government affairs blog

Making Sense of Antidumping and Countervailing Duty Investigations

Posted by Andres Castrillon on November 17, 2014

From bearings to tires to chemicals, automotive parts and products are often the subject of antidumping and countervailing duty investigations. Auto Care Association members who sell or buy imported products need to be aware of the existence of any antidumping or countervailing duty investigations or outstanding orders affecting their imported products. How do these investigations work? Who is involved? And what is the association’s role in these investigations? We provide basic guidance on these questions below.


What are Antidumping and Countervailing Duties?


Antidumping and countervailing duties are types of remedial duties used to offset the effects of two types of trade practices that are determined by U.S. federal agencies to give imports an unfair advantage over domestic U.S. competitors. The antidumping law provides for the assessment of duties on imported merchandise that is sold to purchasers in the U.S. at a price less than its fair market value. Fair market value of merchandise is the price at which it is normally sold in the foreign manufacturer’s home market. The antidumping duty is assessed in an amount equal to the amount by which the manufacturer’s home market value of the merchandise exceeds the export price to the U.S. purchaser.


The countervailing duty law provides for the assessment of countervailing duties on imported merchandise that is sold to purchasers in the U.S. if the government of a country is providing a subsidy with respect to its manufacture, production or export. The countervailing duty is assessed in an amount equal to the net countervailable subsidy.


Both laws require an agency determination that an industry in the United States is materially injured, or is threatened with material injury, by reason of imports of such merchandise.


Agencies Involved in Investigations and Enforcement


Three government agencies enforce the antidumping and countervailing duty laws. First is the International Trade Administration (ITA), an agency of the Department of Commerce. Through its Import Administration business unit, the ITA has the responsibility to investigate foreign producers and governments to determine (i) whether dumping or subsidizing has occurred and (ii) if so, the margin of dumping or amount of the subsidy.


Second, the International Trade Commission (ITC) determines whether the relevant U.S. industry is suffering material injury or the threat of material injury caused by the subject imports.


Third, U.S. Customs and Border Protection (CBP) is the enforcer. Once the ITA and the ITC have made the necessary determinations, ITA instructs CBP to assess the duties on importers. The duties are normally assessed as a percentage of the value of the imports of the dumped or subsidized product.


How Long Does it Take for Antidumping or Countervailing Duty Orders to Be Issued?


Once a petition is filed, if both the ITC and ITA make affirmative preliminary determinations (within 190 days of initiation of the antidumping investigation, or 130 days for a countervailing duty investigation), importers are required to post a bond or cash deposit to cover an estimated amount for the duties which would be collected in the event that an antidumping or countervailing duty order is issued upon the completion of the investigations. Typically, the final phases of the investigations by the ITA and ITC are completed within 12 to 18 months of initiation.


What is the Association’s Role in an AD/CVD Investigation?


Antidumping and countervailing duty investigations are legal proceedings to determine whether foreign producers and exporters are breaking U.S. law by dumping or by benefiting from illegal government subsidies. These investigations are highly fact- and data-intensive, involving several rounds of questionnaires and briefs, and focusing on confidential sales and cost data, or confidential subsidy information in the case of a countervailing duty investigation. Unlike regulatory matters, an association cannot intervene to “lobby” on behalf of an industry to make the case go away. Instead, “interested parties” (namely, foreign and domestic manufacturers, exporters and importers of subject merchandise) must present evidence to substantiate or rebut the dumping and/or subsidy allegations.


Associations sometimes get involved and testify or file briefs in these cases supporting or opposing the imposition of duties by discussing the “injury” side of the investigation, providing information on the overall health of the industry and whether or not relief is needed. However, in order to participate as an “interested party” in one of these cases, the majority of an association’s members must be producers, importers or exporters of the subject merchandise. In most cases, the Auto Care Association’s role has been to keep our members informed of developments and their options and answer any questions we can to help make sense of this complicated process.


Conclusion


These are very complicated and technical investigations. Auto Care Association members who may be impacted by one of these investigations should consult with experienced international trade counsel to determine their potential liability and understand their options. The ITA and ITC websites provide additional information and resources for these investigations. Be sure to also review a comprehensive list of resources for importers and exporters on the Auto Care Association’s website here.

