Foreign Carmakers Invoke Reagan To Sway Trump On Trade

WASHINGTON President Donald Trumps promises to radically rewrite American trade policy helped him win in the industrial Midwest, dealing a blow to the elite, business-friendly consensus on the issue. But thus far, Trumps protectionist talk has been more bark than bite and now big businesses with a key stake in the status quo are fighting to keep it that way.

Most recently, leading Asian and European carmakers, most of whom have large U.S. workforces, released a video advertisement touting their contributions to the U.S. economy that makes the case for keeping international trade barriers low.

The minute-long ad by the Association of Global Automakers, a trade group that represents foreign car companies, shows footage of workers producing cars at facilities for several of the manufacturers Toyota, Hyundai, Kia, Honda, Volkswagon, Subaru and Nissan as a narrator extols the accomplishments of the auto manufacturers.

Whats more, it explicitly emulates the famous Morning in America television spot from former Republican President Ronald Reagans 1984 re-election campaign.

Its morning again for auto manufacturing in America, the narrator begins, with the music from Reagans original ad in the background.

Bloomberg via Getty Images
Employees disassemble a motor in the quality control department of the Toyota Motor Manufacturing plant in Huntsville, Alabama, on Feb. 28, 2006.

The conceit of the ad is that international carmakers, as the Association of Global Automakers calls its member companies with headquarters in non-American locales, are now as integral a part of the American landscape as the suburban families in Reagans ad.

The ad debuted during NBCs Meet the Press earlier this month. The AGA declined to say how large of an ad buy it was making other than by noting it is the largest purchase in the trade groups history.

To accompany the ad, the trade group erected a website, HereForAmerica.com, which features more of the data demonstrating the importance of foreign automakers in the United States economy.

Foreign carmakers now produce 47 percent of the cars made in the United States up from 1 percent in 1979, according to the AGAs analysis of its members data available on the new site. As a result, those German, Swedish, Japanese and South Korean companies with U.S. production plants directly employ 130,000 workers, the trade association states.

Any trade policies that result in more limited market access for foreign carmakers either directly or as a result of foreign retaliation for U.S. actions, the ad implies, will ultimately hurt Americans most.

Thanks to trade and open markets, our auto industry is stronger, prouder and better than ever before, the video concludes as auto workers of diverse backgrounds raise the American flag up the pole at the foreign carmakers U.S. plants. Why would we ever want to return to a time of less competition and less choice for consumers?

Notwithstanding foreign carmakers employment of American workers, their critics lament that they have largely fought off unionization efforts and deliberately located most of their facilities in the American South, where laws and political culture are more hostile to union formation. Unionized auto manufacturing jobs at American carmakers in the Midwest typically offer higher pay and safer working conditions than their non-union counterparts in the South.

When asked about this critique, John Bozzella, president of the Association of Global Automakers, said, International auto manufacturers have invested billions in the United States to create high-paying, high-tech jobs all across the country.

In other respects, foreign carmakers are promoting a trade agenda that is similar to that of their American competitors: protecting access to international labor and supply chains in Mexico and Canada enabled by the North American Free Trade Agreement.

NAFTA has been an absolute success story for the U.S. auto industry. Theres just no question about that, Bozzella said.

What is less clear is whether carmakers, domestic and foreign alike, support NAFTA for reasons that American workers would consider positive.Thanks to the 1994 accord, U.S.-based carmakers have easier access to Canadian and Mexican consumer markets, and parts suppliers elsewhere in North America.

But in practice, it has also increased the offshoring of manufacturing jobs to Mexico, where labor costs and regulations are dramatically lower. Mexico exported $75 billion worth of vehicles to the U.S. in 2016, compared with $21 billion in vehicles the U.S. exported to Mexico, according to the office of the United States Trade Representative.

Of course, experts disagree about the net employment effects of this bilateral trade, let alone its benefits for consumers. Some 17 percent of the value of Mexican automotive exports to the U.S. comes from components, chemicals and services that originated in the United States, according to an estimate by the economic think tank Bruegel.

NAFTA has been an absolute success story for the U.S. auto industry. Theres just no question about that. John Bozzella, Association of Global Automakers

The type of NAFTA reform that Bozzella said the AGA supports involves modernization and revitalization, suggesting it would back changes to the agreement removing remaining barriers to trade, particularly in areas of the economy that did not yet exist when NAFTA was brokered.

Representatives of two major industries that benefit from NAFTA corn growers and oil producers hammered home a similar message at a May 31 event on NAFTA reform featuring Commerce Secretary Wilbur Ross at the Bipartisan Policy Center in Washington, D.C.

It works very well for us right now. You can always strengthen an agreement, said Chip Bowling, chairman of the National Corn Growers Association in remarks before Ross spoke.

Ross did his best to reassure big business interests like Bowlings that fear NAFTA reforms that could restrict access to foreign goods or markets that the Trump administration is prioritizing changes that are more likely to help them.

Bringing NAFTA up to speed with the Trans-Pacific Partnership, which would have created intellectual property protections and removed barriers to digital trade, would take precedence, Ross said. Mexico and Canada already agreed to the TPP, a 12-nation Pacific Rim trade agreement that Trump campaigned against and formally withdrew the U.S. from shortly after taking office.

There were a number of concessions to NAFTA countries made in connection with the TPP. And so we would view those as a starting point for discussion, he said.

That is likely a relief to pro-NAFTA elements of big business, but it is alarming to progressive trade skeptics who had hoped that trade reforms aimed at saving American jobs would be an area of common interest with the Trump administration. Job-saving reforms would entail making it harder to offshore production to Mexico, rather than extending its open trade channels to other sectors of the economy.

Leading liberal experts like Lori Wallach, director of Public Citizens Global Trade Watch, are already concerned that the Trump administration is content to merely turbo-charge NAFTA under the guise of repairing it, all while hoping that voters eager for change of any kind wont know the difference.

Theyd take the pieces of TPP that Mexico, the U.S. and Canada had agreed to and enact them bit by bit through the NAFTA renegotiation, Wallach warned in April.

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