Trump NAFTA demands could have unintended effects

Keith Laing, Detroit News Washington Bureau
Published 9:40 p.m. ET Oct. 17, 2017

Washington — A Chrysler Pacifica built in Canada could be hit by tariffs when shipped to the United States under a contentious proposal from the Trump administration in negotiations over the North American Free Trade Agreement.

U.S. negotiators proposed increasing the minimum percentage of parts that must be made in the U.S., Canada or Mexico — from 62.5 percent to 85 percent — in order to escape tariffs when imported to this country. And they want to require that 50 percent of parts must come from the U.S.

That would mean the Pacifica and several other vehicles made by Detroit carmakers could be hit by import taxes when sent here. Only 44 percent of the components of the Pacifica — which is built in Windsor — originate in the U.S., according to a study conducted by American University. And industry observers say the demands could raise the price of cars and actually drive production offshore by causing carmakers to just pay the tariff and shift production to countries with lower labor costs.

Canada and Mexico this week rejected what they see as a hardline proposal, and pushed the time frame for resolving differences into 2018. The next round of talks take place in Mexico on Nov. 17-21.

“We have seen proposals that would turn back the clock on 23 years of predictability, openness and collaboration under NAFTA,” Canadian Minister of Foreign Affairs Chrystia Freeland said Tuesday in a press conference at the conclusion of the latest round of negotiations in Arlington, Va. “In some cases, these proposals runs counter to (World Trade Organization) rules. This is troubling.”

Mexican Secretary of Economy Ildefonso Guajardo Villarreal added: “In order for this effort of the United States, Canada and Mexico to be fruitful, we must understand that we all have limits.”

U.S. Trade Representative Robert Lighthizer said he was “surprised and disappointed by the resistance to change by our negotiating partners.”

“NAFTA has resulted in a huge trade deficit for the United States and has cost us tens of thousands of manufacturing jobs,” Lighthizer said. “The agreement has been come very lopsided and need to be rebalanced.”

A 50 percent requirement for domestic content would trigger import duties not just for the Pacifica, but for the Ford Fusion, which is built in Mexico with 48.5 percent of its parts coming from U.S. A GMC Terrain built in Mexico with 43 percent of its parts coming from the U.S. also would also face tariffs if it was sold domestically.

But a Toyota Tacoma — which is built in Mexico and in Texas with 52.5 percent of its parts coming from the U.S. — would clear the threshold.

Paul D. Ryan, vice president of trade and competitiveness for the Washington, D.C.-based Association of Global Automakers, which lobbies for international carmakers, said the Trump administration’s demands are “unprecedented, and I think they’re both unrealistic and unworkable.”

“I don’t think it’s anything our trading partners could accept,” he said.

Assessing ramifications

Renegotiating NAFTA was central to President Donald Trump’s campaign as he promised to bring back jobs, especially in auto-dependent states in the Midwest. NAFTA was enacted in 1994 to create a free-trade zone between the U.S., Mexico and Canada.

Trump vowed to end the trade pact with Canada and Mexico, and slap a 10 percent to 35 percent tariff on vehicles and parts made in Mexico that are imported into the U.S. That could add $5,000 to $15,000 to sticker prices.

Critics have noted Mexico will continue to be attractive to automakers because it has free-trade agreements with more than 40 countries that are separate from NAFTA. Additionally, they note the U.S. has most-favored nation status with all 164 countries that are members of the World Trade Organization, including Mexico, Canada and China, which limits tariffs on most traded goods to 2.5 percent.

Kristin Dziczek, director of the Industry, Labor and Economics Group at the Center for Automotive Research in Ann Arbor, said the Trump administration’s latest demands could push more auto companies into claiming most-favored nations status, meaning they would pay only a 2.5 percent tariff for cars imported from Canada and Mexico if they fall under the 50 percent threshold. Automakers, she said, are not going to move production to the United States unless the cost of doing so is less than paying a 2.5 percent tariff.

Then there’s the “chicken tax.”

Without NAFTA, pickups and SUVs built in Canada or Mexico and then sold in the U.S. would be subject to a 25 percent duty imposed by former President Lyndon Johnson in response to tariffs by France and West Germany on U.S.-raised chickens.

Dziczek said the higher tariffs for pickups and SUVs could force automakers to be more creative in their vehicle designation. She noted that crossovers have already blurred the lines between SUVs and passenger cars.

“A 25 percent tariff is going to make you think about how to get around it,” Dziczek said.

