WASHINGTON — The United Auto Workers union is launching a lobbying blitz to preserve a 41-year-old tariff on imported pickup trucks designed to protect market share, profits and jobs at Detroit automakers.
The controversial truck tariff has become a delicate bargaining issue for negotiators working on a new bilateral trade agreement between the United States and Thailand, a leading producer of pickups. The trade talks opened last month in Hawaii.
The truck tariff has been eliminated in other deals between the United States and key trading partners, including the North American Free Trade Agreement (NAFTA) with Canada and Mexico, and a recent U.S.-Australia trade pact.
Thailand, with low labor costs and a central Asian location, has become the world’s second-leading producer of pickups, after the United States. If the truck tariff — equal to 25 percent of a vehicle’s price — is eliminated, the UAW fears automakers will dump pickups built in Thailand in the U.S. market.
Toyota Motor Co.p., Mazda Motor Co., General Motors Corp., Isuzu Motors Ltd. and other automakers have consolidated Asian pickup production in Thailand and export trucks to Japan, China and India.
By 2010, pickup output in Thailand is expected to more than double to nearly 1 million units a year, according to Global Insight, a Massachusetts market research company.
The UAW hopes to preserve the existing tariff and safeguard 20,000 U.S. union jobs, while protecting a market long dominated by Detroit automakers.
Alan Reuther, the union’s legislative director in Washington, said the Thailand trade pact has the potential to be as devastating on auto jobs as NAFTA. In the United States, jobs at 10 pickup assembly plants and many more parts plants would be at risk, he said.
“You’ll see a flood of pickups coming in from Thailand,” Reuther said. “We’re worried about history repeating itself.”
The truck tariff, sometimes referred to as the “chicken tax,” was first imposed by U.S. trade officials on imported pickups in a trade dispute over poultry exports in 1963.
At the time, the target was Volkswagen AG. The German automaker exported a pickup, along with the Beetle, to the United States. U.S. farmers were upset with European tariffs on frozen chickens. President Lyndon Johnson also approved tariffs on potato starches and brandy.
The tariffs have discouraged imports and have encouraged Japanese automakers to build pickup trucks and now SUVs in North America.
The UAW’s lobbying efforts have paid off. A UAW-backed resolution in Congress urges the Bush administration to consider the potential loss of tens of thousands of auto jobs during the trade negotiations. It has already attracted 206 co-sponsors in the House and 36 in the Senate. The House resolution is sponsored by Michigan Congressmen Dale Kildee, D-Flint, and Sander Levin, D-Royal Oak, Carolyn Cheeks Kilpatrick, D-Detroit, and Rep. Jack Quinn, R-N.Y., and Rep. Steve LaTourette, R-Ohio.
“Globally, the market in the automobile sector is distorted by a myriad of tariff and nontariff barriers maintained by numerous major producing countries,” Kildee and other lawmakers wrote in a June letter to fellow House members. “A global problem needs a global solution.”
The Senate version of the resolution was co-sponsored by Sen. John Kerry, D-Mass., the Democratic nominee in the presidential race.
Repealing the tariff would benefit Mitsubishi Motors Corp., Isuzu and Kia Motors Co. The three Asian automakers make pickups overseas but do not have truck plants in the United States.
A repeal of the tariff has been a major goal of the American International Automobile Dealers Association, a lobbying group that represents U.S. dealers that sell Mitsubishi, Isuzu, Kia and other foreign brands.
Association President Marianne McInerney said the trade group was founded four decades ago by VW dealers to specifically lobby for a repeal of the chicken tax.
Because it’s largely open to imports that have helped lower prices and improve quality, the U.S. market is highly competitive and that has benefited U.S. consumers, McInerney said. But with the truck tariffs in place, consumers of small pickups in particular — those in the $10,000 to $15,000 price range — pay higher prices and enjoy fewer choices, she said.
“All of our members feel on principle this needs to be repealed,” McInerney said. “It’s a relic of the past that has outlived its usefulness. Most people are surprised to learn this tariff exists at all. Consumers have been shortchanged, but they are unaware of why that is.”
Detroit automakers support efforts to open markets such as Thailand, but hope negotiators also target Japan and South Korea, which remain largely closed to U.S. exports.
Steve Collins, president of the Automotive Trade Policy Council, a Washington group funded by GM, Ford Motor Co. and DaimlerChrysler AG to advance trade policies, said Japanese and Korean companies are pressuring Thailand to make the truck tariff a top issue in the talks.
“We support the goal of opening markets in each country, but this has to be handled carefully,” Collins said. “We want the U.S. to negotiate smart, to negotiate strategically and recognize the pressure on this issue is coming from abroad.”
Daniel Ikenson, a trade analyst with the Cato Institute, a Washington think tank, said the truck tariffs are 10 times higher than tariffs on imported cars, and distort the pickup market in favor of Detroit automakers.
UAW President Ron Gettelfinger, worried over the recent loss of 2.5 million U.S. manufacturing jobs, wrote President Bush in November urging the administration to take the issue off the table during the Thailand talks.
“In light of this serious ongoing problem, the UAW believes it makes absolutely no sense to jeopardize the jobs of thousands of additional manufacturing workers and their communities by permitting a surge of pickup truck imports from Thailand,” Gettelfinger wrote.
Given the sensitivity of the automotive issues, negotiations on the truck issue are unlikely to be finalized until sometime next year.
In a letter to members of Congress earlier this year, U.S. Trade Representative Robert Zoellick said the U.S. would be “sensitive to congressional concerns on automotive issues” and would consult closely with automakers and auto workers.
“Our goal is to negotiate a comprehensive free trade agreement that will provide new opportunities for American farmers, businesses and workers,” said U.S. Trade Representative spokesman Richard Mills. “We consult regularly with Congress and domestic stakeholders on sensitive issues. We work together to find and develop creative ways to address them.”
