0719DOC Section 232 - United States Department Of

121and from the public was issued a week later on2May 30th.3comments.And we have received more than 2,3004Thank you all for being engaged with5us in our formal investigation into the state of6the U.S. automobile and automotive parts7industries and the industry's impact on national8security.9this investigation will ultimately result in a10Section 232 recommendation on national security11grounds, as we did earlier with steel and12aluminum, and as we have initiated regarding the13uranium industry.14It's clearly too early now to say ifBut President Trump does understand15how indispensable the U.S. automobile industry16is.17innovation.18industrial economy.19Americans with high-paying jobs.20industry is central to the advancement of new21technologies such as autonomous vehicles, fuel22cells, electronic motors, battery storage,This industry had been a major driver of(202) 234-4433It provides a backbone for ourIt supports millions ofNeal R. Gross and Co., Inc.Washington DCAnd thewww.nealrgross.com

131composites, and other new materials and advanced2manufacturing processes.3The intention of our hearing today is4to gather information on the current strength of5the domestic industry.6hearing about the global market and technology7trends that are important to our assessment as to8whether government action is required to assure9the viability of U.S. domestic production andWe are interested in10whether present conditions constitute a potential11threat to our national security, as defined in12Section 232 of the Trade Expansion Act of 1962.13We are carefully analyzing all of the14information that you are providing and that our15analysts are gathering from other sources.16are looking at every comment that has been filed.17We need to understand the complexity of the18industry, the global nature of supply chains and19production systems.20WeSo, I look forward to a very21productive day and suggest we now begin with the22first panel.(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

1412MS. NIKAKHTAR:Thank you, Mr.Secretary.3I also just wanted to take a quick4opportunity to mention some of the other leaders5at the Department of Commerce who are here.6Peter Davidson, the Chief Counsel at the Commerce7Department.8Secretary Gil Kaplan for the International Trade9Administration.He is sitting upfront.UnderAnd I think I saw Gary Taverman,10Acting Assistant Secretary for Enforcement and11Compliance, and numerous other leaders from both12the Department of Commerce and other government13agencies, taking the time to join us today.14This is truly a collaborative effort15among agencies of the industry to conduct this16investigation and to share the information we all17have to ensure that our analysis is robust.18Now I would like to turn it over to19Sahra Park-Su, the Senior Policy Advisor at the20U.S. Department of Commerce, and she will be21serving today as our hearing moderator.22call Sahra up to explain the hearing process for(202) 234-4433Neal R. Gross and Co., Inc.Washington DCAnd I'llwww.nealrgross.com

151today.2Thank you.3MS. PARK-SU:4Good morning.Thankyou, Nazak.5And thank you, Secretary Ross, for6being with us today as we hear from various7groups and stakeholders as they present their8testimony on the effect of imports of automobiles9and automotive parts on our nation's security.10Before we begin, I would like to go11over a few administrative rules for both our12presenters and the audience.13For the presenters, each panel will14present their testimony in the order as it15appears on the agenda.16state your name and the organization you17represent.18present your testimony.19you have one minute remaining by raising a green20card; 30 seconds remaining when I raise the21yellow card, and when your time is up, I will22raise a red card.(202) 234-4433When you begin, pleaseYou will each have five minutes toI will inform you whenPlease do not go over yourNeal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

161allotted five minutes, as we hope to allow equal2time for all who are here to testify today.34Please note, no outside equipment suchas cell phones is allowed during our testimony.5Oh, I'm sorry, can everybody hear me?6Please note, no outside equipment such7as cell phones is allowed during your testimony.89Once the entire panel has providedtheir testimony, there will be an opportunity for10the United States Government panelists to seek11clarification on specific points you have raised12or seek further insights into your areas of13expertise as it relates to this hearing.14Now, for the audience, due to time15constraints, we will not be taking any questions16from the audience.17quiet and turn your cell phones to silent mode or18off during the testimony.19refrain as much as possible from entering and20exiting the auditorium during the testimony.21There will be brief pauses between panels, and we22encourage you to use it if you must enter or exit(202) 234-4433We also ask that you remainWe ask that youNeal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

171the auditorium.2you leave the building complex for whatever3reason, you will need to pass through security to4re-enter the complex.5Lastly, please remember that ifNow, at this time, would the United6States Government panelists and the presenters7for the first panel please come up and take your8seats?9For the first panel, we welcome the10Alliance of Automobile Manufacturers, Jennifer11Thomas; American Automotive Policy Council,12Governor Matt Blunt; the National Automobile13Dealers Association, Peter Welch, and the14National Association of Manufacturers, Linda15Dempsey.16Good morning.17Can you hear me?18Ms. Thomas, you may begin.19MS. THOMAS:20MS. PARK-SU:Yes, I can.21MS. THOMAS:Good morning.22Welcome.Great.Can you hear me?Thank you.My name isJennifer Thomas, and I am the Vice President of(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

