
already taken place in response to the recent imposition of
tariffs on steel and aluminum imports the strained relations
with key allies spark retaliation from domestic
industries and lowered overall welfare with rising prices on a
variety of consumer goods. These negative economic effects are
entirely predictable and are why the bar has always been hyper
Section 232 investigations to offset the many downsides in
national security benefit for imposing consumer taxes on
imports must be clear and significant there is no credible
argument that tariffs on automotive and parts can be
detrimental. Far from enhancing our security position automotive
tariffs would undermine national security America maintains the
world’s largest and most powerful military force thanks to a robust and unmatched
economy that has long embrace free trade in today account for
25% of global GDP the US was able to spend more defense in
2017 then the next seven highest spending countries combined the
implication should be obvious the stronger the economy the
more resources are available for spending on defense the
corollaries and policies which on the nation’s economy we can his defense by reducing
what is available for the defense budget this is why
general Madison many other experts who argue that the
national debt is based on the greatest security threat. The
tax foundation estimated 25% tariffs on auto imports could
amount to as much as 73 billion in new taxes on consumers
reducing after-tax income for the year by almost half a person
the Peterson Institute for international economics
estimates [ Indiscernible] 1.5% and cost 195,000 US jobs or
if other countries retaliate with their own tariffs and
evidence suggests they will , it would be a four-person
reduction the client and the loss of 624,000 US jobs. Thanks to the compounding effect
of growth even modest reductions in economic growth today can
amount to potentially hundred billions of fewer taxpayer
dollars for future defense budgets for all these reasons
and more this investigation should object reject attempts
run-of-the-mill detection under the guise of advancing national
security interest. Thank you for your time.
>>Thank you, Mr. gar SMIS Remi? Back thank you, my name is Bryan Riley and I
with the national taxpayers Union established in 1969 in a
nation oldest taxpayer over organization and government
officials you have my written comments so
what I like to do is touch on a few highlights anybody would
like more details who doesn’t have the written comments we’d
be happy to make those available. Brian I got here
early and I was sitting in the corner and I had a direct you of
the American flag. And I was reflecting on what it means to
me to be an American. And I don’t know what it means to you
all or to those of you who are here, but to me, being an
American is about freedom. And to me differentiates being an
American versus somebody from Russia or China is freedom and I
was thinking about our Independence Day celebration a
couple of weeks ago which was based on our celebrating
independence from the country for reasons among others that
cut up our trade with all parts of the world and those are ideas
I don’t think we should move away from. We went through the online
comments that of been submitted you requested from the public
and most of the people I’ve heard today have not if not all
almost all think these tariffs are a bad idea. And the online
comments roughly 90% say don’t impose these terrorist tariffs
as a taxpayer organization we reviewed view them as a tax I
will drive up costs and those that can see the chart over
there don’t worry about the numbers the important thing is
the line that goes up like a rocket at the end and that
represents the cost these tariffs would impose roughly
tripling the tariffs that Americans would pay based on our
2017 import . That has national security
implications as well and Brian touched on this to some extent,
in 19 83 previous 230 — 232 investigation noted that trade
restrictions acts as a drag on the rest of the
economy in roadie the industrial base and other sectors and
undermining our ability to sustain a balanced defense
effort in a national emergency. I think that’s important I was
looking at the most recent 232 investigation and one of the
things commerce looked at was whether imports are weakening
our internal economy and I hope you’ll use that same criteria
here because I don’t think a strong case can be made that
imports are weakening our economy in fact I think imports
are strengthening our economy into earlier this year read over
1100 economist including 15 Nobel laureates and this is an
excerpt from the letter they said we are convinced that
increased protective duties would be a mistake a higher
level of protection would raise the cost of living and injure
the great majority of our citizens now to be clear they
were talking about auto tariffs they were talking about a narrow
example but in general that you is almost unquestioned by
economist and if you look around the room and this was pointed out to
Brian the countries that are most prosperous that the most
economic security have one thing in common they have the most
economic trade as the Federal Reserve chairman noted earlier
this week in general countries that make open to trade that
have an elected barriers have grown faster and have higher
incomes higher productivities countries with more
protectionist direction have done worse I think that’s the empirical
result and last night the chairman of the Ways and Means
committee noted nothing will weaken America more than rolling
back our freedom to trade, there’s been a broad amount of
research done on the impact of trade on international peace and
diplomatic relations and I urge you to consider this in your
analysis and summary of one report suggested that actually
from the earlier to 32 investigation that the US has
long been a champion of free international trading system
that benefits the American people and benefits our trading
partners so to wrap up I just really hope
that you’ll take the views of the 90% of people who commented
seriously and consider the views of the people who testified
today and I don’t know who it was earlier that made an
accurate statement from the trait perspective which was
talking about tariff as trade — terrorist — tariffs are the
problem we need to move in the direction of more international
trade more economic freedom not less freedom and I hope that you
all consider that as she your requirements are looking at this
in the overall view of economist again is trade is not just for
economics and not just good for prosperity is good for security
as well. >>Thank you, Mr. and I’d like
to open for 20 questions or comments from US government>>Well thank you.
>>I like to take this opportunity to welcome our fifth
panel, to take their seats and I have the associate of automakers
John Bozzella LG Electronics and LG Electronics Vehicle
Components and Alabama John Hall, the Korean Automobile
Manufacturers Association young and Kim
>>Mr. Ms. Anna may begin.
>>Thank you very much. On behalf of the associate of
global automakers and America companies thank you for the
opportunity to speak to today and my name is John Mazzella and
on the presidency over the Association of Global Automakers
as well as the spokesperson for American high, so they reflect
the consensus views of international automakers in the
United States. We represent the US interest in the US
subsidiaries. The international automakers
have invested $82 billion in the United States and directly
employed 133,000 Americans and 500 facilities. Including 31
manufacturing operations. Together these companies create
and support jobs for 2.47 million Americans including
people employed in design, research and development,
manufacturing, sales and dealership operations as well as
other businesses. International automakers also produce nearly
half the cars SUVs dance and light trucks made in America
last year. And accounted for nearly half of US exports. We
will surely hear a great deal of testimony today about the
economic impact on tariffs and auto and auto part
imports and our formal statement also outlines the profoundly
negative impact of tariffs on US auto production and I will
repeat those facts with the time I have available today. I do
want to comment broadly on the basic premise of this
investigation and the idea that imports unfinished vehicle and
are harming the national security of the United States.
First there is simply no support for the proposition that imports
of cars trucks SUVs and auto parts threaten the national
security of the United States. No automaker or auto parts
supplier has requested protection under our trade laws
including the statute that authorizes this proceeding. Auto
sales production and exports are in fact at or near all-time
highs. Second the Department of Commerce so far has been unable
to outline any theory explaining how the commercial production of
cars and trucks is connected to the US national security. Third
in response to the departments call for comments only three
substantive statements were filed out of more than 2300
comments of all types supporting tariffs or other restrictions on
auto and auto parts imports and that support was frankly [
Indiscernible] in addition to the absence of public support
associations representing the entire US auto industries value
chain yesterday publish an opening letter to the President
opposing the tariffs and urging that the investigation be
considered. The unity is as remarkable as it is
unprecedented. Which brings me to the extraordinarily
heavy-handed effort that began last week as you know the
department has decided to turn to an archaic statute the
defense production act of 1952 justified a survey demanding a
huge amount of highly sensitive competitive
business information from every automaker producing cars and
trucks in the United States. To my mind this highly intrusive
overbroad and burdensome tactic is simply the latest evidence
that the department possesses no evidence to support the idea
that auto and auto parts imports harm the national security. Of the United States. The truth
is that the auto industry striving competitive and
innovative than ever. The automobile industry in the
United States is in fact highly comprised of 14 major global
companies 15 scheduled to begin domestic production in
2021 these companies are deeply enmeshed in are contributing to
the communities in which they operate. US production capacity
is as great as it has ever been stronger now because of trade
and import competition have strengthen US competitiveness
and spurred investment. Every US production facility in the
industry would be available in a national
emergency and the Americans who work for international
automakers are no less patriotic are willing to serve their
country in time of crisis and any other American there is
simply no basis for treating these companies and their
employees any differently than any other US automakers and in
conclusion the greatest threat to the US automotive industry at
this time is the possibility that the administration would
impose taxes on imports in connection with this
investigation. They would kill jobs in Chase automotive
investment in innovation overseas during up period of profound industry
transformation thank you for the opportunity to be before you
today and I’d be happy to answer any questions.
>>Thank you,. >>Mr. Boyle? Back my name is
Joe Boyle on the Senior Director for business development and
sales for the US arm of LG Electronics Vehicle Components
company with operations in Troy Michigan Vehicle Components
represent US — here in the United States LG serves a major
automakers with mass component is a glee radius
displays telematics modules in a full portfolio of powertrain
product for electrified vehicles. I’m here to day to have a straightforward message
the imposition of vector tariffs on imports and component parts
using the production of automobiles in the United States
is a bad idea. Doing so will harm the American companies and
workers that are part of the fastest-growing and most
innovative segment of the US auto market LG story is a good
example of the benefits being driven by the growth of the US
market for connected and electric vehicles although LG
may be best known as a consumer brand port Smartphones TVs
washing machines and refrigerators LG also has a
thriving business supplying critical components to auto
manufacturers for connected electric vehicles as you may
know LG is the primary technology supplier for General
Motors US production of the award-winning Chevy volts sales
a better electric vehicles like the volt outgrown tremendously
over the last five years I started to grow exponentially in
the years ahead. Due to the tremendous success of the Chevy
volt and the growth of the market for such advanced
vehicles LG will soon open a new US factory
in Michigan for production of advanced electrical Vehicle
Components in our new factory in the US automotive operations
will provide about 300 US jobs in the metropolitan Detroit. I
want to emphasize the decision to invest in a new factory
message was made last year and had nothing to do with this
trade case. In fact the major influence on her decision was
precisely the US has had a very open market with respect to
trade in autos and auto parts. Of course like many companies we
invest primarily to support important customers and markets
with global production and trade restriction in a given market
make it less attractive not more attractive for global investment
for two reasons, first businesses need certainty to
plan for successful investment to growth, the sudden imposition of trade
restrictions seemingly as part of a short-term negotiated
strategy undercuts that certainty. Such trade
restrictions do not encourage long-term investments rather
they raise doubts about what might come next that would
imperil that investment. Second open marks are particularly
critical in the automotive industry as hard to imagine a
more interconnected industry that depends on global supply
chains part of the appeal of investment
in United States has been its historic reputation for open
markets in the absence of unstable government policies
that disrupt this business the locations of
supplies from which automakers purchase key components changes
over time due to multiple factors including cost quality
technology and service. The success of global auto companies
relies on having the freedom to optimize the total value
proposition when making sourcing decisions. Losing free and open
access to global supply chains and access to the best new
technologies creates uncertainty and prevents competent future
planning. This is why I have come to Washington LG
Electronics strongly believes that imposing additional tariffs
will cause damage to the incredible growth of US-made
connected electric vehicles. The growth in demand for US
vehicles with these innovative technologies have been driven by
the fact that US automakers are able to offer these vehicles to
consumers while worldwide it competitive in affordable
prices. This competitiveness has been — from US or foreign
suppliers based solely on value and free-market economic
decisions. Disrupting Axa to global supply chains could well
effect the continued ability of US connected and electric
vehicles to succeed in the global marketplace. For all
these reasons LG Electronics urges you not to impose such
could to 232 tariffs on the auto industry. LR 2 in my remarks with a
specific request we ask that you please identify as soon as
possible which specific components in which HTS numbers
are a part of the Section 232 investigation the Commerce
Department’s initiate notice simply uses the term automotive
parts of phrase that is far from clear and therefore subject to
wide-ranging interpretation. Although commerce is recently
issued survey actually lists her elbow out of parts category
these categories are themselves very prod. This can very broad
that this concludes my testimony thank you for providing LG
Electronics to share his views on this important matter and
I’ll be pleased to answer any questions you have.
>>Thank you,. >>
>>[ Captioners Transitioning ] >>
>>>>>I have worked for Hyundai
since 2005 we have invested billions of
dollars. I have seen how it has transformed the Alabama economy
and credit thousands of jobs. Icing the strength of the
commitment to American manufacturing. We have faced
challenges and downturns. We did not abandon American workers
during difficult times. Hyundai has stuck with America and America through good times
and bad. Even when other companies in our area closed
their doors. This is one reason I’m proud to work for Monday and
to be represented at this hearing. Of also seen how we
have transitioned. We at Hyundai believe strongly that even
though auto-parts do not threaten our national security,
it is the opposite. Imports and exports are essential to our
business and the growth of the American automotive industrial
base. And the skilled workforce. Our views on this port are
detailed in the written Simitian by Hyundai. I want to briefly
highlight two of them. We believe the imports from Korea
do not impose a national security threat to the United
States. Because of the United imports from Korea, the
commitments that were secured to the Trump ministration. The
White House itself has acknowledged that the new force
will improve the auto industry and enhance our national
security. Korea and the United States also share a strong
strategic denial alliance. We fought in a war
together. And that created a bond that goes back more than 60
years. I mainly want to talk about the commitment of Hyundai
to America manufacturing and how it would be undermined by new
tariffs. Some may feel that Hyundai is a foreign automaker.