Keywords: Trade

Celebrating World Trade Month With a Trade Mission To Latin America

Posted by Andres Castrillon on May 19, 2014

The month of May is widely celebrated across the United States as “World Trade Month.” It is appropriate then that as you read this post the Auto Care Association is participating in Trade Winds – the Americas Business Development Conference and Trade Mission, sponsored by the U.S. Department of Commerce. The 2014 Trade Winds program includes an Americas-focused business forum consisting of regional and industry specific conference sessions as well as pre-arranged consultations with U.S. Foreign Commercial Service Senior Officers representing commercial markets throughout the region. Auto Care Association executives are participating in mission stops to Panama and Colombia. 


The Auto Care Association’s Executive Committee has identified Latin America as a priority export region for its membership. By participating in this trade mission, Auto Care Association executives will:  


  • Network with the regions’ leading industry and government officials and experienced U.S. and global companies;
  • Learn how to help Auto Care Association members overcome barriers in the Americas; and,
  • Meet one-on-one with top business experts from the U.S. Embassies and Consulates to educate them about our industry and work with them to identify opportunities and market entry strategies.


With an increasing number of Free Trade Agreements having entered into force between the United States and Central/South American countries in the past few years, trade between the U.S. and Latin America is booming. Latin American countries now constitute some of the largest markets for U.S. exports. For example, in 2012, Colombia was the third largest market in Latin America and 22nd largest market globally. Additionally, the five countries being visited during the Trade Winds mission (Colombia, Peru, Chile, Panama and Ecuador) account for approximately U.S. $60 billion worth of exports of a wide range of products from the United States. These are also strong export markets when looking exclusively at auto parts, with Chile alone accounting for U.S. $280 million in exports in 2013.  


Colombia, Peru and Chile are some of the fastest growing economies in the region, integrating well within the global economy by opening up their markets to many countries and maintaining a stable political and business environment. U.S. products enjoy a high level of acceptance in these countries and the U.S. has the dominant share of imports. According to projections, continued growth and investment in these countries is unlimited.  


We want to position Auto Care Association members to fully maximize their advantages and identify opportunities in this promising region. This is why, in addition to participating in Trade Winds, we have organized an Auto Care Pavilion to the upcoming Latin Auto Parts Expo, July 9-11, 2014, in Panama City, Panama. Forty members will exhibit in our pavilion and participate in networking and education sessions with key automotive contacts from throughout the region.     


Members interested in learning more about the association’s international initiatives or the Latin Expo should contact Andres Castrillon at andres.castrillon@autocare.org or by phone at 301-654-6664.

Keywords: Trade

Four Things I Learned About the Auto Care Industry in China

Posted by Andres Castrillon on January 06, 2014

Last month I spent ten days in China. I spent a week in Shanghai attending the Automechanika show and meeting with international associations, AAIA member companies and market experts. I then visited Beijing to meet with U.S. Embassy staff to discuss opportunities in the Chinese market and how AAIA can work with the Embassy to help AAIA members take advantage of those opportunities. I also spent a day with the leaders from the China Automotive Maintenance and Repair Trade Association (CAMRTA) to understand their priorities and challenges in the market, and to determine whether they might be a good partner for any future AAIA China initiatives. Below are four things I learned during my trip.


1. Everything you’ve heard about the booming Chinese automotive market is true. The Chinese automotive market is booming. China’s automotive sector grew at a compound rate of 24 percent between 2005 and 2011 and, in 2010, overtook the United States as the largest single-country, new-car market. Growth is expected to slow down to an average of 8 percent between now and 2020, when sales are expected to reach $22 million, bigger than both the European and North American markets. New car sales in China are forecast to contribute to 35 percent of the world’s car-market growth through 2020. The people I spoke with on the ground report that car making joint ventures in China are concerned with insufficient capacity to meet demand.


2. Significant challenges remain. Market entry can be challenging, with rules and regulations that are difficult to identify and navigate, and which can often change. Intellectual property rights protection remains a very significant challenge to doing business in China, with counterfeiters becoming more sophisticated every day and with legal remedies difficult to enforce. Moreover, it can be difficult to identify reputable and legitimate business partners in China for joint ventures, agent representation, distribution or logistical and supply chain needs. Even in the association world, finding the right partners can be challenging as there are seemingly thousands of automotive “associations,” with very few being actual associations as we think of them.


