Ford Motor Company announced this week that it will close all operations in Japan and Indonesia this year, because it sees "no reasonable path to profitability." Last year GM pulled out of Indonesia. What does it say that they are doing this with the Trans-Pacific Partnership (TPP) on the horizon?
Ford is giving up on trying to crack the Japanese and Indonesian automobile markets, saying that the upcoming TPP does not address such problems as currency manipulation and other non-tariff barriers. the BBC reported, in "Ford pulls out of Japan and Indonesia":
In 2015, Ford sales accounted for just 0.1% of the Japanese market and only 0.6% in Indonesia.
In a statement, Ford spokesman Neal McCarthy said: "Japan is the most closed, developed auto economy in the world, with all imported brands accounting for less than 6% of Japan's annual new car market."
The 12-nation Trans Pacific Partnership trade agreement in its current form would not improve Ford's ability to compete there, he added.
Sen. Sherrod Brown (D-Ohio) also blamed TPP. The Hill reports in, "Dems blame trade deal as Ford exits Japan":
“The TPP’s lack of any meaningful currency protections means that it will be more of the same.” We need our government to fight for companies in the global marketplace in the same manner as some other countries do. This business decision by Ford is further evidence of the impact of unfair currency manipulation.”
"The ink isn’t even dry and we are already seeing proof that this massive agreement will sell out American workers and roll back the remarkable recovery of our auto industry," Brown said.
Rep. Debbie Dingell (D-Mich.) joined Brown:
Dingell said that "this business decision by Ford is further evidence of the impact of unfair currency manipulation.”
"Until our trade agreements meaningfully address currency manipulation, the mother of all trade barriers, American companies will continue to be threatened and disadvantaged by foreign governments who attempt to tilt the global playing field in favor of their industries and against the United States," Dingell said.
In fact Steve Biegun, Ford's vice president of international government affairs, said TPP would "lock in" our auto trade deficit:
"By our assessment, this TPP would lock in place a $50 billion annual auto trade deficit with Japan," he said at a hearing held by House Ways and Means Committee Democrats on Jan. 7.
"We do not expect that any global automaker will meaningfully increase exports to Japan as a result of this TPP agreement," he said.
TPP Opens U.S. Market While Not Helping U.S. Carmakers In Other TPP Countries
With U.S. automakers giving up on selling into TPP countries because of barriers that TPP does not address, TPP still opens up the U.S. market to even more Japanese cars. On top of that, it opens up the "country of origin" requirements for calling these car "Japanese" even if they are more than 50 percent made in or up to 65 percent made with parts from China.
TPP also does not include currency provisions that would be subject to TPP's dispute settlement provisions. Instead there is a "side agreement" in which countries basically agree to have discussions. But in November, right after TPP was completed, Japan's finance minister said that the TPP will not change Japan’s currency practices.
What does this mean? It is likely that if TPP passes, the U.S. will be swamped by Japanese cars with parts and manufacturing in China. Both countries hold their currency rates artificially low, which means things made or done there cost less than things made or done here. So, they get the business and we don't.
TPP is sold to us as good for jobs, exports, manufacturing, etc. It supposedly "opens up new markets." But a closer look reveals that TPP is clearly a continuation of our country's deindustrialization policy, intentionally transferring jobs out of the U.S. The idea of "free trade" is to enable giant corporations to move jobs out of the country to places where wages and environmental protection costs are very low, so shareholders and executives can pocket the difference. This also forces workers here to compete for the remaining jobs, driving wages here down as well.
TPP is also sold as "confronting China" by "writing the rules," but its loosened "country-of-origin" rules do the opposite. After the U.S. enabled mass imports from China we lost more than 50,000 factories and 5 million manufacturing jobs. Now TPP opens up the auto and other industries to China. Again, this is about deindustrialization, driving wages down and breaking unions, all so a few already-wealthy can pocket the difference.
Call your representative in Congress and your senators and let them know that you are watching to see how they vote on the TPP.