The past two years have delivered a strong message about global interdependence. As we’ve discovered, a virus spreads swiftly around a planet linked by air travel and cross-border tourism. Supply chain disruptions in one nation cause ripple effects worldwide. An unprovoked war in a single region has untold consequences everywhere.
And in an interconnected economy, we depend on each other to sustain our livelihoods. The old conceptions of a local company and foreign competitors have broken down. To strengthen relationships with allies and forge new opportunities for market access around the world, the Biden administration needs to pursue trade policies that enable manufacturers to continue investing in America.
Consider the international automakers that have become an ever-growing presence in the U.S. Companies such as BMW, Honda, Hyundai, Kia, Mazda, Mercedes-Benz, Nissan, Subaru, Toyota, Volkswagen and Volvo are building cars Americans want, exporting products from the U.S. to valued trading partners around the globe and generating attractive and rewarding career opportunities right here at home for American workers.
International automakers account for 47 percent of all vehicles produced in the U.S. and 55 percent of all-new vehicle sales. What’s more, international automakers are responsible for $22 billion in annual vehicle exports: More than 650,000 of our U.S.-built vehicles each year reach consumers in 135 countries and territories. Many of those exports are supported by U.S. free trade agreements.
While those stats are impressive, there is far more we can do. But it requires a stronger commitment from the Biden administration. Specifically, the president must pursue policies that strengthen U.S. manufacturing and enhance trading partnerships with U.S. allies without picking who gets to benefit here at home. This is the route to growth in the U.S., especially in communities all too often left behind.
Empowered by the right policies, international automakers will continue to lead the charge toward prosperity for all. Already, more than 500 facilities operated by international automakers pepper the U.S. landscape, from Alabama to Ohio to California. Together, these manufacturing, assembly, R&D and other facilities represent nearly $100 billion in investments and along with their supplier and dealer networks generate 2.1 million American jobs and counting.
Over the past 25 years, production volume by international automakers has increased 82 percent. The upward trajectory can continue, bringing more opportunities into more communities. But the direction over the next quarter century will depend on decisions that the Biden administration makes today.
For example, President Joe Biden and his administration are engaging with international partners on the Indo-Pacific Economic Framework for Prosperity. The U.S. is striving to remain competitive in a rapidly transforming region as other countries negotiate agreements that leave the U.S. on the sidelines. At a minimum, any framework agreement must open the Indo-Pacific market and create opportunities for manufacturers in America to import materials necessary to build in America and export products overseas.
Additionally, it’s disappointing to hear comments from U.S. Trade Representative Katherine Tai that “no one is focused on tariff cuts” at this point in negotiations. Reducing tariffs will lower the cost of goods for American consumers and domestic manufacturers, so it should be a top priority from the outset.
The administration should also look to harmonize automotive technology industry standards and eliminate nontariff trade barriers to help streamline two-way trade. This should include pursuing outcomes that expand on the World Trade Organization’s Trade Facilitation Agreement, helping to ease logistical impediments and the free flow of goods and services. Accelerating key provisions of the agreement and bringing customs procedures into the 21st century would help move goods across borders more quickly. While supply chains remain constrained, it is crucial the administration works to remove these barriers and steers clear of any provisions that would further delay or inhibit the free flow of goods to American manufacturers and consumers.
Finally, previous trade agreements are not necessarily a blueprint for future ones.
The Indo-Pacific region has its own characteristics and presents its own set of opportunities, so the administration must recognize this framework will require a new model that helps address unique challenges and benefits for a positive relationship in the region.
Every day, the world becomes more interconnected. It’s time to recognize our interdependence and reflect in federal policies our shared values of expanded opportunity, community investment and environmental stewardship. International automakers have a vital role to play in the nation’s economic recovery and long-term success, but only the right policies and relationships will make it possible.
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