We are a part of the automotive — American automotive process.
Half of the vehicles we sell are made in Alabama. 20 percent of
the vehicles we make. Exports have increased over the past
five years. Helping Alabama become the third largest auto
exporting state. These manufacturing operations
directly support thousands of American jobs. Just like mine.
And thousands more directly in communities across the country.
It is important to remember that the investment of Hyundai in
Alabama is not just limited to vehicle manufacturing. When
Hyundai decided to make cars in the United States, it decided
to make core components here also. For example, Hyundai makes
almost 700,000 engines each year in Alabama. Hyundai power
tech makes about 650,000 transmissions each year in
Georgia. All the sports are made by American workers. A cluster in Alabama and Georgia
that did not exist before Hyundai. Hyundai also partners
with other American companies to create innovative automated
technology that makes other contributions to U. S. economic
development by supporting education and charitable causes.
For example, Hyundai has funded educational converts and is
greeted $145 million to fund life-saving research in the
fight against pediatric cancer. We have suppliers that account
for two percent of Alabama’s GDP and directly employee 25,000
American workers. In addition, there are another 47,000
Americans employed in Hyundai dealerships and service centers
all over the country . New tariffs on imports would have a
devastating effect. I am one of thousands of American workers
whose livelihoods would be affected substantial tariffs on
automotive goods. It would not be possible to change our
supply change overnight. At 25 percent, tariffs would raise
production costs at a Alabama factory by 10 percent annually.
This would force us to raise prices and cut production. A lot
of Alabamians, my friends and neighbors could lose their jobs
with a tariff on imported vehicles. It would force us to
significantly scale back our dealership networks. Hurting the
business workers and the communities they support. U. S.
consumers would be forced to spend thousands of dollars more
for a car and hundreds more on routine maintenance. Imports are
just a part of our American operations. They are vital to
success of all the others. Our team members at Hyundai and I hope the department will
recognize this and conclude that automotive imports do not
threaten our national security. Thank you.
>>My name is Yong-Geun Kim and
I’m the president and CEO of Korean Automobile Manufacturers
Association. Thank you for letting me testify on Section
232 . First of all I would like to emphasize that it is a complicated global
supply chain. Therefore, a restrictive tariff affects the auto industry
worldwide. It affects the connectedness of auto dystrophy
Tours. — Industry . The total imports from Korea
into the American market is 4.8 percent. At this level, there
will be in effect on the U. S. economy is this. That business.
Furthermore, 90 percent of the autos from Korea will have
CUV’s. There is little competition with
U. S. automobiles. By contrast automobiles manufactured and
sold in the United States by the major U. S. automakers such as
the pickup truck, SUVs are far larger and far more
profitable than the small vehicles imported from Korea.
Automobiles imported from Korea offer a wide range of choices to
U. S. customers and give them the opportunity to purchase
automobiles at lower prices. If the United States issues trade
restrictions it will make it difficult to replace this
portion of imported automobiles. It will result in an increase in
manufactured cost of prices. This will result in a shrinking
of market. Imported Korean auto-parts are
minimal. Making up 5.5 percent of total U. S. auto material. Auto parts imported from Korea are used in a product of small
and medium cars. It does not affect national security. This
impact could to the increase in competitive United States auto
industry. Korea’s auto bills — automobile use was cut in
half and eliminated in 2016. Korea’s import of U. S.
automobiles has increased in the past six
years. The sales of U. S. automobiles
in Korea has continued to increase due to their interest
in the large car segment. In closing, based on the
characteristics of the automotive industry and our two
countries, based on the different segments,
in implementing one another — and with the trade fragment,
I believe automotive trade is a cooperation between the United
States and Korea. It can happen without any
further trade restrictions.>>I would like to open the
floor to United States government for questions or
comments.>>Thank you all for your
presentations. Especially to turn 15 for coming from Alabama
and taking time away from your work. We appreciate your
perspective. I want to start with John Bozzella . The share
of U. S. automobile production by U. S. owned firms has dropped
dramatically since 1985. From over 95 percent to under 50
percent last year. At the same time, the share of domestic
production by domestic owned firms is significantly higher in other key auto producing
nations such as Germany, Japan or Korea. Also, import
penetration in the United States is much higher — significantly higher, then in
those countries I mentioned. The other key producing alternations
around the world. In your view, what does this mean for the U.
S. competitive position in automotive manufacturing and its
impact on economic and national security?
>>Thanks for the question. A couple of things. The United
States auto industry and U. S. auto market is the most vibrant,
innovative and competitive car market on earth. There is no
question. 14, soon to be 15 car companies operate here in the
United States. Yes, 10 of them, soon to be 11 are international
car companies. They are all U. S. car companies. All innovating
here. All investing in research and development
here. International car companies have 72 research and
development subtleties in 17 states in the United States. 42
different models are designed and developed in the United
States. It is a vibrant, competitive market. The industry
as a whole is successful. For imports, I am a little confused
about how we are seeing the goal post. For the last quarter of a
century, we have had a seamless, NAFTA industry. In North
America. Half of United States — auto imports into the United
States come from our trading partners, Mexico and Canada. If
you take those imports out of the equation, import
alliteration looks like the EU. What you have is a market that
is in a 15 U. S. auto workers — benefiting U. S. auto workers
from the free trade of NAFTA and innovation in competition for
imports and development in the United States.
>> Thank you .>>I had a question for Joseph
T. Boyle . Other witnesses may want to follow up. From the
perspective of a large automotive parts supplier, what
is the relationship in your industry between where research
and development takes place and were manufacturing will later
take place?>>The — LG Electronics and LG
Electronics Vehicle Components USA has been in the automotive
is this for many years. Most of our research and development has
traditionally been in South Korea. However, as our presence grows in the U.
S. market, especially in technologies like
electrification and connected vehicles, our customers are
doing more and more of their development. General Motors,
Ford Motor Company, SCA, art vesting term it is resources in
Detroit. In developing autonomous technology and
electrification technologies. They need us and we need to be
close to them, in order to serve those needs and develop future
products. In fact, as the business has grown, in addition
to moving manufacturing and warehousing operations into the
United States, we have been steadily growing our research
and development facility. Employing PhD’s and advance
scientists to develop those technologies we talked about.>>Another question for Joseph
T. Boyle . I want to take advantage of your expertise,
specifically as it relates to elect a vacation. I noted during
the last couple of panels that we currently have an old — a
trade deficit. If you parse it out and look at specific
opponents the — a specific part of the trade deficit is made up
of electronic parts. The concern some have voiced is as we look
at the future of the U. S. auto industry as it transitions more
toward electrification, are we falling behind? Are we
vulnerable to not having U. S. sources for key components, as
the vehicles become more electrified? I would love your
perspective.>>I think it is a global
interconnected industry. Parts will be designed and
manufactured throughout the world. Recently, in particular
over the past five or so years, we have seen a definite trend at
the domestic automakers. I will cite GM and Ford. Of
significantly expanding their design capabilities, especially
in the area of software. It is critical to the advanced
electronic components. The OEMs that we work with are taking
much more in house ownership of that key component of the
product design. To the extent that in some cases, they are
relying much less on their design and development partners
and suppliers. And doing the advanced development internally
and sourcing X more on a build to print aces. — Basis. Where
they were somewhat lacking in the past and relying on
suppliers to provide the technical and research and
development. For autonomy, artificial intelligence etc.,
the domestic OEMs of the United States are growing very rapidly
to internalize the capability. They are also very protective of
their intellectual property. Whether they are co-designing
with the supplier or designing internally. They are very
protective of making sure that that technology does not go to
unintended places. And they are having assurances from their
suppliers.>>The examples you’re giving
focus on the development and design of those products. What
about the actual manufacturer and assembly of batteries and
components? Is there a robust enough U. S. manufacturing
source for those products? Are we largely reliance on imports?
>>In the case of LG electronics, we supplied battery
packs. That is the first product we will build in a north
American facility. The key components, the cells and
control electronics are also sourced mystically. —
Domestically. Are robots and sources of supply of key
components available in the United States.
>>Any other questions? Thank you very much . We are going to
take a lunch break. We will reconvene at 1:40 PM. If you are
joining us after lunch, please remember to give yourself enough
time to get through security to enter the building. We look to
reconvening at 1:40 PM with our number six panel. Thank you .>>[ The event is on a 10 minute
recess. The session will reconvene at 1:40. Eastern
Standard Time. Captioner on stand by. ] >>[ The event is on a lunch break.
The session will reconvene at Eastern Standard Time. Captioner
on stand by ] >>[ The event is on a lunch break.
The session will reconvene at 1:40 PM Eastern Standard Time.
Captioner on stand by ] >>[ The event is on a lunch break.
The session will reconvene at 1:40 PM Eastern Standard Time.
Captioner on stand by. ] >>[ Captioners transitioning ]>>>The government of Turkey, I would also like to take the
opportunity to introduce the United States government
panelists here today. We have the assistant secretary for the
international trade administration, the automotive
team laid — lead, the Bureau of industry and security
at the Department of commerce. We have Robert Reed, the
department of defense and the department of transportation. Ambassador Sullivan, you can
begin when you are ready. >>Thank you very much. Welcome
chairperson, panel and members of the committee. I’m happy to
be here. I am David Sullivan, I am the am Lassiter of the
European Union in Washington. I am happy to appear before you. I
am here to convey the serious concerns of the European Union
and its states to this investigation. The EU believes
that this current investigation lacks legitimacy, factual basis
and could lead the United States into a breach of United —
international Law. The EU reiterates its concerns. This development harms trade,
growth and jobs in the U.S. and abroad. It weakens bonds with
friends and allies and shifts attention away from shared
strategic items. If import tariffs are imposed on
automotive and automotive parts, all of your closest allies will
be affected. The notion that imports of autos or auto parts
from your closest allies could threaten U.S. national security
is plenty speaking, absurd. The EU’s written comments layout our position in detail. I would
like to recall some key points. Firstly, imports of European
automobiles are stable in line with U.S. production and respond
to market signals. Although imports from the EU do not
threaten or impair the health of the U.S. industry and economy,
the EU and EU industry specialize in different market
segments, and over the last five years imports from the EU have
been stable and correlated to strategic growth. Secondly,
there is no economic threat to the U.S. automobile industry
which is healthy and has steadily expanded domestic
production in the last 10 years, largely thanks to increased
specialization and integration into global value chains.
Imposing restrictive measures would undermine the current
positive trends of the U.S. automobile and auto parts sector
and negatively impact U.S. GPD. This loss is likely to be multiplied by
four in the likely event that U.S. trading parts take
countermeasures, as already seen in reactions to the section
tariffs on steel and aluminum. Import restrictions from the
present investigation would result in countermeasures on a
significantly higher volume of U.S. exports, which we estimate
at $249 billion, approximately 1/5 of U.S. exports in 2017. The
EU is proceeding with internal preparations in the event the
U.S. adopted trade restrictive measures. Thirdly, if the auto
companies producing in the U.S. contribute significantly to U.S.
welfare and employment. They are integrated into the U.S. value
chain and export about 60% of the production to other countries, improving the
U.S. trade balance. They provide 125,000 direct upstream jobs in
manufacturing plants and 420,000 jobs with dealers. Trade
restrictions will lead to higher costs to producers, thus in
effect taxing the American consumer. Fourthly, you auto
companies foster innovation through domestic research and
help develop the local workforce. Rather than threaten
national security, EU companies are driving long-term economic
stability and competitiveness. Almost 1/5
of research and development expenditures in the U.S. were
derived from foreign owned subsidiaries. The EU automotive
industry also contributes to enhancing the skill set of the
U.S. workforce. Fifthly, import restrictions would be contrary
to international rules. There are no exceptions under the
general agreement on tariffs and trade
that justify import restrictions by a developed country to
protect the domestic industry against foreign competition, and
less in the form of permitted trade measures. Although the gap
provides for security exceptions, the scope of these
exceptions is circumscribed for specific exceptions that are
clearly absent in this case. Six lee — number six, there is no replacement for U.S. parts. We
need to focus on direct threats to national security, and
particularly defense. The U.S. needs technical vehicles that are customized by
US-based suppliers. These operate in a niche market that
is independent and unrelated to the automobile industry. As only
products from the US-based manufacturers are used for the
U.S. military, any trade restrictions imposed on
passenger cars like trucks and car parts, cannot be justified
by national security. In conclusion therefore, I urge you
to conclude this investigation with the finding that imports of
autos and auto parts do not threaten U.S. national security.