3. There are many resources available to help overcome the challenges. Despite all of these challenges, many U.S. companies are on the ground and thriving in China. The U.S. Commercial Service in China offers valuable assistance to American businesses exporting goods and services to China. There are specialists focused on the automotive industry at each of the regional locations in China, including the U.S. Embassy in Beijing and four Consulates in Shanghai, Guangzhou, Chengdu and Shenyang. I met with the Beijing team and they are working to help identify trade opportunities and local potential trading partners within their perspective regions. They have developed a solid understanding of the opportunities and challenges in the automotive market and can help guide U.S. companies. Additionally, the U.S. embassy has another team of people focused on market access issues and helping bring down barriers to market entry. There are also many private sector resources available. For example, I met with an American attorney who has worked in Beijing for 20 years and specializes in helping U.S. companies overcome any regulatory hurdles to doing business in China.


4. The auto care industry in China is underdeveloped and not prepared for the aging car parc.The Chinese car parc is aging and the used-car market is growing, but there is currently no sophisticated infrastructure in place to service and repair these aging vehicles. China lacks sophisticated distribution networks for auto parts, as well as standards for cataloging and parts identification. There is also no organized consumer education effort, and there is very little preventative maintenance that is performed on cars in China. AAIA members can play a large role in helping overcome these challenges. Many large Chinese investors want to duplicate the U.S. auto care industry model and are looking for U.S. joint venture partners. There is also a large market for imports and American products are generally highly regarded in China.


AAIA is exploring areas where we can become more active in the Chinese market in order to better position AAIA members to be successful there. We welcome member input on the Chinese market and ways AAIA can be impactful in overcoming the many challenges that exist there.

Keywords: Trade

AAPEX Opens the World to AAIA Members

Posted by Andres Castrillon on December 09, 2013

Participating in trade shows is among the most effective ways for companies to enter into new international markets or expand their visibility in existing markets. Trade shows offer the opportunity to meet potential foreign buyers, test foreign market interest, gather valuable market intelligence and evaluate the competition.


In response to member feedback, AAIA’s programs and activities during AAPEX 2013 reflected a new, more focused international trade promotion program aimed at helping our members compete more effectively in the global market place. AAPEX promises participants the opportunity to grow their business, and what better way to do that than to connect with the 95% of consumers that live outside U.S. borders? In 2013 AAIA worked harder than ever to make AAPEX a platform for opening the world to AAIA members.


Bringing the World to Your Booth. More than 16,000 international buyers attended AAPEX 2013. Additionally, more than 450 buyers visited AAPEX as members of 12 international buying delegations. The U.S. Commercial Service (USCS), the export promotion arm of the U.S. Department of Commerce, led nine of the 12 delegations with buyers from Bulgaria, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nigeria, Spain and Turkmenistan.


AAIA has been working closely with the USCS’s global automotive team to promote the export of automotive goods and services from the United States, and to help AAIA members find qualified international partners. Prior to AAPEX, AAIA staff hosted a webinar for USCS automotive specialists to help them better understand the car care industry and how to use AAIA’s vast member network to identify export-ready companies. During AAPEX, AAIA staff hosted several meetings with USCS leaders that generated many ideas for mutual cooperation.


Member Engagement. AAIA’s international segment, the Auto International Association (AIA), has been working closely with AAIA staff to better define the association’s international goals and priorities. During AAPEX 2013, AIA hosted two focus groups conducted by a third party facilitator. One session was for the member companies and the other session was for international associations. The member session was aimed at understanding members’ international trade challenges and what role AAIA can play in helping overcome those challenges. The association session was aimed at identifying opportunities for cooperation with AAIA’s international partners. The sessions were well-received and will help AAIA better respond to member’s international needs.


International Partner Engagement. AAIA staff met individually with several international groups to explore opportunities for cooperation. The groups included:


  • Korea Trade-Investment Promotion Agency (KOTRA)
  • Automotive Component Manufacturers Association of India (ACMA)
  • ProExport Colombia
  • Australian Automotive Aftermarket Association (AAAA)
  • Italian Trade Commission (ITC)
  • Latin Auto Parts Expo
  • Brazilian Auto Parts Manufacturers Association (Sindipecas)
  • Russian Trade Representation


Foreign Market Intelligence. AIA organized three “Global Market Update” sessions highlighting export opportunities for AAIA members in Colombia, India and Australia. AIA plans on offering similar webinars throughout the year. AIA also presented an education session, in partnership with the USCS, which gave an overview of U.S. government export assistance programs and highlighted key export opportunities for U.S. auto parts manufacturers.


