The controversial Trans-Pacific Partnership trade deal between the U.S. and 11 other nations could spark a new wave of U.S. auto and auto parts makers fleeing to Mexico, a leading Democratic trade expert in the House is warning.
According to Michigan Rep. Sander Levin, the result would be that Americans eventually may be forced to buy "TPP cars or trucks," assembled in Mexico and largely made of foreign parts.
Levin, the top Democrat on the House Ways and Means Committee, came out in opposition to the deal last week. He said it includes no demands that Mexico let workers unionize or that it increase automaker wages above the $8-an-hour average.
His worry is that many more automakers will flee to cheaper Mexico, one of the countries in the trade pact. Levin said one Detroit company told him that closing a U.S. plant saves $300 million.
He's also upset that the Obama trade deal would open the door to China flooding the car parts industry, resulting in cars built in Mexico with mostly Chinese parts, which are cheaper. The U.S. is the biggest importer of Mexican-made cars.
If the deal succeeds, Levin said every car from Mexico should come with this notice: "This model comes with job loss as standard equipment."
Even though China is not part of TPP, that won't stop foreign companies from using cheaper parts from China. And under the deal, the percentage of homegrown parts required in products shipped into the U.S. are too low, said Levin.
During a media breakfast sponsored by the Christian Science Monitor last week, he said:
"The rules of origin define the content that is required to come from TPP countries in an auto or auto part in order for the final items to receive preferential treatment, i.e. lower tariffs, when they are sold in other TPP countries. The risk to auto suppliers, steel producers, and other manufacturers thoughout our country is just too high under the negotiated text, which significantly lowers the content requriements under NAFTA.
"We should not be opening the door to inputs from China, Thailand and other low wage countries -- wheather they flow through production in the U.S. or more likely in Mexico, where they will further drive down the cost of production and encourage the loss of additonal U.S. jobs. In other words, U.S. consumers could find themselves drivving TPP cars or trucks with over half of their parts by value made in China or elsewhere and the vehicle itself assembled in Mexico."
Paul Bedard, the Washington Examiner's "Washington Secrets" columnist, can be contacted at email@example.com.