Thank you for your attention. >>Thank you Mr. ambassador.
Ambassador Fernandes if you wouldn’t mind pulling the
microphone in front of you when you speak.
>>Good afternoon, on June 29, the government of Mexico
submitted written comments regarding the section 232
regarding the national security imports of autos and auto parts
initiated by the Department of commerce. I appreciate the
opportunity provided by today’s hearing to stress our position.
More importantly, my comments today as ambassador of Mexico to
the United States reflect our honest conviction that
thoughtful consideration should be given to the concerned — concerns voiced not only by
my government, but many other within the United States and
abroad. Allow me to summarize in the following four points.
Number one, trade integration with Mexico is beneficial to
American automobile industry. Clear rules and certainty of
market access under NAFTA enable industry trade and contribute to
the U.S. automotive industry global competitiveness. The high degree of integration
between the United States, Canada and Mexico enables U.S.
producers to effectively manufacture and compete, not
unlike other regions in other countries in the world. The
nature of modern global supply chains implies, for example that
half of the 131 billion in automotive industry trade
between the U.S. and Mexico, are vehicle parts that are shipped
across the borders several times before reaching the final
consumer. Mexico is the top automotive supplier
to the U.S., accounting for about 40% of imports. At the
same time, the United States is Mexico’s top automobile parts supplier. The benefit of
these integrations are clear. Since 1990, the U.S. automobile
production , the per-unit value of vehicles
and the industries overall contribution to the United
States gross Mastic product have increased. Number two vehicles
and auto parts to section 232 tariffs would disrupt supply
change that make the U.S. automotive manufacturers
competitive. It would also harm the U.S. automakers and
consumers. The Peterson Institute for international
economics, for example predicts that with this measure, the
automotive industry of the United States would lose 1.5% in
production, close to 200,000 jobs, and consumers would
naturally pay more to buy a car. Number three, imports of vehicles and auto
parts from Mexico do not threaten or undermine United
States national security. Applying section 232 tariffs
would be a misapplication of the trade expansion. This bill has been recently and
clearly expressed by a significant number of U.S.
legislators. Indeed, in 2001 the Department of Commerce in a
similar case stated the obvious. Mexico is a close ally and is
party to NAFTA. In any of our national trading
relations, Mexico stands firm against the use of national
security arguments in an effort to restrict trade or gain
negotiation leverage. We will remain diligent for any
unjustified trade restriction and will exercise our rights to
ensure that the Mexican automotive industry is not
adversely affected. Number four oh –, the United States and
Mexico have a robust and increasingly important need to face our security needs.
Transnational organized crime that deals with drugs, illegal
weapons and people and money stands out. Daily our security
agencies work together to stem the destructive activities of
these organizations. As the 2018 Department of state reports, the
U.S. and Mexico have one of the most extensive bilateral law
enforcement relationships in the world as a foundation in which
we are billed. — Built. Early this year, 10 commanders in a
letter addressed to the president asserted that,
effective pursuit of U.S. security and economic interest
depends on partnerships with those nations that share our
borders, Canada and Mexico. While contributing to economic
growth, NAFTA has also established a framework of trust
among all three parties leading to close cooperation to address
a range of pressing concerns including drug trafficking,
terrorism, cyber security, organized crime and migration. My comments today reaffirm our
commitment to free trade. They come from the certitude that a
strong and successful United States is in danger of Mexico as
much as a strong and successful United States is in danger —
Mexico is in danger of the United States. Thank you very
much. >>Thank you. Deputy ambassador
Hillman?>>Thank you manager person. My
name is Kiersten Hillman , I am Canada’s deputy
ambassador to the United States. I am here today on behalf of the
government of United — Canada to emphasize the benefits of our
integrated auto sector and the exceptional nature of our
enduring national security relationship. In times of peace
and through wars our cooperation relies on each other. Today as
we examine whether imports of autos and auto parts from Canada
are a threat to U.S. national security, let me be clear.
Rather than potentially strengthening U.S. national
security, imposing tariffs on automotive imports from Canada
would undermine U.S. security and would have a devastating
effect on U.S. competitiveness in the auto sector. Let me start
with the economic case between our two countries . Over 50 years, the United
States has had tariff free access to the United States for
Canaday — Canada experts. Canada has bought over 37% of U.S. automotive exports.
Canada is by far the top destination for the U.S.
automotive sector. Canadian cars are U.S. cards. Auto parts —
cars. Assembled vehicles exported from
Canada to the United States contain more than 50% U.S.
content. Allow me to repeat that, Canadian made vehicles
exported to the United States contain more than 50% U.S.
content. As such, they directly contribute to U.S. economic
prosperity and our integrated supply chain ensures we can
outcompete any other producing region. We have always stood
together. During the 2008 economic downturn, the Canadian
and U.S. governments collaborated to ensure the
Canada, U.S. auto sector could weather the uncertain economic
environment. Together we cooperated to protect jobs on
both sides of the border. The Peterson Institute has
determined that if the U.S. moves forward with auto tariffs,
195,000 American jobs would be lost. This would reverse the
current trend which has been discussed that has seen U.S.
employment in the auto industry increased by 6% annually. In
this investigation you are being asked to examine a specific
industrial sector, automobiles and auto-parts. Not tanks, or
battleships. Civilian passenger vehicles and parts. The U.S.
Department of Defense does purchase those types of
vehicles. Where is the nexus between
civilian vehicles and national security? There is none. There
is no basis for finding one. In contrast, America’s enduring
alliances strongly support U.S. national security. Canada is one
of three foreign countries that are members of the U.S. national
tech knowledge — technology and industrial base. Industrial centers in Canada are
an important reserve capacity for the United States in the
event of attacks on the U.S. On this basis alone , this investigation must
conclude that Canada could not conceivably represent any risk
to U.S. national security. By extension, Canada-U.S. auto
trade does not pose a risk to national security. Canada urges the
United States to recognize the wide range of benefits of an
integrated North American economy and to remove steel and
aluminum tariffs on Canada. These tariffs are already having
a detrimental impact on the North American auto sector.
Canada was forced to respond to this unilateral action by
applying commensurate counter tariffs. Should this
investigation ultimately result in the application of tariffs on
autos, Canada will once again be forced to respond in a
proportional manner. Today you are not only hearing from
Canada, but allies that have similarly enforced to respond to
steel and aluminum tariffs with counter tariffs. If tariffs were
to be imposed in the context of the auto sector, the number of
U.S. jobs would rise from 195,000 to 624,000 high-paying
manufacturing jobs. These jobs could be lost to the U.S.
forever. Canada’s priority is and has
always been to work with our American friends to strengthen
the integrated Canada-U.S. economy. To also ensure our auto
sector flourishes together. No country is more interested in
the prosper — prosperous of the United States. Maintaining
open trade in autos and auto-parts between our countries
is crucial to the economic well-being of our companies, our
communities and our workers. That in turn supports our
collective security. We urge you to reflect on these matters as
you prepare your recommendations. Thank you.>>Mr. Wilson?
>>Madigan by thank — thanking deputy ambassador Hillman for
sharing Canada’s position.>>Canada and the United States
have the greatest trade relationship in the world.
It has led to economic growth, productivity and a fully
integrated auto sector that is more profitable, innovative and
robust. Ontario is a proud auto trading partner to the U.S.
Ontario is the economic engine of Canada and the hub of
Canada’s automotive industry. The vast majority of Canada’s
manufacturing occurs in Ontario which borders the Great Lakes
regions. This region which includes Michigan, Ohio, Indiana
and Illinois functions as an integrated automotive production network. Materials
auto sector is deeply integrated with U.S. production in the
states. Canadian firms have invested $1.7 billion in the
U.S. between 2012 and 2018. That creates and sustains thousands
of U.S. jobs across many states. For example, magna international
headquartered in Ontario employs 27,000 people. Since 2011 they have
created more than 8400 jobs across 11 states. The integration of our auto
sector is of enormous benefit to both of our countries. Our
country’s businesses, workers and economics. This integration
is evident across our supply chains. Autos provide a clear
example of how connected our countries are. The parts of you
have heard, on average crosses the border more than seven times
before being installed in the production line. American
automobile producers have invested billions of dollars to
fine-tune these processes. Our supply chain reduces cost to
businesses, increases productivity and keeps vehicles
affordable for Canadians and Americans alike. Any outcome
from this current 232 investigation that will result
in tariffs or other barriers to trade in the automotive sector
would lead to significant negative economic impacts and
job losses, not just in Canada, but on both sides of the border.
It would make vehicles more expensive for American
consumers, leading to decreased sales, hurting businesses,
workers and the American economy as a whole. This would seriously
erode North American auto industry leaders efforts over
several decades. It could hurt sales in states like Alabama
that exports $604 million in engines and $65 million in brake
parts to Ontario each year. Experts have calculated that a
25% tariff on auto imports coming into the U.S. including
on parts, would shrink U.S. production by 1.5%. This could
result, as you have heard in 195,000 job losses in the U.S.
in the next — in the first three years. If other countries
respond to the U.S. actions by imposing their own tariffs, this
would only make the impact greater. U.S. production could fall by 4% and 624,000
jobs could be lost in the U.S. These consequences will be felt
in Canada as well. Workers are the backbone of our integrated
auto sector. Together workers, and industry leaders have built
something great. It can be and continues to be an
engine that drives our economies forward. If auto tariffs are imposed, everybody loses.
The Canadian auto industry has supported U.S. national security
interests for decades by ensuring reliable auto parts
suppliers. We have supported these interest in times of peace
and conflict. For instance, during World War II, the World
War II auto plant in Ontario built over 8000 — vehicles that were essential
to Allied operations during the conflict. These contributions are from
Ontario helped bolster U.S. national security, safety and
the freedom of U.S. citizens. Any barriers to automotive
imports from Ontario, Canada would hinder us from helping in
the same way in the future. As such, it is essential for
businesses, workers and families in both of our countries who
cannot receive a full exception , should be considered in this
investigation. We are relying on you to keep
them front of my tenure decisions on this matter. We are
stronger and more prosperous together. Our trade partnership
has enabled both countries to see great economic gains —
gains. I am confident we can work together thank you for
listening . [Captioners Transitioning] Secondly, Turkish automotive
producers do not target the U.S. market. To exports
almost $204 billion of automobiles and automotive parts
to the world. At our share is only 5.7% in Turkey’s export
in 2017 into the U.S. Turkey’s main export is to EU countries.
[ muffled audio ] in the Mediterranean area. In
terms of numbers, Turkey exports nearly 58,000 [ muffled audio ] in 2018. It
represents a negligible share in the U.S. market. [ muffled audio
] further more, [ muffled audio ] automotive companies [ muffled audio ] I would like
to touch upon Turkey’s domestic market. To is among the
countries that has increasing income at a young population and
where demand is on the rise unlike other developed countries such
as the EU, Japan, and the U.S. [ muffled audio ] the automobile
market in Turkey is estimated to grow [ muffled audio ] this is to say domestic demand
in Turkey and auto market is estimated to grow significantly
in the coming years. When it comes to capacity [ muffled
audio ] it was as high as 89% before 2008. Right now, it is
86%. As a result, [ muffled audio ] distance between U.S.
and Turkey makes the U.S. market [ muffled audio ] main export
destination. Besides, Turkey has a growing domestic demand and
for [ muffled audio ] can be a
threat to the U.S. industry. You looking — looking at U.S. auto
production, has doubled from more than 5.6 and million [
muffled audio ] in 2016. According to U.S. auto sales,
they have increased more than 67% since the financial crisis. In terms of exports, according
to statistics from the United States international [ muffled
audio ] increased by 17% for the year 2008 through 2017. In 2017,
the expert, U.S. exports were recorded as $130 billion with an increase by
44% in comparison with previous years. When it comes to
employment, according to the report published by the American
automotive policy consults, automotive employment increased
by nearly one half from 2011 through 2016. [ muffled audio ]
increased by 10.8% from 2013 to 2018. [ muffled audio ] growth
rate of 2.1%. The number of employees in the U.S. automotive
industries includes their 2010 [ muffled audio ] 2017. The report
also showed R&D activity and automotive parts industry
continuing to grow. In Michigan, nine of the 10 worlds largest
auto makers [ muffled audio ] auto suppliers have opened
facilities in 2017. In the initiation of this
investigation, it was stated the aim was [ muffled audio ]
automobile parts and production threaten to weaken the economy
of the United States including potentially reducing research
and development and [ muffled audio ] fuel cells, electric
motors and storage, [ muffled audio ] and other cutting-edge
technologies, all of the above-mentioned indicate that
domestic automotive is not suffering from increasing
imports of automobiles and automobile parts. On the
contrary, production and employment is growing
continually from 2010. Also, on a be a little industry — also the automobile industry
contributes to other countries with a growing number of new R&D
facilities. I would like to make some remarks of the
compatibility of the investigation [ muffled audio ]
to believes that section 232 investigation, although
justified under the nations security, it is only initiated
on pure economic rationale. Turkey fully respects [ muffled
audio ] to provide security protection
for people. To also understands the concern of the U.S. as far
as fair trade is concerned. However, while recognizing the
right of members to take measures to reach these measures
and objectives, Turkey says choosing to do so should not
interfere with international trade. Turkey urges the U.S. to
abide by provisions and safeguards in the agreements
under the investigation. Thank you.