Dziczek said auto companies claimed NAFTA’s duty-free treatment for 99.5 percent of the cars that were imported from Canada and 99.7 of the vehicles that were imported from Mexico in 2016.

She said the proposed changes to NAFTA could put U.S. auto companies at a disadvantage against global competitors.

“Every vehicle that is traded in the world has a portion of that car that is done in a low-cost, or some would say best-cost, country,” she said. “If you’re competing in a global market and you don’t have a low-cost or best-cost country, you’re going to be at a disadvantage.”

‘Self-sabotage’?

Alan Deardorff, professor of public policy and economics at the University of Michigan, said it’s not clear how Trump’s NAFTA proposals will impact employment in the U.S.

He noted automakers would be free to import cars cheaply from other U.S. trading partners, except in the case of light trucks that would face higher tariffs due to U.S. trade law.

“If they are no longer trying to qualify for preferential tariffs, they might as well import parts from China,” Deardorff continued.

Linda Lim, professor emeritus of strategy at the University of Michigan’s Ross School of Business, said the Trump administration may be trying to “self-sabotage” the NAFTA talks with its strident domestic-content proposals.

“What’s really happening is the Trump administration is not very enthusiastic about NAFTA,” she said. “One thing they can do is make demands that are so extreme they kind of self-sabotage. I’m not saying that’s what they’re doing definitively, but it’s quite ridiculous to suggest such a high local percentage.”

Domestic content

These cars built in Canada or Mexico by Detroit carmakers would face tariffs on U.S. sales under the Trump administration’s NAFTA proposal (U.S. content figures are from an American University study):

■Cadillac XTS, assembled in Canada, 49 percent U.S. content

■Ford Fusion, assembled in Mexico, 48 percent U.S. content

■Chrysler Pacifica, assembled in Mexico, 44 percent U.S. content

■GMC Terrain, assembled in Mexico, 43 percent U.S. content

http://www.detroitnews.com/story/business/autos/2017/10/17/trump-nafta-demands-unintended-effects/106752830/

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Carmakers rattled by Trump NAFTA demands

Keith Laing, Detroit News Washington Bureau
Published 6:52 p.m. ET Oct. 16, 2017

Washington — Automakers are raising concerns about the future of the North American Free Trade Agreement after the Trump administration proposed increasing the required percentage of domestic parts in cars to qualify for duty-free treatment.

The proposal, which emerged in talks with Canada and Mexico in Washington over the weekend, calls for increasing — from 62.5 percent to 85 percent — the minimum percentage of parts that have to made in the U.S., Canada or Mexico in order to escape tariffs. The administration has also proposed instituting a new requirement that 50 percent of parts must come from the U.S. directly.

Jennifer Thomas, vice president of federal affairs at the Alliance of Automobile Manufacturers, which lobbies for automakers, said the proposal is not likely to have its intended effect of increasing U.S. jobs.

“This is an onerous proposal that is unprecedented, especially with the domestic content requirement,” she said. “We strongly believe this is going to have an adverse effect. It’s going to lead to a decrease in production, a decline in jobs and an increase in cost to consumers. A lot of companies are going to forgo the NAFTA benefit and just pay the tariff, so you’ll see a shift in production to other locations.”

Renegotiating NAFTA was a central tenet of Trump’s campaign as he promised voters to bring back jobs, especially in auto-dependent states in the Midwest. NAFTA was enacted in 1994 to create a free-trade zone between the U.S., Mexico and Canada.

On the campaign trail, Trump said he would end the trade pact with Canada and Mexico and slap a 10 percent to 35 percent tariff on vehicles and parts made in Mexico that are imported into the U.S. if NAFTA renegotiation is not a success. That could add $5,000 to $15,000 to the price of a car. Some domestic vehicles assembled by American workers in Detroit could be hit with import tariffs.

Trump has threatened recently to withdraw completely from the deal, which was enacted in 1994 to create a free-trade zone between the U.S., Mexico and Canada. In a Forbes interview published last week he said: “I happen to think that NAFTA will have to be terminated if we’re going to make it good. Otherwise, I believe you can’t negotiate a good deal.”

Thomas said Monday automakers are concerned the latest bid could lead to Canada and Mexico walking away from the NAFTA negotiating table.

“There is growing concern that this is ultimately going to lead to a withdrawal because with the contentious proposal that has been put on the table, it’s hard to see how the three countries can come to agreement,” Thomas said. “This would really set us back and hurt our manufacturing base in the U.S. and hurt our ability to export,” Thomas said.

