Date:         Tue, 26 Dec 2006 14:22:49 -0500
Reply-To:     Jack R <jack007@COMCAST.NET>
Sender:       Vanagon Mailing List <vanagon@gerry.vanagon.com>
From:         Jack R <jack007@COMCAST.NET>
Subject:      More on the Truck Tariff
Content-Type: text/plain; charset="us-ascii"

Originally aimed at Volkswagen AG, the tariff essentially forces automakers
to build pickups in North America or do without.



https://www.dctruckfinancial.com/whatsnew/tariff.html




Tariff On Trucks Backed
Thailand pact could result in flood of pickups

WASHINGTON -- Detroit's automotive industry is raising a ruckus over trade
talks that it says threaten thousands of American jobs by opening the U.S.
market to cheap pickups from Thailand.

The carmakers, the United Auto Workers and their allies in Congress are
reviving efforts to pressure the Bush administration to retain a 25% tax on
imported pickups as it tries to reach a free-trade agreement this year with
Thailand -- a deal that would normally do away with all such taxes.

The push has united Detroit's automakers and the UAW, which have clashed
over loosening trade rules in the past, and could test the election-year
appetite in Congress for free trade agreements amid record trade deficits
and job cuts in manufacturing.

Steven Beckman, director of governmental and international affairs for the
UAW, says a free-trade deal with Thailand that eliminates the tariff would
threaten 42,000 UAW workers who assemble trucks and 50,000 UAW workers in
parts and engine plants.

Thailand is the second-largest producer of pickup trucks in the world behind
the United States.

"If the Bush administration negotiates a free trade deal that eliminates or
substantially reduces this tariff, the U.S. could be flooded with cheap
imported pickups from Thailand," Beckman told a panel of Democratic senators
last week.

Stephen Collins, president of the Automotive Trade Policy Council, which
lobbies on trade issues for General Motors Corp., Ford Motor Co. and
DaimlerChrysler AG in Washington, said the real beneficiary of a lower
tariff would be Japanese automakers that have moved their truck production
to Thailand because its labor and other costs are so low.

"The U.S. is the most open market in the world," Collins said. "We have no
apologies whatsoever for the fact there's a high tariff. We are not in a
mood to turn to the Japanese industry in Thailand and say, 'OK, we're going
to give you carte blanche to go after our pickup truck production in the
U.S.' "

Foreign automakers and free-trade advocates contend the fears are overblown,
that Thai trucks aren't suited to the U.S. market, and that the tariff is an
anomaly in an industry that thrives on shipping vehicles and parts freely
around the world.

"This is clearly a tariff that was designed to preclude trade in those kind
of products," said Paul Ryan, director of governmental affairs with the
Association of International Automobile Manufacturers. "We think it really
is an anachronism that ought to be abandoned."

But the UAW is urging lawmakers to revive a resolution calling on trade
negotiators to maintain the import tax, or tariff. The union says it has
support from Democratic and Republican lawmakers. Senate Democrats held
their own hearing on auto trade issues last week, calling on the Bush
administration to toughen trade policies.

"There's an increasing concern about this administration's approach to
trade, and the Thai truck issue is a very clear test," said U.S. Rep. Sander
Levin, D-Mich.

The chicken tax

At the center of the dispute lies a 43-year-old tariff on imported pickups
dubbed the chicken tax by opponents. It was imposed in 1963 to limit the
sale of West German trucks in the United States after European officials
tripled tariffs on chickens imported from the United States.

While frozen fryers now flow freely across borders, the 25% tariff on
pickups survived. Originally aimed at Volkswagen AG, the tariff essentially
forces automakers to build pickups in North America or do without.

The result: The American International Auto Dealers Association says exactly
one pickup that qualified for the tariff was imported to the United States
last year.

The pickup tariff is 10 times larger than the 2.5% duty on other imported
cars and trucks, and is one of the largest remaining tariffs charged by the
United States on any manufactured product. President George W. Bush has long
touted the benefits of free trade. His trade representatives have called for
an end to all tariffs, and every other free-trade deal the Bush
administration has negotiated has included removing tariffs.

Any free-trade agreement, or FTA, "will eliminate tariffs on trade between
the United States and Thailand," Assistant U.S. Trade Representative Barbara
Weisel said last month.

"The United States already buys more Thai products than any country in the
world and the FTA's new market access will only increase trade in the
future. Once the FTA is in place, no other country will have better access
to the U.S. market."

Thailand, which has dubbed its automaking region the Detroit of the East,
saw its truck production grow 37% last year to 822,867. Those trucks were
one-ton models, similar to the Ford Ranger and the Chevrolet Colorado --
versions of which are built in Thailand by Ford and GM.

In addition to GM and Ford, most Japanese automakers have plants in
Thailand, which they use as an export base. Toyota Motor Corp. announced in
December it was building a new plant there to assemble 100,000 pickups
annually, and Mitsubishi said this month it would start exporting its Triton
pickup from Thailand to 140 countries -- every market in the world except
North America, where it sells the Raider pickup built by UAW workers in
Warren.

According to the Bank of Thailand, the average Thai manufacturing worker was
paid 6,597 baht a month last year -- $167 at current exchange rates.

In Thailand, Tritons start around $14,000, with a loaded four-door version
topping out around $22,000. The larger Raider starts at $19,180 and can
carry a sticker price of more than $30,000.

Sensitive talks

Automakers and the UAW sense an opening to press their case as the talks
enter a sensitive stage. So far, little progress has been made in seven
rounds of formal talks over 19 months. The Bush administration's fast-track
authority -- the ability to negotiate trade deals that Congress can't alter
-- expires next year, and trade negotiators had wanted to conclude talks
with Thailand this year.

And Congress appears more responsive to concerns about job losses and
growing trade deficits in the wake of previous free-trade deals. The U.S.
trade deficit hit a record $782 billion in 2005, with a record
$139.4-billion deficit in cars, trucks and parts. Beckman noted that, since
the North American Free Trade Agreement was approved in 1994, the auto trade
deficit with Mexico has grown from $3.6 billion to $27.3 billion.

The union also notes that 200,000 auto jobs have disappeared since 2001,
with GM and Ford prepared to pare another 60,000 this year.

But opponents of the tariff note that large foreign automakers already build
a variety of pickups in North America, and that the smaller, diesel-powered
trucks assembled in Thailand aren't suited to the U.S. market.

"There's already production here or capabilities to produce in Mexico if
cost is part of the issue," said Kevin Koonce, vice president of government
relations for the American International Auto Dealers Association, which was
formed to fight the tariff in the 1970s.

If the tariff fell, "we would see an increase in some sectors, but as Honda,
Hyundai and Toyota have shown, if they can prove a viable market here,
they're apt to build a factory here."

Date: 02/22/2006