>>[ participant comment / question
off-mic ] >>Thank you to our dignitaries.
We appreciate your time. Importantly as well, we
appreciate our lateral relationship with each of your
respective countries and we look forward to our strong alliance
with you and our long-standing relationship of close
cooperation. We will absolutely take each and every one of your
points into serious consideration as we continue
with our investigation . And we thank you for your most
valuable insights today. Thank you again for your time.
>>At this time, I would like to
welcome our seventh panel to take their seats. We have the
government of Japan, deputy chief commission Kazutoshi
Aikawa , the government of the Republic of South Korea, deputy
minister Kang Sung-cheon , the government of Malaysia, minister
Sabariah Ghazali , the government of South Africa,
Ambassador Mninwa Mahlangu , the Taipei economic and
cultural representative office, Miss S. Jenny Van.
>>Mr. Kazutoshi Aikawa, you may
begin when you are ready. >> And please make sure to bring the megaphone up front.
Thank you. >>Okay. Thank you for giving
you the opportunity to present on the investigation conducted
by the Department of Commerce under section 232 of the trade
expansion act of 1962. I would like to briefly touch upon the
current situation of the U.S. automotive [ muffled audio ]
United States economy. I would like to also explain possible
negative impact on the U.S. economy in the event of
restrictive measures. In regard to the current situation of the U.S. automotive
manufacturing base, I would like to point out that the U.S.
automotive manufacturing base has sustained an annual
production of more than 10 million vehicles since 2012. And it continues to steadily
grow. The number of jobs in the U.S. automotive and auto parts
industry has increased accordingly. There’s no
indication of imports from Japan hurting the U.S. auto industry.
In our view, the growth of the U.S.
manufacturing base related to the globalization of the
industry , the exports of passenger
vehicles manufactured in the U.S. have been on the rise and
increased success of the global picture meant network [ muffled
audio ] is a source of competitiveness for today’s U.S.
automotive industry. Let me turn to the contribution
that Japanese have accomplished, Japanese companies to the U.S.
economy. Japanese automakers have been providing a role in
creating many jobs and supporting the growth of the
U.S. manufacturing base. In particular, since January 2017, Japanese companies have
announced a number of new investments in the United
States. And it is expected that the least — at least 28,000
jobs will be created by those investments. This ranks highest among foreign
companies investing in the United States in that period.
And it is Japanese automakers that are enormously contributed
to it. [ muffled audio ] Japanese automakers are
currently manufacturing as many as 3.8 million cars in the United States and
exports from the United States to the rest of the world amounts
to $23 billion in value. Japanese auto and auto related
companies in total have invested more than $48 billion and
created more than 1.5 million jobs directly in the United
States. Those Japanese companies have sustained jobs in the
United States for a long time and continues into the local
economy and communities in a meaningful manner. [ muffled audio ] purchased
domestically in the United States by the U.S. auto
companies. [ muffled audio ] domestically in the United
States by Japanese auto companies. In fact, their
purchases of U.S. auto parts have increased by 28 times in
value in the last 30 years. As is seen in the new Alabama plant
investment by monster Toyota, the Japanese company contributions United
States has been on an expensive trend. In case of a new Alabama
plant, efforts are underway for the commencement of the
operations in 2021. Lastly let me say a few words on the trade
restriction measures on automobiles and auto-parts. It
will have a negative impact on the U.S. economy. According to
recent IMF reports, the U.S., it would be the region most
affected by trade tensions with a drop in GDP of about 0.8% in
the worst-case scenario. That includes terrorist being imposed
on imported automobiles and auto-parts. Even if the measures
were opposed, [ muffled audio ] immediate expansion of domestic
investment, constraints on production
capacity and employment among others, the prospects of an
unpredictable investment environment, it could be a
hindrance to such a new investment expansion the
imposition of tariffs invite an increase in vehicle prices
and service a burden on consumer sentiment. Therefore, it could
lead to shrinking of the U.S. auto market with consumer pull back a purchases. According
to the trade partnership worldwide, a 25% tax imposition
will result in the increase of prices of $30,000 imported cars
by 6000 — $6400. In addition, an inevitable increase in
domestic production cost, U.S. auto makers will eventually lose
their competitiveness. According to the study of the peters
Institute for international economics, and imposition of a
25% tariff on automobiles and auto-parts and corresponding
retaliatory measures by other countries, it might cause the
unemployment of about 624,000 workers in the United
States. The U.S. economy as a whole could consequently suffer. The introduction of trade
restriction measures would also have an adverse effect on global
trade and the trading system as a whole would be a great risk.
Such measures would raise serious questions as to the
compliance with agreements . U.S. manufacturing and other
cultural industries could suffer as well. — And agricultural
industries could suffer as well. [ muffled audio ] trade
relations with Japan could you not only to the economic
prosperity of the United States but also to its national
security. The importation of automobile and parts from Japan
is not by any means increased to impair , by any means planning to
impair national security of the United States. It will not do so
in the future. Let me conclude by expressing once again our
sincere hope that the Department of Commerce will take those
concerns enumerated into consideration seriously and
concur with my fellow colleagues that those concerns should never
[ muffled audio ] thank you very much.
>>Thank you. Debit he minister Kang
Sung-cheon? >>Thank you. Good afternoon. My
name is Kang Sung-cheon. I am deputy minister for trade
for Ministry of trade, industry, and energy of the Republic of
Korea. I would like to begin by upsizing that Korea is a key
security ally at a trustworthy trade partner of the United
States. Our two countries have just recently reached an
agreement in principle [ muffled audio ] which was the focus primarily on autos. As such, Korea does not
undermine or diminish in any way the national security of the
United States. Now allow me to elaborate. First, Korea and the
United States have a long-standing bilateral security
alliance that goes back for decades. Please — these
alliances might be sensibility — these alliances provide peace
and stability for ongoing U.S. efforts for denuclearization of
the Korean Peninsula. Korea is a partner in this year’s national
security initiative, not a threat to it. Secondly, [
muffled audio ] are to countries have established free, fair, and
reciprocal terms of trade, elimination of tariffs on
passenger cars and other allowances given to [ muffled
audio ] exports of automobiles into the Korean market have
increased by more than we hundred percent since it came
into effect. The United States is now a major player in Korea’s
import auto market. At the Trump Administration’s
request, our two countries engaged in a man — engage in
negotiations which is a greatly enhanced market access [ muffled
audio ] for U.S. vehicles. Under the amended agreement, [ muffled
audio ] U.S. cars under the U.S. safety standards from 25,000
50,000 units per manufacturer. — 25,002 by 25,000 — 25,000
two — 25,000 to 50,000 units per manufacturer. [
muffled audio ] for both countries. Thirdly, Korea card companies are an important part
of the U.S. economy. They have invested over $10 billion in
U.S. production supported more than [ muffled audio ] for
American workers. [ muffled audio ] U.S. trade imbalance [
muffled audio ] industries innovative capacity .
re-automakers [ muffled audio ] U.S. production and produce core
components in the U.S. and carry out numerous [ muffled audio ]
cutting-edge technologies in the United States. Furthermore,
Korea auto industries are not in direct competition with U.S.
industries. Korea exports to U.S. mostly small and midsize
cars while U.S. auto makers focus more on SUVs and pickup
trucks. If anything, Korean car — cars benefit U.S. consumers
by providing a wider set [ muffled audio ] last but not
least, Korea would like to voice a general concern that the
United States should be very cautious about asserting
national security on autos and auto-parts which have a nuclear
relationship to the defense industry. [ muffled audio ] in
such a manner might trigger a cascading series of abuses
around the world. This in turn would cause harm to the global
economy and present a very real threat
to the national security interests of the United States
as well as of Korea. In closing, I would like to emphasize once
again that Korea and the United States have always maintained a
strong bilateral security relationship. At further, out to
countries already have agreed here on autos based on [
indiscernible word ]. Any measure under section 232 has
the potential to be fundamentally undermined doing
— has the potential to fundamentally undermined [
muffled audio ] carefully consider all relevant aspects of
the investigation in deciding whether section 232 remedies are
appropriate for the U.S. auto sector. Thank you.
>>Thank you. Minister Sabariah Ghazali?
>>Good afternoon , members of the U.S. administration. I am
Sabariah Ghazali , minister Council of [ indiscernible word
] from the country of Malaysia. Thank you for giving me the
opportunity to speak on section 232.
Malaysia and the U.S. have always enjoyed strong and close
trade and investment relations. However, this new investigation
is a concern for Malaysia. Any remedial measures introduced by
this law could potentially jeopardize our exports to the
U.S. Malaysia views the usage of section 232 trade expansion act
as defined by the U.S. administration as jeopardizing
the multilateral trading system being upheld by the members.
Malaysia believes the U.S. concerns can be appropriately
addressed through the WTO agreement on safeguards as it
will provide equal opportunities for trading members to address
concerns within a set parameter of rules and transfers.
Nonetheless, if the U.S. administration chooses to
continue the investigation, Malaysia requests for the U.S.
administration to provide an avenue for fair assessment. It is proposed for the
investigation to take into account the following. Number
one, defining the terms of automobile and auto-parts based
on HS code. A number two, qualifying imports by respective countries
of the set product which is deemed to be impairing the U.S.
national security and simulating a detail on how such imports
could impact U.S. national security. At third is
considering the balance of the products between the U.S. and the
partners. Malaysia also requests that the U.S. administration
provide adequate consultation sessions with trading partners
including Malaysia, especially in the case of advanced
findings. Trading partners should be given equal
opportunity with clear parameters on how the country
can address U.S. concerns as well as the trading partners
concerts. In the event that remedial measures are imposed,
exemption or exclusion should be [ muffled audio ] based on the
following reasons. Number one is imports from Malaysia into the
U.S. for automobile and auto-parts are very low. Between
2015 and 2017, imports of automobile and auto-parts under
HS 87 from Malaysia constitute only an average of 0.03% . From the U.S. overall imports
to automobile and auto-parts is this level. And it is a 0.021%
for the overall your support of our products from Malaysia. Such
imports should therefore not be a cause of threat to the
national security of the U.S. Low imports from Malaysia should
also indicate that Malaysian products do not compete with the
U.S. domestic production.>>U.S. exports of the same
products, HS 8072 Malaysia for the same period of 2015 to 2017
were much higher indicating surplus for the U.S. and
represents an average of 0.40% of U.S.
overall exports to Malaysia. In fact, it complements the U.S.
production as most of the imports are supplied to sister
companies in support of the U.S. domestic production. Any
additional tariff imposed on Malaysian originating imports
will not only at cost to production in the U.S. adding
with the U.S. consumers having to pay higher prices, but also
the exports of the final products where Malaysia’s [
muffled audio ] U.S. losing competitiveness and export
>>In summary, the low value of value in auto and auto-parts
from Malaysia part of the U.S. value chain which complement the
U.S. production base pick the imports from Malaysia are mainly common items that
could be used for U.S. defense purposes and do not impact
national security or economic security. Malaysia believes that
the import from Malaysia will not stifle the incentives for
innovation of U.S. firms, cost of U.S. unemployment or industry
displacement given the small amount of imports. Should there
be remedial measures taken by the U.S., the trading relations
of our two countries within the context of the products should
be taken into consideration, the relatively small imports of
autos and auto-parts from Alisha impacts the U.S. national
security and economic security must be made clear sage such
findings might way into the way forward for bilateral trade
relations between Malaysia and the U.S. The government of
Malaysia hopes that serious consideration would be given
based on the above points before imposing any measures against the imports from Malaysia under
this investigation. The government of Malaysia also
reserves its rights to raise any other issues concerning this
investigation at a later date. Thank you for your attention and
consideration. >>Thank you. Ambassador Mninwa
Mahlangu? >> Thank you. Thank you very
much for giving us the opportunity to present our case
today and this public hearing. South Africa automotive experts
to the U.S. about 21.17% in 2017 which is 0.4% of total U.S.
automotive imports of US$294 billion. [ muffled
audio ] automotive exports to the U.S. in 2017, 93 were passenger cars, 4% were
auto-parts, what percent for transport of goods, and 0.68% [
muffled audio ] the share of South African exports destined
for the U.S. has declined over the period from 40.9% in 2009 to
only 12% in 2017. So South Africa has been extorting daily
passenger vehicles to United States. In addition, South
African automotive’s were exported to supplement U.S.
production where there were shortages in
U.S. production eyes. However, since we have been brought into
2018, one of the automatic vectors will at the stage no
longer export to the U.S. which will result in a reduction in
South Africa export of passenger vehicles. South Africa will
continue to import automotive components from the U.S., thus
supporting jobs in the U.S., therefore future South African
automobiles exports to the United States would be
significantly reducing while the [ muffled audio ] will increase
in view of the industry linkages. In a
nutshell, South Africa exports of vehicles and parts do not or
harm the national security of the United States of America.