Matt Blunt, president of the American Automotive Policy Council, which lobbies in Washington for Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles, agreed the latest demands are a tough pill for automakers to swallow.

“We are very concerned the approach they are taking could be counterproductive,” Blunt said.

Kristin Dziczek, director of the Industry, Labor and Economics Group at the Center for Automotive Research, said it “could have a perverse effect of having less jobs in the U.S.

“This is going to push more cars and more parts into ‘most favored nations’ status, which is only a 2.5 percent tariff,” she said, referring to rules established by the World Trade Organization that limit tariffs between countries that have given enough the designation.

The U.S. has most favored nation status with all 164 countries that are members of the WTO.

Dziczek said the lower tariffs with those countries could make trade with places with low-cost labor more attractive if NAFTA is drastically altered or eliminated.

“If you’re paying 2.5 percent, you can pay 2.5 percent from any country that has most favored status with the U.S.,” she said. “You’re not going to move production to the U.S. unless the cost of doing so is less than paying a 2.5 percent tariff.”

Linda Lim, professor emeritus of strategy at the University of Michigan’s Ross School of Business, said the Trump administration’s stance could make it harder for the U.S. to argue against protectionism from other countries such as China.

“The whole thing is self-defeating. It’s not going to create jobs. It’s not going to help the economy and it’s not going to help us against China.”

Lim said the automotive sector would be one of the hardest hit if the proposed changes are enacted. But she said the president may decide to blow up the deal anyway.

“The administration needs policy wins, and trade was such a big deal on the campaign trail,” she said. “They may be willing to take the economic cost — especially as the global economy is doing well — and shaft the auto industry.”

http://www.detroitnews.com/story/business/autos/2017/10/16/carmakers-rattled-trump-nafta-demands/106721306/

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Trump threatens to terminate NAFTA

Keith Laing, Detroit News Washington Bureau
Published 4:04 p.m. ET Oct. 11, 2017 | Updated 10:17 a.m. ET Oct. 12, 2017

 

Washington — President Donald Trump is threatening to blow up the North American Free Trade Agreement as negotiators from the United States, Canada and Mexico gather in Washington for a fourth round of talks.

Trump said in an Forbes interview that was published Tuesday: “I happen to think that NAFTA will have to be terminated if we’re going to make it good. Otherwise, I believe you can’t negotiate a good deal… .

“[The Trans-Pacific Partnership] would have been a large-scale version of NAFTA,” Trump said. “It would have been a disaster.”

Asked about the possibility of negotiating a separate deal with Canada and Mexico if NAFTA falls apart after meeting with Canadian Prime Minister Justin Trudeau at the White House Wednesday, Trump said: “We’ll see what happens. We have a tough negotiation and it’s something you will know in the not too distant future because we are going to be discussing NAFTA and we will be discussing defense.”

Trudeau put a happier face on the NAFTA talks after Wednesday’s meeting with the president.

“We gave a good partnership and there are always ways to improve it, always issues we need to talk through and that’s why having an ongoing constructive relationship between the president and prime minister is really important,” said Trudeau, who also met Wednesday with members of the powerful U.S. House Ways and Means Committee on Capitol Hill.

Negotiators from the U.S., Canada and Mexico are scheduled to meet Wednesday through Sunday as they seek to hammer out an agreement that would be acceptable to all three nations. The first three rounds of talks between the three countries over potential changes to NAFTA were held in Washington, Mexico City and Ottawa.

Trump administration officials have said the U.S. wants to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.” The administration has not identified a specific percentage of minimum domestic content that it would like to see.

NAFTA supporters have raised alarm bells about the Trump administration introducing “poison pills” into the recent talks.

U.S. Chamber of Commerce President Tom Donohue said in a speech in Mexico on Tuesday, “Let me be forceful and direct. There are several poison-pill proposals still on the table that could doom the entire deal.”

Donohue identified proposals from the Trump administration to impose a sunset clause that would stipulate that the revised trade agreement would terminate after five years unless all three countries agree it should continue and increasing the percentage of parts that are used in cars and other products that have to made in the U.S., Canada or Mexico to qualify for duty-free treatement under the deal as troublesome to negotiators from Canada and Mexico.

Donohue said the Trump administration has also proposed changes to the NAFTA agreement’s Investor-State Dispute Settlement system, which allows individual companies to sue countries for alleged discriminatory practices. Critics have said the system allows companies to go around domestic courts to sue governments in cases that involve international law disputes.

