Transcript Document
GLOBALIZATION The Aftermarket’s Economic Opportunity Eliminating Trade Barriers The following is a excerpt from a presentation by AAIA CEO Kathleen Schmatz. For the purpose of this course, comments have been added to the notes pages by your instructor Guideposts • – Trade liberalization always helps expand the global trade pie for aftermarket trade and all trade. – At the micro level, firms, workers and consumers are demanding competition and choice. General Agreement on Tariffs and Trade (GATT) – U.S. led in creating the General Agreement on Tariffs and Trade (GATT) --today known as the World Trade Organization (WTO) – following World War II. – Gave the shattered European and Japanese economies huge concessions. – Opened the vast U.S. market. – Global trade and consumer welfare increased. Global Trade Liberalization • Global Trade Liberalization has continued: – 1963: Kennedy Round – 1979: Tokyo Round – 1994: Uruguay Round – 2001: Doha Development Round began Successes and Challenges • Each time trade was liberalized – trade expanded and consumers benefited. • 1994 Round Successes: – – – – Cut European parts tariffs more than 40% U.S. car and parts tariffs were trimmed to 2% Domestic Content was banned. Intellectual Property Rights (IPR) was protected. Successes and Challenges (cont.) • 1994 Round Challenges – Developing Countries conceded little market access. – U.S. light truck “tariff peak” of 25% remained. – EU heavy duty truck tariffs remained high. 2001 Doha Round • 2001 Doha Development Round – Aftermarket sought to build upon successes, reducing tariff and non-tariff barriers. – 2001 – Congress renewed Trade Promotion Authority (TPA). – Gave President “fast-track” authority to negotiate deals –with Congressional input – but requires straight up or down, no-amendment, Congressional vote on final deal. – Parts trade expansion was named a primary objective for WTO talks. 2001 Doha Round (cont.) • Clock Running on Stalled Doha Round – Fast-track authority runs out July, 2007. Renewal faces a bruising battle and uncertain fate. – Doha and pending bilateral free trade deals need to be approved by then. High Stakes Involved • The University of Michigan estimates a successful Doha Round, leading to the elimination of all barriers could add: – 6.3% to annual European GDP; – 6.2% to Japan’s GDP; – 5.5% to America ’s GDP. The EU’s Hefty “Brie Tax” • France’s protected farm lobby has blocked EU agriculture trade concessions needed for Doha progress. • The EU’s 457 million consumers stand to lose $800 billion in annual GDP growth – that’s about $1,800 each. • Each of France’s 400,000 farmers is creating a $2 million “Brie tax” – or drag – on EU growth potential. High Stakes Involved (cont.) • The World Bank estimates that full trade liberalization could boost Developing Countries’ incomes by $259 billion in 2015. • The resulting income and wealth creation is needed to sustain future growth in vehicle and aftermarket consumption.