The automotive parts exports to the U.S. includes engines and
catalytic converters that make the U.S. competitive and also
benefits consumers of automotive products in terms of cheaper
products as a result of duty-free access that they enjoy
. Ford engines in South Africa are manufactured with inputs for
the U.S. and create 800 jobs in the U.S.. Catalytic converters
are produced from minerals that are available in abundance in
South Africa such as platinum and nickel. Since South Africa is well and
out with minerals, the country remains a strategic source of
catalytic converters in the U.S. Imports of tanks and armored
vehicles into the U.S. from South Africa contributes to what
the U.S. — to the U.S. national
security. Therefore, if then investigation on national
security impact on automotive imports results in an imposition
of tariffs on these imports, such actions will most likely
suspend benefits for South Africa and possibly increase the
price of these automotive inputs to U.S. benefactors. Section 232
investigation on automotive’s and parts is taking place in the context
of section 232 which is applied on a South Africa exports of
steel and aluminum as of March 2018. Since the establishment of
Alcoa 2001, automotive’s have been leading the export sector
to the U.S. market. Alcoa exports including automobiles,
auto components, aluminum, and steel amount to $2.9 billion in
2005. And it increased to $27 billion in 2016 however when excluding
autos, auto components, aluminum, and steel, the total
exports were valued before 4 billion — valued before valued below $4 million without
automobiles and automotive parts, steel and aluminum, the
benefits of Alcoa to South Africa will almost be
extinguished. The U.S. IDC study shows that, during 2010 , 2016, U.S. exports of motor
vehicle parts to the South African — 27 . increased by
82%. [ muffled audio ] in this period. This is as a result of
strong business legs which were established by U.S. companies
based in South Africa. Furthermore, the study notes
that a number of programs implemented by South Africa aim
at improving competitiveness and have lowered barriers to entry
into the industry. They have also significantly reduced [
muffled audio ] components and preassembled vehicles which may
also have facilitated U.S. auto-parts at exports to South
Africa. Therefore the intra-industry linkages have
contributed to a mutually beneficial trade relation
between the two countries. Thus, the implementation of section
232 will have a significant and
negative impact on the existing trade relations in the sector
for South Africa and the U.S. . In terms of Alcoa, Alcoa has
supported the transformation of South Africa exports from
primary and mineral products to more valued added products such
as automobiles and automotive parts. Alcoa has also
contributed to development of regional value chains in the
continent with companies such as [
indiscernible name ], [ indiscernible name ], [
indiscernible name ], and electric wiring respectively to
automotive industry in South Africa. Accordingly, Alcoa has
been a catalyst for the transformation of [ muffled audio ] the imposition
of section 2 to 32 to imports of cars and parts from South Africa
would render South Africa and exporter of commodities to the
U.S. and undo benefits of Alcoa. In terms of our relationship,
bilateral trade between South Africa and the U.S. is growing
and mutually beneficial and relatively balanced. In 2017,
the U.S. was ranked as the third biggest source of imports
globally in South Africa and was ranked second largest export
destination for South Africa products after China. South
Africa remains a market for 35% of goods that the United States
exports to sub-Saharan Africa. Regarding bilateral trade and
services, total to a trait was estimated at $4.7 billion in
2017 with the U.S. enjoy a surplus of approximately $900
million. Accordingly, according to the reports of the foreign [
muffled audio ] the reports of ITC, foreign data investment in
the United States is estimated at $4.2 billion in 2016.
Therefore, we wished to you that the companies from South Africa
are interesting currently $11 billion in the U.S. creating
5000 jobs in the United States of America and we request and
what the forward that you be sympathetic in looking at this
so that our relationships between the two countries can
continue. Thank you very much. >>Thank you. Miss S. Jenny Van?
>>Good afternoon. My name is S. Jenny Van and I am the legal
advisor to the office of negotiations representing the
government of Taiwan. Thank you for the opportunity to testify
today. In our written submission, we have already
addressed our observations on healthy and growing states of
the U.S. automobile industry. In my present today, I would like
to focus on two points that highlight the importance of
imported auto-parts to the U.S. economy. My first point is
importer auto-parts do not pose a threat to U.S. economic
security. Rather, as other associations testify
today, there said he finished products to sustainability of
its automotive industry. Currently, the capacity
utilization rate for U.S. auto industry manufacturing is above
80%. However, the domestic industry still needs imported
auto-parts to meet the required demand both in the OEM sector
and the aftermarket. This need is for imported auto-parts and
is especially salient for collision body parts like
bumpers, mirrors, visual signaling equipment and
miscellaneous parts and accessories. For body parts,
this is mainly committed to issues of cost competitiveness
and economies of scale. For miscellaneous parts, in 2017, accessories and parts
was the U.S.’s top imports among all auto-parts imports according
to custom statistics. That’s, I leverage a comparative advantage
of U.S. domestic and foreign suppliers with more peripheral auto-parts
from foreign suppliers, US-made factors can focus R&D efforts on
improving and producing products that generate more profit for
its businesses and are more essential to national security.
Imported auto parts also drive employment in the U.S. auto
industry. As detailed in our submission, our economic
analysis found a positive correlation between consumer
purchasing power, the demand for auto-parts, the demand for
auto-parts imports, and employment in the auto industry.
In this regard, we echo arguments put forth by my fellow
presenters that additional tariffs on auto-parts would
drive up costs for benefactor, reduce
sales and revenues, decrease investment, and negatively
affect employment of American workers. Moving on to my second
point, in addition to not posing a threat to the U.S. auto
industry, imported auto-parts also fulfill special needs in
the aftermarket that directly benefit the downstream auto
industry. First, they help insurance companies and
consumers by providing competition to OEM service parts
. They keep premiums and repair
costs in line for American drivers. Higher repair costs
will lower the number of cars repaired and increase the risk
of consumers driving unsafe cars on the roads. Furthermore, many
auto-parts wholesales and retails our local, small
businesses. They would not be able to stay in business if
costs for parts become prohibitive. Secondly, foreign
auto part suppliers help U.S. after market businesses because
they are capable of filling orders with a high variety on a
very small scale. This is true for all of us
generally. But it is especially true for specialty parts used to
restore classic and antique cars . As one specialty automobile
manufacturer commented in the DOC or to the
DOC, for many imported parts, there is no U.S. source. The
volume is simply too small and U.S. companies have more
profitable work at higher volume available. Taiwan, as a champion
for democracy, and free trade, has been a longtime U.S. ally.
They been a strategic U.S. partner in Asia-Pacific reason
— region. We are so partners with major American auto
companies that are cost-effective and reliable
general and specialty parts provide U.S. companies and
consumers with more choices in a car purchases, maintenance, and
repair. With no prior preferential treatment, tightly
77 earned the trust of their U.S. suppliers to contribute to
the U.S. and global economy. This is there success story. In
conclusion, we respectfully request that automotive parts be
excluded from the scope of this investigation or any resulting
remedy. If any remedy is imposed, we ask that as a last
drastic remedy, it be accorded to auto-parts. Thank you for
your time. >>Thank you to our four
dignitaries for your comments. We know that you have worked
today’s hearing into your busy schedules that we sincerely
appreciate your taking the time to appear this afternoon.
Furthermore, we truly appreciate our relationship and
long-standing history of close cooperation and strong economic
ties with each of your countries. Your comments are truly quite a point to us.
And we will rest assured take them into very serious
consideration as we continue our investigation. We thank you
again for your time and comments. Thank you.
>>At this time, I would like to go ahead and call a break. We
will resume at 3:10 PM and continue with the rest of the
panel. Thank you. >>[ BREAK — This event will
reconvene at 3:10 p.m. eastern standard time following the
break. ] >>>>
[ captioner standing by ] >>Thank you very much. I would
like to resume this hearing by welcoming the eighth panel to
the stage. Today we have Sumitomo Rubber North America,
Inc. with Richard Smallwood , 1015 with Richard Glidden, JTEKT
North America Corporation with Michael Davidson, MAHLE
Industries with Mr. Chris Hyman Mr. Smallwood, you may begin
when you are ready. >>Good afternoon. I am 1014, — I am Richard Smallwood with Sumitomo Rubber North
America, Inc. headquartered in Kobe, Japan. Today I plan to speak on behalf
of all rubber entities. Sumitomo Rubber North America, Inc.
appreciates the opportunity to present our views at this
hearing. We are a global tire in a company providing tires for
all types of vehicles including passenger cars, trucks, buses
and motorcycles. In the United States, Sumitomo Rubber North
America, Inc. tires are produced or imported under the [
indiscernible word ] brand-name. Travertine has only invested
substantially in U.S. tire manufacturing, employing more
than 1600 American workers at our U.S. facilities in seven
states. And we are now planning a substantial expansion of our
U.S. manufacturing presents and recently announced an investment
of roughly $80 million to produce 15,000 tires per day by
2020. These completed in future
investments are part of a strategic plan announced 2 years
ago that Sumitomo Rubber North America, Inc. made public with
its intentions when the doublets American manufacturing up
capabilities in the coming years. We believe the imposition
of tariffs on automotive parts under section 232 what harm
rather than help U.S. tire consuming industries and
consumers. It would undermine the significant investments of
Sumitomo Rubber North America, Inc. in the U.S. any factoring operations. The investments I
just described reflect our strategy to be more closer to
the manufacturing facilities our principal U.S. customers and to
our consumers. That includes a range of automobile and
motorcycle makers. It also includes well-known automotive
tire part trade partners such as discount tire . Indeed we have transferred
production capabilities for a product away from our non-US
operations to American plans to better meet our customers needs.
Tariffs on imported tires would have some combination of two
address economic consequences. They will increase the costs of
these critical opponents to U.S. tire manufacturers — components
USR benefactors or they will decrease — they will increase
the cost of these critical components to U.S. tire
manufacturers or they will decrease [ muffled audio ] pass
along in the form of higher sticker prices and higher retail
prices to the American consumer. It will reduce the amount of
funding available for us to invest in new production
facilities or to hire additional personnel. Tariffs will raise prices and
potentially limit choices for U.S. consumers. Sumitomo Rubber North America,
Inc. is not aware of any U.S. tire manufacturers advocating
for the imposition of tabs under section 232 . No analysis from
the U.S. government or any other entity demonstrate U.S. tire
imports threaten national security. At the same time, the
department is hearing from any participants in the industry in
written submissions and in today’s hearings detailed terms
exactly how the imposition of tariffs what harm U.S.
manufacturing and investment just as these industries are
completing their recovery from the great recession. Finally,
alongside our expanding operations in the
U.S., we do import tires from Thailand, Indonesia, and Japan.
These three countries are all close military allies and
security partners of the United States. They contribute
positively to U.S. national security in many ways we
described in our written submission. Seen in its full strategic
context, I do not see how Sumitomo Rubber North America,
Inc. engagement with the United States through U.S. investment
and imports would have any conceivable negative impact on
national security. Certainly our economic impact in the United
States is a reasonably positive one. On
behalf of Sumitomo Rubber North America, Inc. entities, I would
again like to think the Commerce Department for this opportunity
to share our views. Thank you. >>Thank you. Mr. Glidden?