181Federal Government Affairs at the Alliance of2Automobile Manufacturers.3association comprised of 12 automakers, both4domestic and international nameplates.5appreciate the opportunity to be here with you6today.7We are a tradeILet me start my dispelling the notion8that cars are a threat to national security.9Americans have always had a love affair with10cars.11that it has become part of the American dream.12Getting your driver's license is a rite of13passage, and everybody can remember their first14car.15Buying the car is such a common aspirationThe auto industry is part of the very16fabric of America.17engines driving our economy through jobs,18facilities, R&D investments.19darkest days, the companies that I represent20immediately responded with donations of vehicles21and charitable contributions.22It's one of the most powerfulOn 9/11, one of ourNow, sadly, there is a long list of(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

191products that are no longer made here in America,2like TVs, laptops, cell phones, even baseballs,3but cars, millions of cars, are made in America,4and our footprint continues to grow.5Right now, 14 automakers are operating645 assembly facilities across 14 states.Those7are both domestic and international automakers.8We support more than 7 million American workers,9generate 500 billion in annual paychecks, 20010billion in state and federal taxes, and every11year automakers in the U.S. invest about 2012million in R&D, transforming mobility through13automation and electrification.14I'm here today to reiterate our strong15opposition to this unprecedented, unwarranted16investigation and the potential imposition of17higher auto tariffs.18strengthen our trade agreements to better achieve19a level playing field, but tariffs are the wrong20approach.21comments that were filed before this hearing.22fact, we were only able to find three(202) 234-4433We appreciate the desire toOur view is shared by over 2200Neal R. Gross and Co., Inc.Washington DCInwww.nealrgross.com

201organizations who were supporting this inquiry.2The opposition is widespread, indeed,3because the consequences are alarming.4tariffs will harm American workers, families, and5the economy.6massive tax on consumers.7HigherSimply put, auto tariffs are aOur analyses show that a 25-percent8tariff will increase the price of an imported car9nearly 6,000 and the price of a U.S.-made car10 2,000.11MS. BAMBAS:I'm getting a signal that12the audience is having a little bit of a hard13time hearing.14little louder, please, for the folks in the back?If you don't mind speaking a15MS. THOMAS:Sure.16MS. BAMBAS:Appreciate it.17MS. THOMAS:My apologies.18MS. BAMBAS:Thank you very much.19MS. THOMAS:This would equate to an20 83 billion tax on consumers, and that would21trigger a domino effect throughout the industry22and the economy.(202) 234-4433Because when vehicle pricesNeal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

211rise, demand drops.2production.3losses follow.4Lower demand means lessAnd when production declines, jobA Peterson Institute analysis projects5the job loss of 200,000, and if other countries6retaliate, they estimate American job losses to7exceed 600,000.8country's auto jobs.9That's about 10 percent of thisTariffs will also strike at the heart10of American technological leadership by chilling11R&D investments.12the global race to develop electrification and13automation technologies.14raise costs and chill investments, then the U.S.15may well lose that leadership.16countries are already chasing automakers'17investments and encouraging them to build R&D18facilities overseas.19Today the U.S. is a leader inBut, if auto tariffsAnd otherRetaliation would further threaten20U.S. auto exports.21billion in autos and auto parts were exported22from our ports to more than 88 countries.(202) 234-4433Last year more than 100Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

221Retaliatory tariffs would restrict access to2international markets, depress auto exports,3reduce jobs, and threaten the industry's4competitiveness in the global marketplace.5Speaking of competition in the global6market, we understand that the agency has sent7detailed questionnaires to automakers requesting8information about their production.9are working on responding, but it is challengingCompanies10due to the highly sensitive information that's11been requested.12take critical precautions to ensure that this13competitive business information remains14confidential and secure.15We urge the Administration toIn closing, automakers support the16Administration's efforts to level the playing17field and strengthen our trade agreements to grow18American jobs.19there is a better way to do this than raising20tariffs.21strengthened by modernizing NAFTA, concluding a22US/EU trade pact to reduce trade barriers on both(202) 234-4433But we respectfully contend thatOur economic security could beNeal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

231sides of the Atlantic.And we encourage the2Administration to seek other opportunities to3expand market access for exports.4winning formula for continuing the economic5success that the Trump Administration has6reignited, and we look forward to partnering with7you on our goals.8Thank you very much.9MS. PARK-SU:This is theThank you, Ms. Thomas.10Governor Blunt?11MR. BLUNT:12I'm Matt Blunt.Well, thank you.I'm the President of13AAPC, the American Automotive Policy Council,14which represents the common public policy15interests of Fiat Chrysler, or FCA, Ford, and16General Motors.17opportunity to share our views on this Section18232 investigation.19We want to thank you for thisWhile AAPC and its member companies20share the Administration's goals of maximizing21the economic contributions that America's auto22sector makes to the U.S. economy, we are opposed(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