Advocacy. Two high-ranking Commerce officials attended the show and met with AAIA staff and some members to discuss AAIA’s international trade concerns. The officials were:


  • Daniel Green, Director of the U.S. Department of Commerce’s Market Access and Compliance (MAC) Office at the Embassy of the United States in Beijing, China
  • Chandra Brown, Deputy Assistant Secretary for Manufacturing, U.S. Department of Commerce


AAIA is committed to making AAPEX a key tool for its members to identify and achieve their international goals. For more information on AAIA’s international programs and resources, please contact Andres Castrillon at andres.castrillon@aftermarket.org.

Keywords: AAPEX, Trade

Protecting Your Intellectual Property Rights at AAPEX

Posted by Andres Castrillon on October 14, 2013

With November quickly approaching, many of you are busy making final arrangements for AAPEX. In addition to finalizing booth details, travel itineraries and meeting times, you should also consider how you will protect your intellectual property (IP) during AAPEX.


IP protection is critical to the auto care industry and is therefore an important part of AAPEX itself. The organizers of AAPEX have a zero tolerance policy toward IP violations and will work with exhibitors to resolve legitimate claims of IP infringement. To provide a mechanism for exhibitors to lodge complaints about potential infringement of an exhibitor’s IP by another exhibitor at AAPEX, AAIA and its partners provide IP attorneys during the show. IP counsel will be available in the AAPEX IP Office in the Sands Expo Center Room 401 from 9 a.m. to 5 p.m., Monday, Nov. 4 – Thursday, Nov. 7 to receive and investigate complaints of IP infringement. AAPEX welcomes any exhibitor concerned about potential infringement to make use of this exhibitor service.


The key to adequately protecting your IP during the show is being able to support a complaint with adequate documentation explaining the ownership of the disputed or applicable rights. Thus, it is important to plan to bring copies or have access to registrations for IP, such as patents and trademarks, as well as any relevant marketing materials, contracts and other supporting documentation.


Upon receiving a complaint, IP counsel will conduct an initial review to determine whether a complaint is adequately documented and demonstrates a violation of the AAPEX IP Policy. When necessary, IP counsel may also conduct an investigation into the specific facts or circumstances to whatever extent is necessary in order to clarify, expand or corroborate the information provided by the complainant. This may include review of an exhibitor’s display and products, as well as documentation of the evidence through the taking of photographs, as well as contacting other individuals who may have knowledge of the facts and circumstances surrounding the complaint.


In circumstances where the evidence presented by the complaining party indicates a violation of the IP Policy or otherwise may be disruptive to the AAPEX show, IP counsel, in coordination with AAPEX management, may order the respondent exhibitor to remove products during the pendency of the investigation. Violating exhibitors face potentially severe consequences, which may include closing an exhibitor’s booth and a ban from future AAPEX shows, as well as the loss of seniority privileges.


AAIA urges all AAPEX exhibitors to develop year-round protection and enforcement programs for their IP and to utilize the IP Review Process to protect their intellectual property during AAPEX. AAIA also recommends that exhibitors consult with an attorney experienced in the field of preserving and protecting IP. More information on the AAPEX IP Policy is available here: http://www.aapexshow.com/2013/public/Content.aspx?ID=3089&sortMenu=103007.

Industry Engagement Key to Effective IPR Enforcement

Posted by Andres Castrillon on September 30, 2013

Intellectual property rights (IPR) theft is one of the many challenges AAIA members can face in the global marketplace. When counterfeiters sell products using our members’ brand names, they steal income from legitimate companies, cause consumers to question the reliability of aftermarket products and threaten consumer safety. They also threaten the flow of legitimate trade, as counterfeiting cases raise the level of scrutiny on aftermarket products, causing additional burdens and delays. Thus, although relatively small in scope when considering the size and importance of the aftermarket, IPR protection is an issue we must all be aware of and can play a role in addressing.


AAIA supports continued efforts by Congress and the administration to improve IP enforcement at home and abroad. As such, AAIA recently participated in an informal roundtable discussion hosted by the National IPR Coordination Center, in partnership with U.S. Customs and Border Protection’s (CBP) Automotive Center of Excellence (CEE). The discussion focused on the enhancement of substantive enforcement protocols for combating IP theft in the automotive industry. The small gathering presented a unique opportunity to meet with the Detroit based CBP-CEE leadership and other Intellectual Property Rights enforcement officials.