>>Thank you, chairperson. My name is Richard Glidden. I am
the vice president of Tianhai Electric North America, Inc. ,
also known as [ indiscernible word ]. I appreciate the
opportunity to present opposition to the tariffs. We
have 145 U.S. employees. We provide wire harnesses to the
automotive manufacturing sector. If proposed tabs on auto-parts go into effect, we
will be forced to lay off more than 45 U.S. employees, cancel
domestic plant for R&D, and manufacturing facilities. This
will occur because of the cost of doing business in the U.S.
which will be insurmountable. We would be selling products at a
loss and be forced to cancel programs. In the past 10 years,
we have invested more than $48 million in the U.S.. We have
grown over 1500% from $13.6 billion to over $200 million
annually and will attract more than 200 employees and reach more than [
muffled audio ] this is a fee that will not be achieved if
tariffs are ultimately applied. While we are part of a global
industry, we continue to expand our domestic footprint. We
currently have an office in Pontiac, Michigan, at a
warehouse in El Paso, Texas. We are planning for two R&D centers
to support electrical distribution design and other
connected vehicle technologies in Michigan and California. In a Michigan thumb, we are
ready to expand our domestic manufacture capabilities by
adding wiring component plants, providing jobs in an area
desperate for such opportunities. Plainly, these
projects will not be achieved if the proposed tariffs are
implemented because we will not be able to generate enough
revenue to maintain our current operations let alone expand. One
of the first and most critical elements of the success in this
industry is the ability to predict and plan in production
timing. Uncertainty impacts our ability to employ Americans, our
ability to provide products to our customers and ultimately our
ability to survive as a company. White distraction and overall
distress on the global supply-chain caused by these
tariffs will result in decreasing quality and
ultimately harm the American automotive market, our customers
will not support a price increase will force us to pull
out of existing contracts or be forced to close our doors.
Frankly, the latter would be inevitable as a result. Looking at one example, 45 of my
145 employees are dedicated to engineering and manufacturing
wiring harnesses. One of the largest truck brands in the
United States uses this. This accounts for nearly 30% of our
company revenue. These employees rely other jobs to provide for
the families by implementing these tariffs pick these 45
employees in their 100+ family members will be the ones that
suffer — and their 100+ family members will be the ones that
suffer. I will lose money for every wire harness I sell to
this customer. Unlike the component and design
manufacturing plant in Michigan, it is not easy to
bring the labor-intensive assembly just to the U.S.
Nonetheless, the money we generate in the U.S. stays here
and creates more jobs. These tariffs will prevent us from
adding more than 200 employees in the next 2 years. It will
prevent the incremental spending of over $200 million in the same
time and it will result in a reduction in my workforce by
40%. In the summary, I hope that it is clear that my focus is
centered solely on the longevity of my company. The livelihood of
my employees and the impact of these tariffs will have on them , if it is not clear to myself
or others how this proposed tariff could be considered a
necessary device to protect national security or in any way
benefit the national economy, ultimately, the final burden
will be felt by my customers, the American automotive
consumer, and first and by my American employees pick these
tariffs will prevent companies like mine from completing
necessary U.S. research, develop it, and production of new
vehicles, new vehicle technologies, and put more
Americans out of work. Thank you for your time.
>>Thank you. Mr. Davidson? >>Good afternoon. Thank you for
the opportunity to testify. My name is Mike Davidson. I am here
on behalf of JTEKT North America Corporation where I serve as
Executive Vice President and chief operating officer. I been
with what is now JTEKT North America Corporation
since 1999 had have worked in the industry for more than 27
years. JTEKT North America Corporation is a global supplier
and manufacturer of automotive steering systems, driveline
components, bearing technologies, and machine tools.
And our North American headquarters is located in
Greenville, South Carolina. JTEKT North America Corporation
employees within 6000 Americans nationwide and are 14 U.S.
manufacturing operations spends seven states. Since 2014, we
have invested more than a half billion dollars in U.S.
operations. Currently we have a five-year
plan that could potentially include an additional $300
million of capital investment in the U.S. We support sourcing
locally. But in some cases, we do import subcomponents,
primarily due to lack of domesticated ability or
capacity. Sources in Tennessee, Texas,
Georgia, and South Carolina depend on steering driveline
engine and pump some components in order to produce more complex
automotive systems for passenger vehicles. These subcomponents of
benefactor primarily at JTEKT North America Corporation
facilities and partners and support global operations. This
reliable supply of subcomponents and inputs enables U.S.
facilities focus on higher value-added production of more
complex automotive systems using innovative and advanced technologies. These
technologies make the U.S. automotive industry soccer to
the tree to a stronger U.S. defense industry. The imposition
of a tariff on automotive parts will disrupt our supply chain
and result in higher final production costs. This could
severely limit our ability to invest in our growing U.S. R&D
efforts. While we do actively work to identify and develop
capable domestic suppliers, JTEKT North America Corporation
cannot readily make changes to it supply-chain. Our steering
and related systems are safety critical. We must ensure
American consumers safety comes first. Our validation of any
supply source requires extensive testing and the time of up to 2 years.
Additionally, all automotive OEMs have their own validation
requirements of our final product in order to allow
sourcing changes. The imposition of tabs on automotive parts will weaken our national
economy. Our extensive U.S. manufacturing operation employs
thousands of hard-working Americans. Auto manufacturers
like GM, Fiat Chrysler, Toyota, Nissan, W, and Honda rely on our
high-quality automotive systems to produce passenger cars in the
U.S. for both domestic and export markets. These OEMs
oppose tariffs which would lead to higher production costs. Such
costs would ultimately be passed along to consumers forcing them
to pay more for the vehicles and the necessary automotive parts
for repairs to give them running safely. This will negatively
impact consumer’s choices and friendly prosperity in the
communities where the team numbers in the families live and
work. For these reasons, we respectfully request that
automotive components be excluded from tariffs. Imports
of these products from U.S. allies are not displacing U.S. production in any meaningful way
and have no impact on a national security. Rather, importation of
these imports supports more complex and innovative factoring
in the United States and has an able to domestic
producers to implement new automotive technologies that
make our U.S. auto industry soccer, it’s autos safer, and
more competitive. A thriving automotive industry would best
contribute to the strength of our economy. That includes the
U.S. defense industry. I urge the administration to continue
to support program policies that will ensure continued investment in the success of
this important sector. Thank you for your consideration.
>>Thank you. Mr. Hyman?>>Good afternoon and thank you
for allowing us to speak today. My name is Chris Heinemann. I am
director of purchasing internal management with MAHLE Industries
we offer the following comments for the section 232
investigation. The partake when the parts and equipment
including pistons, crack chess, intake manifold, filtration, and
engine cooling and HVAC components, MAHLE Industries
opposes any tariffs and quotas or any restrictive items that do not provide
protection to U.S. national security. Just like many other
vehicle parts suppliers, MAHLE Industries has a significant
presence and in the U.S. MAHLE Industries with subsidiaries and affiliates are registered to
do business in 25 states with sales in all 50 states. We have
over 6000 employees in the U.S. as well as 22 facilities located
throughout the country. MAHLE Industries has largest customers in the
U.S. with U.S. automobile manufacturers which have
significant sales to American consumers. During the next 5
years, MAHLE Industries plans to invest over $900 million in maintaining its existing
facilities, plant expansions, and research and develop it
efforts throughout the U.S. MAHLE Industries provide a wide
variety of high-quality competitively priced parts to
which U.S. automobile manufacturing customers. Some of
these customers provide vehicles to the U.S. government and
national defense industry. Additionally, the entity most
impacted by this tariffs assist the Department of Defense
with research and develop it to its windtunnel operation in
Troy, Michigan. In today’s global accounting, as in other
global parts factors rely on open supply chains in order to
produce high-quality products at
competitive prices allowing economic growth and employment
throughout the U.S. If the U.S. imposes Terrace, quotas, or
other restrictive measures, it would cause uncertainty
regarding our ability to relatively obtain parts and
components necessary for us to meet manufacturing requirements. It would put MAHLE Industries
and its employees and workers in jeopardy. If we have
uncertainty to when we can obtain parts, we cannot plan
production a courtly. Is a global supplier with global automotive customers, MAHLE
Industries positions itself to manufacture within the region of
consumption. MAHLE Industries has a majority of US-based
purchasing spent within the U.S. tear 2 supply market ranging
from small businesses to Fortune 500 companies. However as a means of strategic and
competitive priorities, MAHLE Industries relies on open
markets to access the global level to supply market for
reasons including innovation, technical competence,
diversification harassment — mitigation. In fact, there are
certain commodities and components that are not readily
available within the U.S. either due to technical competence or
capacity constraints to support total demand or unique
low-volume high mix applications . Therefore, access to an open,
free-trade global supplier market is essential for a
healthy, viable automotive market. Other recently enacted tariffs
and duties have already negatively impacted our
business. Both the section 232 tariffs on
steel and aluminum and a section 301 tariffs on numerous products
aborted from China have negatively affected our business
as have the antidumping and countervailing duties on
aluminum oil from China. The costs have increased
significantly as a result of these tariffs and duties forcing
us to request price increases from customers and potentially
damaging medical customer relationships and fostering
contract dispute. Our customers are able to assist us in
absorbing these price increases. We are — our ability [ muffled
audio ] we believe any threat to the
U.S. economy will have an immediate impact on U.S.
national security. For all of these reasons, we strongly
oppose any tariffs, quotas, or the restrictive adjustments to
imports of automobiles or automotive parts. We do not
believe restrictive measures are needed to protect U.S. national security and may
in fact weaken our national economy by arming US-based
automotive suppliers and their domestic customers. Ultimately,
any restrictive measures could significantly jeopardize jobs
and income of American workers whose livelihood are dependent on this industry.
Thank you for the opportunity to testify in this investigation. I
would be happy to answer any questions to the members of the
panel. >>Thank you. I would like to
open the floor now for any questions or comments from the
U.S. government. >>First of all, thank you all
very much for your participation today and your insight. We
realize that you have all flown in from out-of-town and that you
have companies to run and this is not part of what you normally
would do. We really appreciate you being here. With that being
said, my colleague Michael has a question.
>>Thank you. I’m not sure if you are here this morning. I
asked similar questions to an earlier panel. From your
perspective, is large automobile part suppliers, what is the
relationship in automotive industry between where R&D takes
place and where manufacturing takes place?
>>Is it the relationship between
location of the supplier or where manufacturers or suppliers
are quite >>Where are you conducting R&D
today, how do you make a decision where you conduct R&D
and does that impact where you actually manufacture the
product? >>In the case of Sumitomo
Rubber North America, Inc., our goal is to produce where we sell the
product. In North America, we went to have North American
production in the U.S. with U.S. production. We need to keep a
close to the consumer. That is what our goal is. In the case of
the original manufacturer or consumer, local production for
local sales. So that is what our rule is.
>>Any type of R&D investment, what we do is it is all related
to engineering and up to the customers specifications and
quality control. It has nothing to do with any new technologies.
That is what we focus on. >>For us, we have five regional
headquarters around the globe. Each of those
regions, they have separate responsibilities for R&D. For
North America and for U.S. in particular, we are growing our
technical centers capacity just for the technologies needed to
supply the market here. So our production strategy
is basically local for local. That is why we are located in
over 25 countries. Yet the R&D for the region is located in the
U.S.. We have increased those resources by 50 percent to 50%
in the last 3 years for streamlining driveline
technologies and continue to grow for other technologies as
well.>>Our manufacturing is located
in the region of consumption. We do have engineering locations
around the globe. It’s for specific applications, vehicle
programs. It is usually following the customer . For example, the traditional
big three and those platforms would normally happen in the
U.S. If it is BMW or Tyler — [ indiscernible name ], those
resources are usually led out of Germany.
>>One problem for the tire industry, there is a tremendous
amount of complexity to manufacture tires in terms of
the chemicals, components, and all of that. So in the ideal world, we would
build everything right here in the U.S. But from a practical
standpoint, we cannot. There’s too much complexity in a
manufacturing. We have to look at it from a very global basis.
We will build some product here, some product in other markets so we can
optimize production. Again, we cannot bring all of the
materials to one plant because it makes it almost impossible to
build every thing we need. There are all the different components
that are required. For us, we have become global and we try to
balance out everything with the different practices around the
world. >>Think you.
>>To talk a little bit about the manufacturing footprint in
the U.S. for auto-parts, some of the folks on the panel this
morning, you all in your presentations, you talked about
the importance of inputs and cheaper low-tech inputs in order
to drive more high-value, high-tech manufacturing in the
U.S. As you all know, the reliance on imported auto-parts
for U.S. auto assembly appears to be increasing. And imports of
auto-parts continue to increase over time. And I think if you
look at the trade data, it shows that it is not just a low value inputs coming
in. It is also very high-tech, high-value products. And I
wonder if I could get you are perspective as tier 1 suppliers.
Are we at risk of having supply chains and sources for these
high-tech, high-value products be established outside of the
U.S. and are we at risk of not having U.S. sources for some of
these high-value, high-tech inputs, especially as we look
toward what the automotive industry looks like in the
future as we advance towards
electrification and autonomy? >>I can give you an example for
the tire industry. If there’s actually a research the
production in North America or United States, there’s actually
a resurgence of production here. So if you look at just the last
couple of years, it has already occurred and what is happening
to the future, we are coming here for the first time. So in
our case, which is over a factory from Goodyear about two
and half years ago. We have another company , tire manufacturers who are
coming into the U.S. and some parts they could be selling
would be considered high-value. Others would be more commodity.