241to any increase in import tariffs on automobiles2and auto parts that could result from this3investigation.4Through iconic brands and deep5American roots, FCA, Ford, and GM produce more of6their vehicles here in the U.S. and source more7of their parts from American suppliers than our8foreign competitors.9GM employ near two out of three American autoAs a result, FCA, Ford, and10workers, and they operate three out of five auto11assembly plants in our country.12Since the industry's restructuring a13decade ago, FCA, Ford, and GM have thrived with14significant growth in their investment, sales,15production, exports, and employment.16past decade, FCA, Ford, and GM's domestic car and17light truck production and sales share have held18steady at about 53 percent and 45 percent,19respectively.20production number increase through expanded21access to export markets and the removal of trade22barriers that place American-made vehicles at a(202) 234-4433Over theAnd we hope to see our U.S.Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

251distinct disadvantage in key regions around the2world.3President Trump and his Administration4have clearly made the auto industry a priority,5and we are thankful for this leadership in policy6areas that are critical to the auto industry,7including successful corporate tax reform.8are, however, very concerned that the positive9effects of the Administration's policies could be10undermined by the imposition of tariffs on11imported vehicles and parts.12WeOur companies are extremely proud of13the contributions they've made to the United14States in peace and war.15there is no evidence that automotive imports pose16a threat to our national security.17we believe there is sufficient capacity to meet18any national security requirements.19understand that economic security is a vital part20of our nation's national security.21have concluded that tariffs under Section 23222would diminish the economic contributions that(202) 234-4433From our perspective,Neal R. Gross and Co., Inc.Washington DCIn addition,We do fullyIn fact, wewww.nealrgross.com

261FCA, Ford, and GM make to our nation's economy2today.3counterproductive to the Administration's4intended goals for the domestic auto industry.And this is an outcome that would be5Our analysis shows that a tariff6increase under Section 232, coupled with the7existing tariffs on imported steel and aluminum,8including from our North American allies, will9result in a net loss of American jobs, lower10capital investment, and lower exports by the U.S.11auto sector.12manufacture a car, the tariffs will lead to13higher vehicle prices for all automakers, foreign14and domestic.15lead to lower demand and lower auto sales and16production.17fewer jobs in the auto industry.18By increasing the cost toThese higher costs will, in turn,And ultimately, this will lead toOur analysis also shows that America's19automakers, along with their suppliers and20strategic partners in the technology industry,21are leading the way in the development and22application of advanced vehicle technologies,(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

271including cutting-edge EV and AV capabilities.2Other countries are attempting to close the3innovation gap by increasing their R&D4investments, but, thanks to targeted investments5by the U.S. Government, the automotive sector,6academia, and the tech industry, as well as the7unparalleled innovation environment in the United8States, we have created a strong foundation for9further advancements and leadership in the coming10years.11To help ensure a bright future for the12U.S. auto sector, while at the same time avoiding13the negative, unintended consequences of higher14tariffs, we strongly recommend a joint15industry/government effort to support our global16competitiveness and expand U.S. auto exports.17accomplish this, we, too, urge the swift18completion of a modernized NAFTA that includes,19among other improvements, acceptance of vehicles20built to the U.S. auto safety standards and21enforceable disciplines against currency22manipulation.(202) 234-4433ToWe also urge the Administration toNeal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

281consider new free trade agreements with our2allies while expanding U.S. auto export3opportunities by knocking down trade barriers our4American automakers currently face abroad.5These suggestions, as well as several6other recommendations, are described in further7detail in the written comments AAPC submitted on8behalf of America's automakers.9consider the analysis set forth in our written10submission, and we look forward to working with11the United States Government to advance our12shared goals of further strengthening the U.S.13auto industry and our nation's economy.14Thank you.15MS. PARK-SU:16Mr. Welch?17MR. WELCH:We urge you toThank you, Mr. Blunt.Thank you, and good18morning.19President of NAD, the National Automobile Dealers20Association.21franchise automobile and commercial truck22dealers, representing both domestic and(202) 234-4433My name is Peter Welch.I'm theNAD represents more than 16,800Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

291international brands that sell new and used motor2vehicles, engage in service, repair, and part3sales throughout the United States.4Last year our dealer members sold 17.15million new cars and an additional 15.3 million6used cars.7million Americans in well-paying jobs and are8responsible for at least that many indirect jobs9through suppliers, contractors and others.10In the aggregate, we employ over 1.1Franchise dealers are retailers.11stock, sell, and service what the American12consumers want to buy, own, drive, and, more13importantly, what they can afford.14TheyI would like to share with you today15a new study that was released this morning, in16fact, by the Center for Automotive Research that17we commissioned.18to the written version of my testimony, and I19suggest that you look at it and use it as a20resource.2122A copy of the study is attachedBut, before I turn to the new study,I would like to reiterate two important issues(202) 234-4433Neal R. Gross and Co., Inc.Washington DCwww.nealrgross.com

301that were covered in our written comments.2First, NAD believes there is no basis for a3finding by the Department that the importation of4autos or auto parts to the United States5threatens the country's national security.6S

Association JENNIFER KELLY, UAW YONG-GEUN KIM, Korean Automobile Manufacturers Association MUSTAFA KOCA, The Government of Turkey CODY L. LUSK, American International Automobile Dealers Association MNINWA MAHLANGU, The Government of South Africa MANUEL MANRIQUEZ, Ja