The Trump administration is considering “eliminating this important tool, or making it somehow optional,” according to Donohue.

“ISDS is a long-standing mechanism for using neutral arbitration to resolve investment disputes,” Donohue said in his Mexico speech. “And for the record, the U.S. government has never lost a case.”

On rules of origin, the Trump administration has said it wants to “incentivize the sourcing of goods and materials from the United States and North America.” Administration officials point to a study released by the U.S. Commerce Department showing the percentage of U.S. content of manufactured goods that are imported from Canada dropped from 21 percent to 15 percent from 1995 to 2011. while the percentage of U.S. content in goods imported from Mexico fell from 26 percent to 16 percent during the same period.

“NAFTA supporters assert that the U.S. content in cars assembled in Canada and Mexico is particularly high and that therefore our $70 billion-plus trade deficits with our NAFTA partners are not worrisome,” U.S. Commerce Secretary Wilbur Ross wrote in an op-ed in the Washington Post. “That would be a great argument if it were correct. But it isn’t. That argument is neither true of motor vehicles nor of manufactured goods in general.”

U.S. Rep. Debbie Dingell, D-Dearborn, said in an interview with The Detroit News the Trump administration’s hard line stances on NAFTA could end up endangering the entire agreement.

“The next few weeks are critical,” said Dingell, who has co-introduced a proposal that calls for increasing the NAFTA region content requirement to 90 percent. “The Canadians are really worried, there’s no question.”

Dingell criticized Trump’s apparent eagerness to pull out of the NAFTA agreement completely.

“President Trump came to Michigan and he made promises and that’s why people voted for him,” she said. “They want him to bring jobs back and protect jobs here.”

http://www.detroitnews.com/story/news/politics/2017/10/11/trump-threatens-terminate-nafta/106533516/

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Carmakers ready robot cars as federal rules advance

Keith Laing, Detroit News Washington Bureau
Published 7:00 a.m. ET Oct. 4, 2017 | Updated 11:40 p.m. ET Oct. 4, 2017

Washington — Automakers would each be allowed to sell thousands of self-driving cars under a bill advanced Wednesday by a panel in the U.S. Senate.

The approval came despite the objection of consumer safety groups who argued that car companies are presenting unrealistic promises about the readiness of the technology, although lawmakers reached compromises on some provisions intended to address their concerns — including a ban for now on selling self-driving trucks. Critics argue that the period when partially self-driving cars are put in traffic with cars driven by people is more dangerous than when cars are fully robotic.

The action came as several automakers roll out cars that already are capable of at least some hands-free driving.

The self-driving measure is one of the few pieces of bipartisan legislation that is moving in Washington this year. A similar measure was approved by the U.S. House of Representatives last month.

Supporters of the measure anticipate a vote of the full Senate will come before the end of the year. If it is approved then, backers will have to square their version with the earlier approved House bill, which allows fewer self-driving cars initially and places a 100,000 cap on them after three years. The Senate allows automakers each to start out selling up to 50,000 self-driving cars if companies can prove they meet existing safety standards for traditional cars, with a cap that goes up to more than 100,000 after five years.

The current limit for such exemptions to federal auto standards is 2,500 cars for two years at a time.

Lawmakers on the U.S. Senate Commerce, Science and Transportation Committee who back the proposed legislation that was approved by the panel said rapid technological advances in the auto industry demonstrate why it is important for the federal government to quickly craft rules. They cited the potential for self-driving cars to cut the number of deadly crashes that occur on U.S. roadways.

“This legislation will enable the future of transportation and mobility in our country,” said U.S. Sen. Gary Peters, D-Bloomfield Township, who is a member of the Commerce Committee and a key sponsor of the legislation, known as the American Vision for Safer Transportation Through Advancement of Revolutionary Technologies (AV START) Act.

“The proliferation of connected and highly automated transportation isn’t decades away,” Peters continued. “It’s just a few short years away. Some would say a few short quarters away before we see these vehicles on the road, and it’s going to have an enormous impact on our economy and our society.”

U.S. Sen. John Thune, R-S.D., who is the chairman of the Senate Commerce Committee and also a sponsor of the proposed self-driving legislation, added: “More than 35,000 people are killed in car crashes on our nation’s roads every year, and over 90 percent of crashes can be attributed to human error. Automated vehicles present an opportunity to make incredible gains in automobile safety.”