The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting, piracy and commercial fraud. As a task force, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft and commercial fraud. The IPR Center works closely with CBP’s Automotive CEE, a central point of contact for inquiries and resolution of issues regarding automotive-related imports.


AAIA’s goal for participating in the discussion is to explore ways to enhance direct connectivity for AAIA members to these key groups. The IPR enforcement officials want to hear directly from industry so that they can more strategically target IPR infringers and ensure that legitimate trade flows freely and efficiently. With limited resources and expertise, their best weapon is the intelligence, feedback and guidance they receive from industry representatives. AAIA will continue to work with these government partners and keep its members updated on their initiatives.


AAIA encourages its members to become familiar with the resources the IPR Center and the CEE offer. Members interested in learning more should contact Andres Castrillon at andres.castrillon@aftermarket.org or by phone at 301-654-6664. Members can also visit the following websites for additional information:


http://www.iprcenter.gov/


http://www.cbp.gov/xp/cgov/trade/trade_transformation/industry_int/iic/auto_aero_cee.xml

Member Dialogue Key to Effective Trade Advocacy

Posted by Andres Castrillon on August 26, 2013

Domestic and international trade policy affects all businesses operating in international markets. Trade policy development is a complex process, involving dozens of players representing different interests. Some seek to improve their position in foreign markets. Others support trade policies that protect them from foreign competition. Some want to increase protection of intellectual property, while others fight to make sure that those efforts don’t add burdens on legitimate commerce. And, as the old adage goes in Washington, “If you’re not at the table, you’re on the menu.” Therefore, we must all be vigilant in protecting our trade interests in order to best position our industry to benefit from the ever-evolving global trading environment.


Here at AAIA, we work hard to identify and address trade policy developments that impact our members. We scour trade publications daily. We are in routine contact with relevant government agencies and congressional staff. We work closely with other foreign and domestic trade associations whose interests align with ours. But our best resource for information on trade developments that impact our members is information from the members themselves. No one is in a better position to know what issues really matter, how they impact the ability to conduct business globally and what positions AAIA should take to protect the industry.


So how can AAIA members better contribute to AAIA’s trade policy advocacy?


  • Monitoring international trade developments. AAIA staff prepares two reports that summarize policy developments that have potential impact in members. First, the weekly Capital Report prepared by AAIA’s government affairs team includes key international trade developments. Second, AAIA’s international segment, the Auto International Association (AIA), distributes Talking Trade, a monthly summary of international trade developments impacting its membership. If you are not receiving this and would like to, please contact Andres Castrillon at andres.castrillon@aftermarket.org. Monitoring these reports is an easy way to keep up to date on trade developments on which you may want AAIA to take action. When you see something that may impact you, pick up the phone and let us know your thoughts.
  • Ensuring leadership and responsibility for international trade issues. Is your company properly organized to identify trade concerns? Who within your company is monitoring international trade developments? Is that person/team receiving the relevant AAIA communications? AAIA members should identify a person or team responsible for oversight of international trade developments and make sure they are aware of AAIA and its resources.
  • Participating actively in formal consultations on trade matters. U.S. trade agencies and congressional committees often request comments from the public on a host of international trade issues. Are you taking advantage of these opportunities? If not, you’re missing out on a great opportunity to shape the debate. AAIA announces these comment opportunities in the reports mentioned above and can help you prepare comments, either through the association or individually.
  • Building relationships with your congressional representatives. Is your congressman/woman or senator on a committee that has responsibility for international trade? Are you building relationships with your representatives and educating them on your trade priorities? Do you have a good trade story to tell? Despite the political gridlock in Washington, trade is one of the few issues both sides are actively promoting and willing to pursue.


AAIA’s effectiveness as a leading policy advocate for the motor vehicle aftermarket is strengthened by active member participation and discourse. In the coming weeks, members will receive communications aimed at better identifying key contacts for international trade oversight. Your company, whether large or small, can play an important role in our trade advocacy efforts. We encourage you to get in contact with us to discuss how we can work together to protect your trade interests.

