- capital report: oct. 2, 2018
capital report: oct. 2, 2018
New NAFTA Announced:
U.S., Canada and Mexico Reach Trilateral Trade Agreement
On Sunday, Sept. 30, the United States, Canada and Mexico
reached a new trade agreement to replace the North American Free Trade
Agreement (NAFTA) right before the U.S.-imposed deadline. NAFTA is still in
effect while the new agreement, called the United States-Mexico-Canada
Agreement (USMCA), goes through Congressional review. The timing allows
outgoing Mexican President Enrique Peña Nieto to sign the USMCA prior to him
“We are encouraged to see the United States reach a
trilateral trade agreement with Mexico and Canada, allowing duty-free movement
of auto parts to continue between the three countries. As we continue to review
the text, we hope the modernized agreement strengthens trade in the region and
promotes consistency and predictability for U.S. auto manufacturers,
distributors, retailers and service providers,” said Bill Hanvey, president and
CEO, Auto Care Association.
In terms of autos and auto parts, the updated auto rules of
4) requires that 75 percent of a vehicle’s content must come from North
America, up from the current 62.5 percent, in order to receive duty-free
treatment. The agreement also includes a labor wage provision requiring a
percentage of a vehicle to originate from workers earning at least $16/hour to
be eligible for duty-free treatment.
Please review the full
text of the trade agreement for more details. USTR has released a couple
factsheets as well:
Questions? Contact Angela Chiang.
View Auto Care’s NAFTA resource page: https://www.autocare.org/FAQ.aspx?id=3513&gmssopc=1
Legislation Introduced in Massachusetts
Last month, three Massachusetts legislators introduced a
bill to amend the commonwealth’s Right to Repair law, with the goal being to
ensure that new vehicle data technology does not prevent drivers from using
independent auto care facilities for maintenance and repairs.
The need for the new legislation was brought about by the
onset of vehicle telematics, which permits vehicles to transmit information
wirelessly. Introduced by Reps. Paul McMurtry, D-Dedham, Joan Meschino, D-Hull,
and John Lawn, D-Watertown, the legislation would require that any vehicle utilizing
telematics technology must “permit the secure communication of all mechanical
vehicle data in a standardized format accessible by the owner or lessee of the
vehicle through their smart phone and, by an independent motor vehicle repair
facility for purposes of maintaining, diagnosing and repairing a motor
Transparency is guaranteed since access to vehicle data
would require authorization from the owner or lessee of a vehicle. The bill
would further prohibit automakers from requiring their authorization in order
to access a vehicle’s on-board diagnostic system for purposes of repairs unless
such access is standardized and not controlled by the automakers themselves.
According to IHS Market, 70 percent of new vehicles today come
with connected technology. That number is expected to jump to 90 percent of new
vehicles by 2020. While this technology could provide benefits to car owners
and the independent auto care industry, all of the data currently transmitted
by vehicles goes directly to the automakers, granting them full control over where
a vehicle can be serviced. Further, some automakers are beginning to require
authorization in order for an independent service facility to access the vehicle
on-board diagnostic system. The onset of telematics, as well as new
authorization schemes, are designed to make the automaker the gatekeeper that
decides how, to whom and at what cost vehicle repair data is made available.
The original Massachusetts Right to Repair law was enacted as
a result of a ballot measure in 2012 requiring automakers to make available to
independent repair shops the same repair information, software and tools they
provide to their franchised dealers. The ballot measure was approved by an 86-14
percent margin, demonstrating that motorists overwhelmingly want the right to
choose where they have their vehicle serviced.
Questions? Contact Aaron
Visit the Massachusetts Right to Repair website: www.massrighttorepair.org
Holds Hearing on Auto Tariffs
The U.S. Senate Finance Committee held a hearing
last Wednesday, Sept. 26 to discuss the impact of tariffs on the U.S. automotive
industry. According to Chairman Orrin Hatch, R-Utah, the hearing was an
opportunity for the committee members “to engage with experts on what new
tariffs on automobiles and automotive parts could mean for families, job
creators and U.S. economic growth.”
The Auto Care Association released a statement after the
hearing, “urg[ing] Secretary Ross and the president to listen to the widespread
opposition to imposing tariffs on imported auto parts and to conclude that
importing these goods is not a threat to national security but rather a
necessary component of a thriving domestic automotive industry.”
Read the full statement: https://www.autocare.org/Auto_Care_Association_Releases_Statement_on_Senate_Finance_Committee_Hearing_on_Impact_of_Tariffs/
USTR Develops Search
Engine for Products Subject to Section 301 Tariffs
The Office of the U.S. Trade Representative (USTR) has
developed a search
engine for companies to find out whether their products are subject to the
Section 301 tariffs on imports from China. Parties can simply enter the 8-digit
HTS code for a particular product to confirm whether it is subject to a tariff
and identify the corresponding tariff list.
USTR has also started to notify parties of product exclusion
request determinations submitted for products on the first tariff list. If you
received a denial notice, note that you can resubmit a new request if you have
additional information that you would like considered.
The third tariff list was finalized last week but the notice
did not mention a product exclusion process, as was the case for the first two
rounds. In a letter
to USTR, the Auto Care Association urged the administration to adopt a process
for our members and stakeholders to request products to be excluded from the
third tariff list.
Questions? Contact Angela Chiang.
View Auto Care’s Section 301 resource page: https://www.autocare.org/Two_Column.aspx?id=4004&gmssopc=1
U.S. Signs Revised
Free Trade Agreement with South Korea
On Monday, Sept. 24, President Trump and South Korean
President Moon Jae-in signed a revised United States-Korea Free Trade
Agreement, known as KORUS. The original KORUS was signed in 2012, but the new
agreement removes a few trade barriers in an attempt to improve the trade
deficit between the two countries.
Key provision of the new agreement include:
- U.S. Truck Tariffs – Korea will phase out the 25
percent tariff on trucks.
- U.S. Auto Exports – Increased quota of U.S.
automobile exports from 25,000 to 50,000 per manufacturer per year without
meeting Korean safety standards. Those cars only need to meet U.S. safety
standards. Note that U.S. automakers have not come close to reaching the cap in
- Section 232 Steel Tariffs – U.S. agreed to
exempt Korea from its Section 232 tariff on steel but instead, be subject to a
quota to limit steel exports to the U.S.
Read the KORUS factsheet: https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2018/september/fact-sheet-us-korea-free-trade
Antidumping Order on
Tapered Roller Bearings from China to Remain in Place
Last month, the U.S. International Trade Commission (USITC)
voted to continue the antidumping duty order on imports of tapered roller
bearings from China. USITC determined that revoking the existing antidumping
order would be likely to lead to continuation or recurrence of material injury
within a reasonably foreseeable time. This is the fourth five-year sunset
review. A full report of the investigation will be available in mid-October.
View the announcement: https://www.usitc.gov/press_room/news_release/2018/er0907ll1005.htm
Get the Latest
Coverage of the 2018 Elections
Thanks to support from the Auto Care Political Action
we are pleased to bring Capital Report readers the latest Inside Elections with
Nathan Gonzalez, a bi-monthly nonpartisan analysis of U.S. elections.
Read the latest issue: https://www.autocare.org/uploadedFiles/Autocareorg/Government_Affairs/Capital_Report/Election_Updates/inside-elections-09-28-2018.pdf