Consumer safety advocates say lawmakers are too focused on automakers’ promises about the potential for fully self-driving cars to improve safety on U.S. roads and increase mobility for people who are unable to drive themselves.

“There seems to be a rush to do what’s in the perceived interest of the automakers to get these vehicles out as quickly as possible,” John Simpson, privacy project director at the Santa Monica-based Consumer Watchdog group, said. “That’s going to kill people.”

He pointed to a fatal accident last summer involving a Tesla sedan that collided with a semi-trailer that was undetected by the car’s Autopilot feature as evidence of the dangers of the period were some cars are semi-autonomous and others are not.

“When things get rolled out without with some kind of federally mandated safety regulations, there are always problems,” he said. “We’re going to have a period here with automakers racing to get all kinds of technology out there that I think are likely to be inadequately tested.”

The debate occurs against a backdrop of furious activity in the auto sector as automakers race to put cars that are capable of at least some hands-free driving on the road as quickly as they can.

General Motors Co. subsidiary Cadillac is rolling out its new Super Cruise technology that allows drivers to go hands-free for long stretches of highway driving on 2018 versions of its CT6 sedan. Volkswagen AG subsidiary Audi’s Traffic Jam Assist system, which allows for 15-second intervals of hands-off driving at slow speeds, is available on 2017 A4 and A7 sedans.

Audi is also planning to make its “Traffic Jam Pilot,” which allows travel hands-free up to 35 miles per hour, available on the 2018 Audi A8. It has prototypes for a “Highway Pilot” feature that can change lanes and pass cars independently, which Audi says will be available commercially by 2021.

The Senate measure would apply to vehicles in which there is a system that operates with the expectation that a human driver will take over when prompted. The legislation would also cover cars with high automation levels, where the automated driving can perform maneuvers even if a human driver does not take over when promoted – and for full automation, when the automated system is responsible for all driving tasks.

Self-driving trucks were dropped from the legislation after a high-profile campaign from labor unions to protect the jobs of professional drivers. The House version of the bill also excludes self-driving commercial vehicles such as trucks and buses.

Supporters of permitting self-driving trucks lamented the decision.

“This bill should include all motor vehicles,” U.S. Sen. Jim Inhofe, R-Okla., said. “Treating cars and trucks different when it comes to federal preemption or the ability to test innovation or emerging technology will hinder efforts to develop and adopt newer and safety technology.”

Peters countered in an interview with The Detroit News after the hearing: “The idea of dealings with trucks is a complex issue and it should be addressed on its own.”

Both the Senate and House versions of the proposed legislation prohibit states and other local jurisdictions from adopting regulations related to cars’ design, construction, software or communication. States still would be allowed to regulate registration, licensing, liability, education and training, insurance or traffic laws.

http://www.detroitnews.com/story/business/autos/mobility/2017/10/04/carmakers-ready-robot-cars-rules-wait/106290952/

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September was best auto sales month of the year

Keith Laing, Detroit News Washington Bureau
Published 6:14 a.m. ET Oct. 3, 2017

September was the best month of the year so far for U.S. auto sales as car manufacturers reversed a year-long downward trend and rebounded from hurricanes that put a damper on sales in multiple major markets.

GM, Ford, Toyota, Nissan, Honda and Volkswagen posted strong sales numbers that were part of an industry-wide total of more than 1.5 million vehicles that were sold in September, thanks to a strong economy and a boost in demand in areas where vehicles were damaged by storms.

The result was 6.1 percent higher than last September’s sales figure, and it came after automakers experienced a nearly 2 percent decrease in August that was attributed partially to hurricanes Harvey and Irma, which slammed populous parts of Texas and Florida last month. September was the first month of the year in which auto sales were higher than they were during the corresponding month last year.

General Motors Co. led the pack with 279,176 cars and trucks sold in the U.S. in September, which was a nearly 12 percent increase over the same month last year. Ford Motor Co. sold 221,643 vehicles, a nearly 9 percent increase. Fiat Chrysler Automobiles sold 174,266 vehicles, which was down almost 10 percent.

“September was the month the U.S. auto industry had been hoping for,” said Michelle Krebs, executive analyst for Autotrader. “Vehicle sales surpassed forecasts, thanks to a strengthening economy, August sales disrupted by and replacement demand created by hurricanes Harvey and Irma, and attractive model-year-end deals.”

Alec Gutierrez, senior analyst for Kelley Blue Book, said, “The sales numbers for just about every manufacturer have come in well above expectations. As you look at the segment mix, there was strength across the board. … Regardless of segment, vehicle sales were very strong.”