Keywords: Trade

As U.S.-EU Trade Negotiations Launch, Regulatory Coherence a Central Pillar

Posted by Andres Castrillon on July 01, 2013

On June 17, President Barack Obama and EU leaders announced the launch of U.S.-EU Transatlantic Trade and Investment Partnership (TTIP) negotiations. A comprehensive U.S.-EU free-trade agreement would reduce the cost of doing business for U.S. and EU companies by eliminating tariffs and streamlining divergent regulatory measures. The potential tariff savings alone make the TTIP a potential game changer. A U.S.-EU free-trade agreement that eliminates all tariffs will allow U.S. and EU exporters to avoid an estimated $10.5 billion in annual duties paid on bilateral goods trade. About $6.4 billion in duties were paid on U.S. goods exports to the EU in 2011, and $4.1 billion on EU exports to the U.S. And, as evident in the automotive aftermarket, about half of U.S.-EU trade in goods and 37 percent of trade in services are between companies linked by ownership. Tariff elimination will, in particular, benefit the auto, machinery and chemical industries, all of which generally support immediate duty phase-outs.


In addition to tariff cuts, enhanced regulatory coherence is one of the pillars of the TTIP talks. The U.S. and EU will seek to reduce costs stemming from product and services rules, while maintaining appropriate measures to protect human health, safety and the environment. AAIA is actively monitoring the negotiations and has submitted initial comments to U.S. negotiators seeking regulatory equivalence, or mutual recognition, in several areas, including automotive repair and diagnostic equipment, telematics applications, competition policy, and testing and certification requirements.


While the automotive sector has been identified as a key sector with a significant transatlantic relationship, and where the biggest relative increase in trade resulting from the TTIP is expected to take place, the expected impact may actually be understated. This is because much of the data focuses exclusively on the potential increase in motor vehicle imports and exports, while ignoring the significant trade increases that will also result in the automotive aftermarket. To illustrate, there are close to 350 million vehicle registrations in Europe, accounting for 34.4 percent of global vehicle registrations. That is significantly more than the 288 million vehicles registered in the U.S., Canada and Mexico. More than 16 million new cars are registered in Europe each year. As these vehicles age, they will need parts and services. In 2011 alone, U.S. parts exports to Europe totaled more than $3 billion, while European parts imports into the U.S. totaled $8.3 billion. The expected increase in motor vehicle trade across the Atlantic will also result in similar increases in trade for motor vehicle products. In other words, the automotive aftermarket stands to benefit significantly from the TTIP.


AAIA is working with FIGIEFA (Fédération Internationale des Grossistes Importateurs et Exportateurs en Fournitures Automobiles), our counterpart aftermarket association in Europe, to identify specific regulations where failure to harmonize will undermine the TTIP’s objectives. As negotiations progress, we will participate in the process by sharing our negotiating priorities with U.S. negotiators and key representatives serving on the various congressional committees of jurisdiction. We are also monitoring other ongoing trade negotiations, including the Trans-Pacific Partnership, to try to ensure that the disciplines do not differ significantly from one agreement to another in a way that makes global commerce more challenging for our members. We welcome input and perspective from members on the impact of the TTIP and other trade deals and key regulatory concerns that should be addressed during negotiations.

Keywords: Trade

Potential U.S.-EU Trade Pact Means Big Opportunities for Automotive Aftermarket

Posted by David Pinkham on April 15, 2013

So far in 2013, news from Washington, D.C. has been plagued by disagreement on a host of hot-button political issues including tax reform, budget proposals, immigration and gun control. While there is no shortage of proposals from either side of the aisle on these issues, most of the proposals will face stiff resistance from various elements on the Hill and their fate is questionable at best. One key proposal that has a good chance of surviving – enjoying broad support from both parties and from the business community – is the proposed free trade agreement (FTA) between the United States and the European Union (EU). Earlier this year, President Obama and EU leaders committed themselves to launching negotiations on a Transatlantic Trade and Investment Partnership (TTIP). Formal negotiations are scheduled to begin in the latter half of 2013, but the groundwork for negotiating objectives is already being laid.


While a trade agreement is not a magic formula for prosperity, the removal of trade barriers across a large volume of trade can contribute significantly to economic recovery. As with any trade agreement, tariff reduction will be a major part of the TTIP. But tariff reduction must be coupled with removal of non-tariff barriers such as differing regulatory requirements and standards. As much as 80 percent of the total potential gains come from cutting costs imposed by bureaucracy and regulations. Lower tariffs mean little if products produced on one side of the Atlantic are not accepted on the other because of diverging regulations. Even slight adjustments to the production process to comply with different regulations add significant costs and undermine the benefits of an FTA.


