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dent Trump and his
counterparts in November
2018, is still awaiting approv-
al from the U.S. Congress.
The White House has touted
the new production rules for
the auto sector as one area of
the deal that’s most benefi-
cial to the U.S.
But the companies, law-
makers and even the U.S. In-
ternational Trade Commis-
sion in an economic analysis
have cautioned that the
rules are so strict that they
would result in higher car
prices and lost sales.
The push comes amid
Trump’s tariff-led assault on
supply chains that run
through China. It illustrates
how much his administra-
tion has drifted from Repub-
licans’ free-market ways and
is willing to employ the sort
of coercive tools used in
command economies such
as China to force domestic
production.
It’s also happening as the
president’s tariffs on steel,
aluminum and imported
components from China
have contributed to a slow-
down in American
manufacturing that has be-
gun to cause the loss of fac-
tory jobs in some politically
important swing states go-
ing into Trump’s 2020 reelec-
tion bid.
The negotiations over
auto rules are taking place in
parallel with discussions
U.S. Trade Representative
Robert Lighthizer is having
with House Democrats on
changes the lawmakers are
seeking to the new USMCA
trade agreement.
Officials from Lighthiz-
er’s office for months have
been meeting with auto in-
dustry executives to talk
through the companies’
transition plans. Those
would allow for a grace pe-
riod of as many as five years
before they have to comply
fully with the new rules in or-
der to ship products across
North American borders
duty-free.
The agreement the three
countries have signed refers
to these transition plans as
an “alternative staging re-
gime” that each nation can
apply on a producer-by-pro-
ducer basis, giving the U.S.
trade representative wide
discretion to treat one com-
pany better than another.
People familiar with the
discussions say the lan-
guage gives the White House
a chance to abuse the transi-
tion-plan approval process
to pressure companies into
making politically expedient
investments. To avoid an
opaque process ripe for
meddling by politicians,
auto companies and Con-
gress are asking the U.S.
trade representative to com-
mit to uniform rules so they
can plan accordingly and
don’t have to fear retribution
for opening a plant in Mexi-
co, for instance, instead of
the U.S.
A spokesman for
Lighthizer didn’t respond to
a request for comment.
There’s precedent in the
Trump administration for
treating one company differ-ently from another in its
trade battles. Apple Inc., for
example, got multiple tariff
reprieves after Chief Execu-
tive Tim Cook personally
asked the president to ex-
clude some of its products
from the wide-ranging du-
ties he imposed against im-
ports from China.
Another worry, the peo-
ple said, is how the White
House would treat compa-
nies participating in con-
tentious litigation on Cali-
fornia emissions rules. The
industry is split on the mat-
ter, with General Motors Co.,
Toyota Motor Corp. and Fiat
Chrysler planning to side
with the Trump administra-
tion over their rivals.
The car industry has
been publicly supportive of
USMCA and is lobbying for
swift approval — mainly for
the sake of much-needed
certainty in an environmentthat has been clouded by
Trump’s multiple threats to
withdraw from the existing
NAFTA. An exit from that
deal would leave more than
$1 trillion in annual trade
among the three countries
hanging in the balance.
But compliance with
USMCA is much more diffi-
cult for auto companies be-
cause of the more stringent
rules that govern whether a
car or auto parts qualify as
made in North America and
can cross borders without
tariff.
Under the deal, 75% of a
car has to be made in the
three countries to qualify. It
also needs to contain 70% of
North American steel and
aluminum, and 40% of a ve-
hicle has to be made in
plants with an average wage
of $16 an hour or higher. The
last part, in particular, is in-
tended to shift more produc-tion and investment to the
U.S. and away from Mexico.
In April, the U.S. trade
representative’s office tried
to preempt an independent
economic analysis of the
deal by releasing its own
“white paper” focused on the
automotive sector.
The office said then it saw
the new NAFTA leading to
$34 billion in auto invest-
ment. Many of those invest-
ments, however, had been
decided on long before the
deal was finalized.
A senior official for the
U.S. trade representative
said in April the Interna-
tional Trade Commission’s
auto estimates were less
positive than its own be-
cause the commission did
not have access to privileged
commercial information au-
tomakers had shared with
the administration.
The wrangling over lan-guage on the auto rules
shows that even if Lighthizer
and House Democrats reach
an agreement on fixes to
USMCA soon, the adminis-
tration is still facing an up-
hill battle in getting support
for its demands in the legis-
lation going before Con-
gress, called an implement-
ing bill.
Republican lawmakers
and administration officials
are worried that time is run-
ning out to get the deal voted
on this year, people briefed
on the internal deliberations
said.
House Speaker Nancy
Pelosi (D-San Francisco)
and labor leaders have con-
sistently reiterated that the
substance of the agreement
is more important than
when it gets done.Leonard writes for
Bloomberg.Trump wants to set car production rules
APPLEgot reprieves from tariffs on products from China after Chief Executive Tim Cook, left, met with President Trump in March.Saul LoebAFP/Getty Images[Auto rules,from C1]