GM’s uptick was driven by a 17.2 percent increase at Chevrolet and a 9.4 percent increase at GMC.

“Our new crossovers from Chevrolet, Buick, GMC and Cadillac have been very well-received, and Chevrolet had an outstanding month with the Silverado and Colorado,” Kurt McNeil, U.S. vice president of sales operations, said in a statement.

GM said 2017 was its best September for Chevrolet since 2004. Sales of Chevrolet’s newest crossovers, the Equinox and Traverse, were up 80 percent and nearly 51 percent respectively over the same month last year. GM also reported the GMC Terrain was up 61.2 percent for its best September ever, while the Cadillac XT5 was up 58.5 percent.

Ford said sales of its F-Series pickups rose by 21.4 percent, with 82,302 trucks sold. The company said demand remains robust for its Super Duty, with the premium Lariat, King Ranch and Platinum trim levels making up 52 percent of retail sales. Ford added that sales of its Explorer, Sport and SportTrac SUVs totaled 21,207, which was a 10.8 percent increase over last year and also its best September retail sales performance in 13 years.

“Ford sales gains came from trucks and SUVs, with truck sales gains of 19.9 percent and SUV sales gains for the month up 1.8 percent,” Mark LaNeve, Ford vice president, U.S. marketing, sales and service, said in a conference calls with analysts and reporters. “Our business was strong nationwide, with retail increases in 12 of our 21 sales regions, with particular strength in Houston.”

LaNeve added: “The only notable year-over-year decline was in Florida. As you know they were closed for a big chunk of the month mainly to power outages and some debris damage, and even Florida was coming on strong at the end of the month.”

Fiat Chrysler said its fleet sales, which represented 16 percent of its September 2017 total, were down 41 percent from last year. It said the reduction was part of a strategy to “reduce sales to the daily rental segment.”

The automaker said five of its U.S. vehicles — the Jeep Renegade, Chrysler Pacifica, Ram ProMaster and Ram ProMaster City — posted record sales figures in September. Sales of FCA’s Jeep Compass were up 75.2 percent, which the company said was enough to account for the compact SUV’s best sales month ever. FCA also reported that sales of the Dodge Durango increased by 45.2 percent, which was best September sales for the SUV since 2005.

Kelley Blue Book had projected that new overall vehicle sales would rise by 1 percent in September 2017 in a year-over-year comparison with September 2016, going from 1.43 million last year to 1.44 million last month.

Similarly, Edmunds.com forecast a year-over-year increase in sales of 0.4 percent with a projection that 1.435 million new cars and trucks were sold last month. The final tally for the month was 1.52 million.

Among foreign-owned automakers, Toyota Motor North America’s U.S. sales were up 14.9 percent for the month. Nissan Motor Co.’s sales were up 9.5 percent.

Volkswagen of America experienced a nearly 23 percent sales increase as it tries to move beyond its diesel-emissions cheating scandal.

American Honda Motor Co. reported best-ever September sales totals for Honda and Acura, up 6.8 percent.

http://www.detroitnews.com/story/business/autos/2017/10/03/september-auto-sales-reported/106258342/

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Senators drop trucks from self-driving bill

Keith Laing, Detroit News Washington Bureau
Published 5:36 p.m. ET Sept. 28, 2017 | Updated 5:39 p.m. ET Sept. 28, 2017

Washington — Lawmakers in the U.S. Senate have dropped self-driving trucks from legislation from that would allow automakers to operate thousands of autonomous cars per year on U.S. roads. The action came after a high-profile campaign from labor unions to protect the jobs of professional drivers.

The measure, drafted with input from U.S. Sen. Gary Peters, D-Bloomfield Township, would allow automakers each to operate more than 100,000 self-driving cars per year on U.S. roads. But commercial trucks are excluded under a bipartisan agreement that was reached between Peters and U.S. Sen. John Thune, R-S.D., who is chairman of the Senate Commerce, Science and Transportation Committee.

Both lawmakers touted the agreement to move forward on the self-driving bill without trucks as a necessary compromise to keep the autonomous vehicle legislation moving in Congress. They said the Commerce Committee will hold a hearing on the revised legislation on Wednesday.

“This legislation proposes commonsense changes in law to keep pace with advances in self-driving technology,” Thune, who had argued in favor of including trucks in the self-driving bill, said in a statement.