But again, this is a full spectrum of product. And it is
the whole notion of having production close to your
customer. That could be an OEM or consumer.
>>Wire harnesses are very labor-intensive. It is very low
technology. So bringing wire harness back here into the U.S.,
I believe, wire harness has not been assembled in the U.S. in
over 20 years. Bringing a very labor-intensive operation over
here is not very, it would not be justified for our company in
general.>>I mentioned our production
footprint basically is to provide locally as much as
possible for the local market. For the supply and puts, it
really comes down to capability and capacity and availability.
So we have more cost impotent higher value inputs. But it
really comes down to, we have aggressive localization targets
for each of our product groups. We are trying to grow the local
content because we feel that is the best long-term strategy. It’s the ability to not be was
you that all that one center comes into capacity or
capability and capacity. And for those higher technology or
innovative technologies, we have a number of core competencies
that we do in-house and we develop those in-house and we do
not supply, we do not lie on supplier parts. So either have
an in-house strategy or we have a strategy localized as much as
possible based upon the sectors. Thank you.
>>I would like to point to a
couple of different trends on our side similar to mentioned
before, German company, it is not unusual we develop products
in Germany with a historical supply base and look to
transition and find suppliers which we have done successfully
over the 14 years I have been with the company. Because we are
a global company and make global OEM customers, we searched the world
for the best available suppliers. So that lends us to
looking everywhere, specifically electronics, I have been here
the whole day so I have heard the question, and from my
judgment, we do have electronic suppliers in the U.S. The
question starts to, question of capacity because they are able
to compete question is maybe why is there not more. To be honest,
the thought going to I had most of the day was the carrot on a
stick. Tariffs are sort of the penalty and could impact areas
that are not beneficial. Maybe the question or concern is how
do you incentivize more electronic production in the
U.S. But we do have suppliers that do compete a but we don’t
have enough of them in our product line.
>>Thank you.>>Are there any other questions
or comments? Thank you. >>At this time, I would like to
welcome our ninth panel to take the seat. We have the German
Association of the Automotive Industry with Bernhard Mattes ,
Japan Automotive Manufacturers Association with Manuel
Manriquez , and American International Automobile Dealers
Association with Cody L. Lusk. >>Thank you good afternoon. I am
1019, present of German Association of the Automotive
Industry. I would think you for giving us the opportunity to
speak today to this distinguished audience and
explain the perspective of the German Association of the
automotive industry representing more than 620 companies,
manufacturers of cars, trucks, buses, and automobile parts.
Personally, I have a long trans-Atlantic history for many
years. I had the privilege to head for its operation in
Germany. At Fort, I learned about the response ability that
you share about the deep and long-standing ties that bind the
auto industry on both sides of the Atlantic. Instead of harming
the United States national cicada, the German automotive
industry as proven to be an integral and vital part of the
U.S. economy. Since the last recession, the U.S. industry has
experienced almost a decade of sales growth and growing
employment and informally deprived regions.
This is not because of German automobile manufacturers
investments in the United States. Today our members
manufacturers as well as suppliers operate more than 300
plants in the U.S. We produce more than 800,000 cars made in
the USA. We created over 100,000 high-quality jobs. This is in
production only with many more in supply and services. In
total, German companies of the fourth largest Florida
player in the U.S. and account for more than 10% of the total
6.8 million jobs created by foreign companies with almost
one out of every five German created jobs being in the
automotive sector. Up to now, we have invested more than US$30
billion in additional investments of 5 billion dollars
— 5 million — $5 million — $5 billion. The U.S. is not only significant
production location but an important strategic market and
an export hub with more than 60% of our production be an expert
it. All of this contributes to — 60% of our production being
exported . All of this contributes to
growth. Take communities like Spartanburg South Carolina, home
of the largest BMW facility worldwide. Tuscaloosa, Alabama, the manufacturing site in
Chattanooga, Tennessee, these communities , we have created well-paid
jobs. We have helped these communities thrive. We are part
of the local and regional success stories and heart of the
communities. Education is another very important aspect.
We train our associates on the job in parallel to their theoretical engineering
classes and specialized training centers with enhanced skills,
they have a perspective for a successful future. We want to
continue our commitment and contribute to the wealth of
American communities. Companies in our industries are so
intertwined we rely on open markets due to
integrated and independent supply chains. Additional
tariffs were cut deeply into the tightly knit network of our
companies. They would threaten our ability to export
successfully out of the U.S. and call future investment in
question. Tariffs on U.S. products will not only harm
exports, but it would undermine competitiveness and strength of
the production location with severe negative effects on
investment and employment in the U.S. This scenario terrifies me.
Things could be made worse by countermeasures which other
countries could take. Such a scenario, rather than free trade
between the populace is a risk to national security. The best national security relies on its
economic performance is. Therefore, we share ideas of
lowering and eventually abolishing tariffs and other
barriers to trade, the framework of a larger agreements between
Europe and the U.S.. We would appreciate if you and your
partners would proceed on this path. Our companies,
manufacturers and suppliers passionate about their
investment in the U.S.. We feel that we are part of the American [ muffled audio ] passion and
responsibility, bringing jobs, skills, and prosperity to the
U.S. and to its people. Thank you very much for your attention
and the opportunity to elaborate on our comments. Thank you.
>>Thank you. Mr. 21 — Mr. 1021, whenever you are
ready. >>Thank you for the opportunity
to speak on this important matter. I am trying 21. I the
general director of the Washington, D.C. office of the
Japan Automotive Manufacturers Association . We represent the Japanese brand automakers.
Many of which of them have deep investments in the United States
, the members are integral to a strong and highly productive
American auto industry. As of 2017, our members have a
cumulatively invested to get — invested over $40 million in
U.S. operations alone and directly provide over 92,000
high-quality American jobs. Our members manufacturing R&D and
design operations are spread out across 19 states. When taking
into account the parts suppliers,
dealerships, and spinoff shops, our members support
approximately 1.5 million jobs throughout the country. We are
proud to be a part of the globally competitive and
technologically advanced U.S. auto industry. Our U.S. presence
was not built overnight. Over the past 36 years, our members
have continued to demonstrate their commitment to the U.S.
market and American consumers. The strongest evidence of our
commitment is that Japan Automotive Manufacturers
Association five members have increased production in the U.S.
tenfold since the mid-1980s which has been matched by the
decrease of Japanese vehicle exports to the U.S. by half.
Japan Automotive Manufacturers Association five errors now
produce about one third of the vehicles made in the U.S. That
is nearly 4 million vehicles. As we stated in our public
comments, Japan Automotive Manufacturers
Association five has critical concerns regarding the section
232 investigation into automobiles and automotive
parts. A number of economic analyses have concluded that
automotive imparts, automotive import tariffs, rather, will
have an impact of millions of American families who rely on
competitively priced vehicles. Tariffs are attacks on consumers
that would add thousands of dollars to the price of any
vehicle whether it is built in the U.S. or imported. This would
lead to decreased U.S. vehicle sales and production. Thereby it
would then U.S. jobs. For example, the Peterson Institute
study cited previously by some of my
colleagues shows tariffs would cause up to 195,000 U.S. workers
to lose their jobs. Manufacturing costs would
increase at our members U.S. plans and negatively impact
American autoworkers and families and communities like
Lafayette, Indiana, areas, Ohio, San Antonio, Texas,
and Smyrna, Tennessee. If other customers retaliate against tariffs, this would decrease
competitiveness of U.S. imports and American jobs would be lost.
In addition to our concerns about the negative economic
impact of tariffs, we believe the basis for this investigation
is wrong. Imports do not U.S. national security. The increased
consumer choice and create an demand and market . In our public comments, we
highlighted the dramatic increases in U.S. jobs and
production over our decades long history in the United States.
Just in the immediate postrecession time span,
Japanese brand automakers increased their U.S. direct
manufacturing employment by 21% whereas overall U.S.
manufacturing employment increased I only 6% during the
same period. This example shows the extent which are members
have committed greatly to U.S. economic recovery and the
strengthening of the us many factoring base. Our members also
boost the U.S. auto industry local competitiveness and pushed
the frontier of advanced mobility by collaborating with
US-based automakers, U.S. government agencies, and
companies from various sectors. JAMA member companies continue to expand and add new
production while investing in new technologies that will set
the trajectory of our industry. However, tariffs would create
negative conditions for such investment. And it would put
current and future contributions at risk. Tariffs and other
restrictive actions would also irreversibly undermine the auto
sectors forward motion during this crucial time as we craft
the future of ability and redefine our industry. Applying devastating tariffs and
engaging in tariff disputes would mean we are failing to
prepare the next generation of American workers for an
increasingly complex environment but we urge the ministration to
consider policies that strengthen the U.S. auto
industry and the American workforce rather than restrict
their potential. Thank you once again for the opportunity to
testify on this important matter.
>>Thank you. Mr. Cody L. Lusk. >>Good afternoon. I am trying
it — I am Japan Automotive Manufacturers Association three,
President and CEO of the American International
Automobile Dealers Association . Thank you for the opportunity to
provide testimony on behalf of America’s 9600 international
nameplate automobile franchises. These dealers have a positive
impact both nationally and in the communities they serve
providing over half 1 million — over a half million American
jobs. We see new opportunities to grow and thrive in this
economy. We worry that a possible 25% tariff will
negatively affect their ability to operate and provide work for
hundreds of thousands of Americans. Across the U.S., in
communities large and small, Americans are employed in the
industry including 577,000 who are employed at 1022
dealerships. These dealerships also account for an additional 5
to 27,000 indirect jobs. As shows, over half 1 million
Americans stand to be adversely impacted should tariffs be put
into place on imported autos at auto parts. As has been
referenced, the recent study by the Peterson Institute found if
those tariffs go into effect, there would be a total of
195,000 American jobs lost. Additionally, should countries
that retaliate in kind of place tariffs on the U.S., the job loss would more than
triple to an astounding 624,000. Another study by LMC automotive
of the effects of a 25% tariff on autos found that sales of new
cars and trucks will also be impacted. Assuming automakers
and dealers absorb at least half the cost of
a proposed 25% tariff, these tariffs would lead to a loss of
1 million annual unit sales. If the full burden of the tariff is
passed on to the consumer, that would jump to a loss of 2
million units per year. Global trade is an engine of
economic growth and is a proven strategy for building global
prosperity. Open trade and investment policies play a vital
role in allowing international nameplate dealers, many of whom
operate second and third-generation family
businesses to compete on a level playing field in cities and
towns across the U.S. Tariffs that take the form of taxes on
consumers would significantly impact new car sales through
higher prices, reduced demand, restricted choice, and new
obstacles for consumers seeking auto loans. Reasonably priced
new cars keep American families safe on our roads, allowing them
to travel to and from school, work, and community events. When
America’s priced out of safe, affordable rotation, those who
can least afford it first to suffer. When the cost of new
autos rises by even a small amount, that’s the a regulation,
taxes, tariffs, auto makers become concerned that the new
costs will reduce sales. As the study referenced this morning
found new vehicle prices would rise by $4400 if a 25% tariff is imposed, for imported
vehicles, costs would rise almost $7000. Even among U.S. build vehicles, all of
which include imported parts, prices would go up almost $2200.
The impact of this would mean higher monthly payments for
American car purchases. Declining sales would have a
clear and definable impact on America’s international
nameplate dealer community. The same car study estimates that
annual revenues for auto dealerships would decrease by
$66.5 billion as a result of a new 25% tariff at 117,000
dealership employees and communities across the country
would lose their jobs . 22 respectfully disagrees with
the position that imported autos at auto parts are being brought
into the U.S. in such quantities or under such circumstances as
to friend to impair the national security. In fact, foreign
manufacturing investment in our communities and workers has
strengthened our economy and greatly broadened consumer
choice. American International Automobile Dealers Association
and dealer members support program economic agendas and
believe it can be accomplished with a positive trait message
and not through the threat of terrorist. Trait keeps our
economy open, dynamic, and competitive and helps ensure
that America continues to be the best place in the world to do
business. Thank you. >>Thank you very much for your
participation here today. We appreciate you taking the time.
We value your comments today at submissions you have made for
the record. We will certainly consider those as we advance
with our investigation. Thank you.
>>I believe we do not have any
questions for this panel. Thank you.
>>I would like to welcome our 10th
and final panel to the stage . We have the China chamber of
international commerce, the China Chamber of Commerce for import
and export of machinery and electronic products [ muffled audio ]
>>Thank you. You may begin.