An ambitious and comprehensive TTIP could bring significant economic gains as a whole for the EU and the U.S. once the agreement is fully implemented. The EU-U.S. economic partnership is the largest in the world with goods and services trade totaling over $1 trillion annually. The EU, as a unit, is the largest merchandise trading partner of the U.S. The U.S. Chamber of Commerce estimates that a significant percent reduction in non-tariff barriers would increase both EU and U.S. GDP by 3 percent.


The biggest relative increase in trade resulting from TTIP is expected to take place in the motor vehicles sector. This is not surprising as the car sector is characterized by a combination of high tariffs and high non-tariff barriers, such as different safety and emissions standards. EU exports of motor vehicles to the U.S. are expected to increase by 149 percent, according to the Centre for Economic Policy Research.


Further integration of the auto industry across the Atlantic means increased opportunities for two-way trade in parts and components and associated services. Increased trade translates to opportunities to businesses at every level of the aftermarket supply chain. The TTIP negotiation process provides AAIA and its members an opportunity to identify and eliminate regulatory barriers to trade in our industry. To realize the full potential of this potentially game-changing agreement, regulatory convergence is needed. Increased regulatory convergence can lower costs, increase trade flows and create jobs in our industry.


AAIA is in discussions with FIGIEFA (Fédération Internationale des Grossistes Importateurs et Exportateurs en Fournitures Automobiles), our counterpart auto aftermarket trade association in Europe, to identify key areas where regulatory convergence is needed. In the coming months, AAIA will be identifying these areas in written submissions and in-person meetings with U.S. trade negotiators. We encourage AAIA members to consider how the TTIP may impact their business and to help us identify any barriers to trade in our industry that might be eliminated, whether through harmonization or mutual recognition. Identifying opportunities for greater transatlantic regulatory compatibility now will help ensure that our industry enjoys the full benefits of the TTIP later.

Keywords: Trade

How the Aftermarket Can Stand to Benefit from Free and Fair Trade

Posted by Andres Castrillon on January 25, 2013

During a visit to Savannah, Ga. earlier this month, I strolled along the waterfront and watched colossal cargo ships arrive to port. Similar in size to a six-story building and capable of carrying the equivalent of a 44 mile-long freight train, the ships carry many of the goods that surround us daily – food, apparel, electronics – and are responsible for a substantial portion of the $100 billion worth of automotive parts imported annually. The ships are a visible reminder of the importance of trade to the U.S. economy in general, and to the automotive aftermarket specifically.


Despite the false notion held by many of our lawmakers that imports threaten domestic jobs (in the past 30 years, as imports have increased, the unemployment rate has decreased), these cargo ships carry automotive products that are critical to our industry’s supply chain and support thousands of jobs. Many of the imported auto products start from U.S. intellectual property and/or components of goods that are produced or assembled overseas. Many more consist of raw materials, components and capital equipment that support U.S. manufacturing. These imports support jobs in port loading, transportation, wholesale trade, retail trade, advertising and aftermarket service. In other words, the economic activity associated with these imports has a market-expanding effect that adds value and jobs to our economy. These imports also expand choice of goods for U.S. consumers.


Given the importance of trade to our industry, my mandate as AAIA’s director for international trade is to utilize AAIA’s influential voice in Washington, D.C. to advocate for free and fair trade in our industry. This includes monitoring activity of federal agencies and congressional committees that might impact the international trade activity of AAIA’s membership, interacting with federal agency officials that have responsibility for automotive parts trade development, and developing and communicating positions to federal agencies on government initiatives affecting AAIA member companies’ import and export business. These efforts will aim to enhance our industry’s ability to compete and to support the interests of foreign suppliers and domestic importers to make sure the U.S. aftermarket has unrestricted access to the premium products from the best suppliers around the world, no matter where they are headquartered.


In the coming months, AAIA’s government affairs team will work with the U.S. government to identify and eliminate barriers to trade, including counterfeiting, tariffs and regulatory constraints. We will provide input on negotiating objectives for bilateral and multilateral trade negotiations, including the Transpacific Partnership negotiations and a potential U.S.-EU trade agreement. We will support action to grant Trade Promotion Authority to the president, allowing him to negotiate trade agreements that Congress can then approve or reject, but not amend. We will review Customs Reauthorization legislation closely and support efforts to streamline the customs process and eliminate redundancies. We will also work one-on-one with members to navigate complicated rules and regulations. And, hopefully, our efforts and your support will help keep those cargo ships coming into port!

Keywords: Trade