Peters, a member of the Senate Commerce Committee who was opposed to including trucks in the legislation, added: “Self-driving vehicles will completely revolutionize the way we get around in the future, and it is vital that public policy keep pace with these rapidly developing lifesaving technologies that will be on our roads in a matter of years.”

Trucking groups expressed disappointment that they lost out in the fight over whether commercial vehicles should be included in the self-driving legislation. They had pressed lawmakers to offer the same protections for self-driving truck operators they are considering for autonomous cars.

“If more automated cars and trucks are to share the roads, they should also share the same framework,” American Trucking Associations President and CEO Chris Spear said in a statement, arguing that lawmakers will still have to address the advent of self-driving trucks in the near future.

“Delaying an inevitable, commonsense solution will only make the issues surrounding more automated trucks more difficult to deal with,” Spear said.

Labor unions mounted an aggressive campaign against the inclusion of commercial vehicles like trucks in the self-driving legislation, pointing out that they could cost thousands of professional drivers their jobs. They applauded lawmakers in the Senate for agreeing to move forward without trucks in the self-driving legislation.

“This approach will give Congress more time to thoroughly examine how driverless technology will impact the jobs, wages, and safety of bus and truck drivers, and develop a plan to address these concerns,” said AFL-CIO Transportation Trades Department President Larry Willis.

Automakers applauded lawmakers in the Senate for reaching an agreement to move the self-driving bill forward.

“Legislation like the bill introduced today will allow manufacturers to conduct more testing and to safely deploy self-driving vehicles to realize the safety, mobility, congestion, environmental, land-use and other benefits of this transformative technology,” General Motors Co. said in a statement.

The Washington, D.C.-based Alliance of Automobile Manufacturers, which represents major auto manufacturers, added: “Chairman Thune’s and Senator Peters’ bipartisan leadership on the AV START Act will help advance self-driving technologies and help keep the United States at the forefront of these innovations.”

The Senate’s self-driving measure would allow the Secretary of Transportation to grant exemptions to federal motor vehicle rules that require cars to have human operators. Initially, 50,000 cars per automaker could be operated if companies can prove they meet existing safety standards for traditional cars. After a 12-month period, the number of exemptions per manufacturer would increase to 75,000, and it would go up to 100,000 in the third year.

Automakers would be able to apply for exemptions to operate more than 100,000 self-driving cars after five years under the proposed legislation. The current limit for such exemptions to federal auto standards is 2,500 cars for two years at a time.

A similar measure that would allow automakers each to operate up to 100,000 self-driving cars per year on U.S. roads was approved by the U.S. House of Representatives earlier this month.

Both versions of the proposed legislation prohibit states and other local jurisdictions from adopting regulations related to cars’ design, construction, software or communication. States still would be allowed to regulate registration, licensing, liability, education and training, insurance or traffic laws.

The new proposed exemptions would apply to vehicles in which there is a system that operates with the expectation that a human driver will take over upon being prompted. The legislation would also cover cars with high automation levels, where the automated driving can perform maneuvers even if a human driver does not take over when promoted – and for full automation, when the automated system is responsible for all driving tasks.

http://www.detroitnews.com/story/business/autos/mobility/2017/09/28/senate-drops-trucks-self-driving-vehicle-bill/106090046/

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Professional drivers fear job loss to robotic vehicles

Keith Laing, Detroit News Washington Bureau
Published 12:00 a.m. ET Sept. 26, 2017 | Updated 9:41 a.m. ET Sept. 26, 2017

Washington — The prospect of self-driving cars, trucks and buses has sparked alarm about job losses among professional drivers, one of the largest employment sectors for those without a college education.

Auto manufacturers and tech companies have promised that self-driving cars will revolutionize mobility and boost safety on U.S. roads. And trucking companies have hailed the potential for increased cargo shipping efficiency.

What’s overlooked in those visions is the potential for the technology to eliminate well-paying jobs in both the commercial driving industry and drivers for ride-hailing services like Uber and Lyft.

A May report from Goldman Sachs forecasts that the professional driving sector stands to lose 6.2 million jobs globally by 2030 due to the advent of fully autonomous vehicles.

Labor leaders have pushed Congress to pump the brakes on the rush to craft rules that would allow wide latitude to self-driving vehicles. They want protections for professional drivers.

“The impact that automation is going to have on the transportation workforce is real,” believes Larry Willis, president of the AFL-CIO’s Transportation Trades Department. “There’s job issues and safety issues that need to considered before we move forward with this.”