>>Thank you and good afternoon. My name is Xuejia Wang with the
China chamber of international commerce . We appreciate the
opportunity to speak at this hearing. Since we have submitted
copper has of comments and rebuttal on behalf of the
Chinese automobile and automotive parts industries,
here I would like to draw your attention to the following key
points. First, the The China Chamber of International
Commerce would draw the department’s attention to the
fact that U.S. automobile sales have increased by more than 67%
since the 2009 financial crisis. U.S. car sales are projected to
exceed 17 million vehicles per year through 2022. Meanwhile,
U.S. automobile production has more than doubled from 2009
through 2016. U.S. automobile production is expected to exceed
12 million vehicles per year through 2019 and reach 13
million by 2020. Therefore, CCIC believes the U.S. automobile
industry is a strong and no evidence supports trade
restrictions. Instead, imposing trade restrictions will achieve
just the opposite of what 232 investigations are intended to
do. New trade restrictions will undermine the competitiveness of
the U.S. automotive industry globally and will jeopardize the
welfare of the U.S. economy. Restrictions will invite
retaliation account retaliation cause widespread abuse of the
national security exception and will disturb the global
order of international trade and thereby reduce global economic
growth. Secondly, Chinese automobiles and auto-parts
imported into the United States do not threaten the U.S.
automotive industry or the national security of the United
States. From 2010 through 2018, nearly all of the U.S. imports
of automobiles from countries other than China. The top six
largest source countries have
consistently accounted for more than 90% of total U.S.
automobile imports. In contrast, imports of automobiles in China
are small. In 2017, U.S. imports of automobiles from China
accounted for less than 1% of total U.S. automobile imports by
volume and value. U.S. automotive parts imports from
China are low value products imported in small volumes and do not pose a threat to U.S.
national security. Therefore, the CCIC request that the
department exclude — excludes imported autos and auto-parts from this
investigation and new restrictive trade measures.
Third, as a country with a large population, in recent years,
China has become the largest potential automotive market in
the world. It’s because of its steady and rapid economic
development and in fact, China only experts a
very small number of automobiles relative to domestic sales. In conclusion, the CCIC and
members hereby ask the U.S. government not to impose import
tariffs on Chinese automobiles and automotive parts. Trade
restrictions which are not only the Chinese automobile and
automotive parts industries but also the U.S. automotive
industry as well as related industries. This will reduce
U.S. employment and burden American consumers. As there is
no basis for this investigation, the CCIC urges the department to
cease the investigation. The CCIC also alleges — urges the
U.S. government the impact — urges the us government to
investigate the impact of this on the greater economic U.S.
welfare. Pick you very much.>>[ captioners transitioning ]
>>>>Good afternoon, members of
the panel. Thank you for this opportunity to testify at this
hearing. I am the vice president of China Chamber of Commerce for
import and export. CCC any is about 10,000 members including first the
U.S. automotive commences to the most advanced automobile
producing technology in the world. Producing automobiles and
critical automotive parts domestically. The list of global
suppliers through worldwide protection. As a result the U.S. automotive
industry is healthy and very competitive. In the last decade.
The production sales are part of
U.S. automobiles has grown steadily. The employment has
stabilized and increased and have grown. In addition, the
U.S. automobile industry has gained substantial returns
through its investments in China. U.S. consumers also benefit. They are able to
enjoy more cost-effective products, therefore any threat to U.S. national
security and the domestic automotive industry does not
exist at all. Secondly, automobile and
automobile parts trade between China and the U.S. is dominated
by the U.S.. The majority of automobiles imported from China are
manufactured by U.S. automotive companies in their Chinese
plants. It only accounts for less than 1% of U.S. total
imports. Furthermore. Most U.S. imports
of automotive parts from China are purchased for the U.S.
aftermarket sector. Some others used as accessories. However,
these automotive parts from China are only amounting to less
than 4% of U.S. aftermarket. Therefore, U.S. imports and
automotive parts from China are negligible. And the clearly to not threaten
the national security of the United States or the U.S.
automotive industry. Thirdly, additional
illness on the imports of automobile and automotive parts
cause many negative impact to the U.S. Because automobile
parts testing and certificate in is a time-consuming process. If
additional tariffs are imposed, the U.S. automotive
manufacturers will be faced with difficulty of finding other
supplies for the increased cost and eventually will lose their
competitive advantage. Further, the U.S. companies will also face the risk of the
shortage of supply of automotive parts. As the U.S.
increase in costs and decline in profits. This negative impact
will in term increase the prices of tax and products in the
market. Directly harming the American consumers. There also
in doubt of global industries. We’ve noticed
that many interested parties have expressed their opposition
to trade restrictions. We believe additional tariffs will
impede the development of the U.S. automobile industries. Harm
the interest of consumers and reduce the employment. In conclusion. CCCME Thinks the
U.S. Department of Commerce should design automotive parts
from any restricted trade measures being considered. Thank
you. >>Thank you Mr. Wong.>>Thank you very much and good
afternoon thank you for allowing me to provide these remarks. The 1376 member
company and 109 trade Association and 47 regional
economic associations. Many of the companies we represent have
a significant and long-running operations in the U.S. Employing
hundreds of thousands of Americans. Like the vast
majority of speakers today. Cadon does not believe we undermined the
interest of the United States nor necessitate the composition
of tariffs for several decades Japanese companies are
very proud to have made billions of dollars of investments in
communities throughout the U.S.. Those investments have
strengthened economic security without
harming national security section 232. The U.S. and Japan
are committed trusted partners and global leaders. They share
security cooperation and trade ties bilateral investments and core values. Jeff invested
millions of dollars in the U.S. to help grow the U.S. economy,
increase U.S. GDP create hundreds of thousands
of jobs. It’s disappointing that those
Japanese companies with growing operations in the U.S. may be
punished for their significant investments. Future
investments and many American jobs depend upon the continued
growth of those operations. Currently, Japanese
foreign direct investment in the U.S. is a whopping $421 billion
in stock value. And $34 billion in flow. Making Japan one of the
top investors in the U.S. Potential tariffs imposed under
section 232 would have a chilling effect on foreign
investment in the U.S. for many years to come. Without those key
investments the economic security and global
competitiveness of the U.S. may be undermined. Japanese companies have invested
more than $57 billion and R&D within the U.S. and that number
continues to grow. Those investments help trade and train U.S. workers to
develop new technologies and provide tremendous opportunities
for U.S. engineers and scientists. In mineral Wells in
West Virginia for example, Heno is planning on opening a
plant. Toyota and Mazda in Alabama have established a joint
venture company to manufacture automobiles together. Japanese automakers and Japanese
companies as a whole have consistently demonstrated their
decades long commitment to supporting the U.S. economy.
Japanese companies are dedicated to upholding rules based open
and richly beneficial global trading system. Based upon this
testimony comments submitted. Kadon Rents asks the department
find the current auto part import does not harm
national security interests and therefore tariffs and other
strict if measures are not necessary. Thank you very much. Scenic thank you, Mr. Blair.
>>Good afternoon I’m Clinton Blair vice president of
government affairs of the organization for national
investment. We are the largest international company here in
the U.S. with most of the international auto manufacturers
and many of the leading companies. Every day we work
here in Washington to tell the news stories and the benefits to
the U.S. economy. Most will members are in while more than 60
percent of the companies in U.S. have fewer than 1000 employees.
OFI members have more than 12,000 Americans for each
company. OFI companies are headquarters and companies
largely considered to the longtime allies for the United
kingdom, France, Canada, and Japan as well as Germany and
South Korea. Not only do these companies make the economy more
resilient. Make sure that nations all of the globe have a
stake in America’s economic success. On behalf of our 209
number companies, on behalf of I’m pleased to be here to
explain why the tariffs are unnecessary and misguided. Given
the national security pretext of what seems to be the
administration’s desire to consider a bygone industrial
policy, I request your full attention to the following 2
powerful stories from veterans of our armed services. To quote this. I saw the light
at the end of the tunnel I cannot wait to get back and get
my fingers dirty. The words of an aircraft electrician who
defended the national security for an Air Force career which
included 9 tours in Asia. He’s describing the challenges he
faced in transitioning into civilian life. Finding a job in
the country that he spent decades defending overseas. I
will share another one with you this coming from a V to two
Osprey mechanic in the Marine Corps. When I left the military
I did not have a mission anymore I was on my own. Trying to fit
in and figure out the program has been awesome
finding something that helps veterans is number one in my
book. My future is no clear and I will keep expanding my
horizons with this company to see where the road takes me. The
program that these American heroes are describing was
developed by Jaguar Land Rover North America through its
veterans career program. Further, Mercedes-Benz was the
first luxury automotive manufacturer to partner with the
U.S. Department of labor and the U.S. Department of veteran
affairs to offer a registered apprenticeship program.
Ironically on the same day that the president has unveiled his
pledge to American workers initiatives which is intended to
provide new opportunities for students and workers through
apprenticeship through work-based learning. The
Department of Commerce is holding this hearing to
determine whether international automakers, which has a long
track record of providing work force training programs are a
threat to national security. For example. Toyota developed the
advanced manufacturing AMT program designed to prevent
classroom instruction and paid hands-on experience at world-class
manufacturing facilities. Students on these programs can graduate debt free from the
income they earn the program earning an associate in advanced
and fracturing degree. And likewise I motor of Montgomery
Alabama partners with state to college to run a program that
includes both classroom and hands-on training. I could
provide you with additional examples. But invoking U.S.
national security to impose a bygone industrial policy
intended to hamper the companies to benefit the
national economy is difficult it’s a front to the economic
support of America’s workforce including veterans and transitioning
military. Thanks for your time. I’m pleased to be here today.
>>Mr. Hedrick when you’re ready.
>>Good afternoon thanks for allowing me to testify and
William Hedrick attorney specializing in import law and
seizure and forfeiture defense in North
Carolina. I first became involved in the automated law
within the last 4 to 5 years. As a result there are certain
things that happened throughout the U.S. for the Department of
Homeland Security. Predominantly represent consumers. Those who are collectors, travelers and
people traveling through the U.S. A lot of plantation in
regards to the U.S. military returning from duty stations.
Running into issues with having vehicles which they drive while
stationed in Europe, Australia, and Japan. Wherever they may be.
Getting those vehicles back here they are
running into compliance issues I work with the U.S. D.O.T and the
EPA to oversee those issues. Thanks for your time this
afternoon. These do not present the national security risks. This law as its proposed or
tariffs as its proposed would significantly predators those codes section 80
and 73. They don’t make any delineation between a used car and a new car. What
constitutes the classic vehicle under both regulations and
vehicles are over 25 respectively, those
vehicles are exempt from those regulations. Classic car
industries in the U.S. represents a multibillion dollar
industry. The proposed tariff can meet with some very grotesque results. I
represent a number of collectors who purchased to be at auction
or otherwise overseas. If purchased
at auction or elsewhere. Under the current tariff
schedule they would pay you $25,000 in import duty upon
arrival in the U.S. that would be a quarter of $1 million which
seems a bit off considering the implication or impact of the
vehicle upon its arrival here in the U.S. In addition to that, if
you look at the number of vehicles per NH TSA is less than
20% of any vehicle built in the U.S. today. This speaks to the
percentage of parts that are manufactured in the U.S. and Canada and to that end. I’m
here to advocate those who are classic car collectors have a
long history of supporting classic vehicles here in the U.S.
Congress within the U.S. actually made it classic car
day. So I’m here to represent the interest of those
individuals and I think you for your time this afternoon.
>>Will thank you all very much for your willingness to
participate and advise us on the unique perspectives of your
companies, your countries, and the industries that you
represent will take into account your comments and your
submissions as a part of this investigation. If you don’t have
any further questions, I invite our assistant secretary for
industry and analysis to come up and give some closing remarks.
>>And closing remarks I want to
sincerely thank all the U.S. government officials from
different agencies for taking the time to come here today this investigation we are pulling in our colleagues at
different government agencies who enthusiastically volunteered
to help us scope out these complex issues. We are grateful
for them. Spend a long day for many of you, so thank you for
taking the time. Not only to submit your comments but to
provide the data and the input. Submitting this comments and
taking the time out of your busy schedules to be here today. We
are carefully emphasizing and analyzing all the information
that’s been provided today that was provided in the comments.
The statistical analysis reports, we are looking at
those. We are doing our own industry and economic analysis.
We underscore the complexity of this industry. And the global nature
of supply chains and systems. Many of the test of fire’s
supply those supply chains today. Making sure we have open
transparent comment that really enable stakeholders to voice
platform where we can share input and to rebut each other’s
input. So that we are able to scope
these issues out from different angles. So that we can
understand all the complexities of the industries and where the
details like. Our analysis is taken into can tell — account. We will
conduct a thorough investigation taking all the relevant facts
and input from stakeholders as well as analysis for final
determination. We cannot thank you enough for your input and
your assistance in this participation. We value all of
your input and thank you again for your participation and contributions.
>>

About the Author: Michael Flood

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