Conventional wisdom holds that autonomous vehicle technology will be deployed first by ride-hailing companies. But John Krafcik, CEO of Google’s Waymo driverless-car division, believes long-haul trucks could come first.

“Ride-sharing makes a lot of sense for the world, because if you look at the personal car, right now it sits idly for 90 percent of the time,” Krafcik said this month at a conference in New York. “For goods transportation though, which could travel primarily on highways, there’s also a really interesting and compelling use-case there, too. So I think either of those two might be the first ones you see.”

Safety considerations

Norita Taylor, a spokeswoman for the Owner-Operator Independent Drivers Association, which represents truck drivers who are not affiliated with large trucking companies, said self-driving trucks will require a different set of considerations than autonomous cars.

Taylor cited concerns about the size of trucks and the vulnerability of their sometimes hazardous cargo to potential hackers. “The most important, key safety ingredient you have to have in any safely operated vehicle is a trained, experienced driver,” she said.

Kara Deniz, press secretary of the International Brotherhood of Teamsters union, which counts 600,000 professional drivers among its membership, agreed.

“Trucks are not the same thing as passenger vehicles,” she said. “I drive a four-door. I wouldn’t presume I could go in and drive an 80,000-pound rig.”

The discussion about the potential for job losses among professional drivers comes as Congress crafts rules for self-driving vehicles. As it does so, tests are proceeding – like the Federal Highway Administration demonstration this month of a three-truck platoon of partially automated trucks using vehicle-to-vehicle technology to communicate about speed and space on a Virginia interstate.

The debate about whether legislation should allow self-driving commercial vehicles spilled over into a recent hearing of the U.S. Senate Commerce, Science and Transportation Committee.

“Including trucks in the conversation about automated vehicles is important as we seek to improve safety; it also puts our economy on a level playing field as other countries around the world deploy automated freight trucks,” said Sen. John Thune, R-S.D., who chairs the panel.

Critics on the panel countered that self-driving commercial vehicles will require a different set of safety considerations than passenger cars.

“In our discussions to date, we have not gotten as clear of an understanding on issues related to self-driving trucks as we have during our countless discussions on self-driving cars,” Sen. Gary Peters, D-Bloomfield Township, said at the hearing. “As a result, I am of the mind that highly automated trucks are not ripe for inclusion in this bill.”

Comparisons to pilots

Trucking companies have downplayed the potential for job losses. They draw parallels to commercial airline pilots who use autopilot when reaching cruising altitude, but take over for takeoffs and landings.

“Drivers aren’t there just to mash the pedals and turn the wheels,” said Bill Sullivan, executive vice president of advocacy for the American Trucking Associations, which represents large truck companies. “They’re there for cargo security and they are heavily regulated by the federal government.”

The ATA has pressed lawmakers to offer the same protections for self-driving truck operators that they are considering for autonomous cars. That includes the ability to apply for pre-emptions from federal rules that require human operators. Similarly, the group wants to prohibit states from blocking self-driving trucks within their borders.

Sullivan said automation has been used on commercial airline flights for years and pilots have not been put out of work. “We’ve had automated technology on airplanes for 50 years and we still have a pilot in the cockpit,” he said.

Peter Pantuso, president and CEO of the American Bus Association, offered a similar optimistic prognosis for commercial bus drivers, also drawing a parallel to the airline industry.

“I think a vehicle that has 50 to 60 people on board is one of the last vehicles that you will become fully automated,” he said. “Even then, you still have sort of a pilot sitting in the seat.”

The trucking association’s Sullivan blamed labor unions for Peters’ opposition to adding commercial vehicles to self-driving legislation.

“Gary Peters was working with us until unions told him not to,” he said. “It’s devolved into a partisan issue and I think truck drivers, whether they are unionized or not, are going to be worse off for it.”

A spokesperson for Peters said Thursday that the Bloomfield Township Democrat “thinks there needs to be further study on the potential impacts of self-driving trucks and that Congress must carefully consider their implications for future policy decisions.”

The AFL-CIO’s Willis said lawmakers should look beyond the technological benefits. “These are very serious economic issues, job issues and safety issues that we need to get right here,” he said.

He added: “We know these type of companies want to try to save money, and the labor component is one of the biggest drivers. There’s no question you will see it on the passenger side and you will also see it on the commercial side if policymakers allow it.”

http://www.detroitnews.com/story/business/autos/mobility/2017/09/26/professional-drivers-fear-job-loss-self-driving-vehicles/106000116/

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