Current Negotiations Could End 'Chicken Tax'

2014-04-air-force-one3 II

By Tim Esterdahl

President Obama recently visited four Asian countries to discuss, among other issues, the status of the Trans-Pacific Partnership trade agreement. While most of the TPP issues were not a big deal to the pickup truck market, the continuing debate over the "chicken tax" is a huge deal. To briefly recap, the chicken tax is one of the most significant international tariffs the U.S. has imposed in the last 50 years. If it goes away, it could fundamentally change the truck market in North America by opening a floodgate for new compact and midsize truck offerings.

The Chicken Tax History

During the Cold War, the U.S. chicken industry aggressively grew and what was once considered a luxury became a staple of the American diet. American chicken farmers started exporting their product around the world, and other countries accused farmers of unfair trade practices and artificially altering the meat. In response, France and West Germany, looking to protect local chicken production and a perceived threat to the health of their citizens, placed a tariff on the U.S. chicken imports. The U.S. responded in 1963, under President Lyndon B. Johnson, by placing a 25 percent tariff on potato starch, dextrin, brandy and light trucks — yes, light trucks.

It seems odd that a tariff on potato starch and brandy should include light trucks, but it was signed into law at the same time the Volkswagen van was gaining popularity. This odd-looking van threatened U.S. manufacturing. Enter the United Automobile Workers, which saw the VW van as a threat to U.S. automakers and, by extension, bad for its members. The UAW took the threat so seriously that audiotapes from President Johnson's administration reveal the union threatened to strike prior to the 1964 elections. It wanted Johnson to respond to the increased shipments of the VW vans to the U.S. Johnson wanted to avoid a strike during the election and also get the UAW to support his civil rights platform. So a deal was struck, and the chicken tax includes a 25 percent tariff on light trucks (about 10 times greater than the average tariff, according to a 2003 Cato Institute study).

The tariff worked and in 1964, West Germany truck imports declined to one-third of the imported number from 1963. VW van sales and imports rapidly declined to insignificant numbers.

Ongoing Impact

1968 Volkswagen_Single_Cab_Rear_Quarter II

Cars.com photo by Mark Williams

During the past 50 years, the original tariff has been modified and removed on every product except for light trucks. Generally speaking, the thought here is the tariff will continue to protect U.S. domestic automakers from more aggressive Japanese and Germany manufacturers. Many believe the tax has played a large part in the domination of Ford, GM and Ram in the truck market; however, some critics are becoming more vocal. The same Cato Institute study called the tariff "a policy in search of a rationale."

It is a double-edged issue for U.S. automakers. On one hand, the tax keeps foreign pickup trucks out of the highly profitable U.S. market; on the other hand, those same U.S. automakers can't import their own trucks from other markets. However, U.S. automakers have become pretty creative in getting around the tax.

For example, Ford recently had a conflict with the U.S. Customs and Border Protection in regard to its Transit Connect. Ford used to build it in Turkey as a passenger vehicle (to avoid being defined as a "truck" and having to pay the 25 percent tariff) with rear windows, seats and seatbelts. Ford then shipped the Transit Connects to a facility in Baltimore where workers removed the rear window, seats and seatbelts and turned them into cargo vans. This strategy worked for years and saved Ford thousands of dollars per imported truck. Then customs stepped in and "requested" Ford stop. Now Ford has a new Transit Connect van, made in Spain, that adheres to the letter of the existing law.

It's worth noting that Ford isn't alone. From 2001 to 2006, Mercedes-Benz and Dodge Sprinter vans were built in Germany and used the same assembly/disassembly process to circumvent the added tax on their full-size cargo vans.

Changing Light-Truck Classification

Through the years, the classification of exactly what is a light truck and what isn't has evolved. This definition has caused the rise and fall of several different types of vehicles. Consider the Subaru Brat and its two detachable rear seats. Those bed seats helped classify it as a passenger vehicle and not a truck under the law. However, customs officials ended up changing that specific classification, and the Brat was effectively killed because of the added surcharge.

Also, the Chevrolet Luv and Ford Courier were built overseas, and a bed was added after they were imported. They weren't trucks without a bed right? Again, customs officials closed that loophole in 1980, which helped kill those vehicles.

Ultimately Japanese manufacturers like Toyota and Nissan built their own plants in the U.S. due to the tariff. While this seems like a win for the tariff, the further insulation of the U.S. automotive industry from direct global competition, thanks to the tariff, is a subject of debate among economists who contend it could and has crippled the industry.

Trade Agreements Impact

Mahindra_truck_580 II

Astute truck fans will point out that many trucks are built in Mexico and Canada. This means they would be subject to the 25 percent tariff right? Wrong. The North American Free Trade Act has a clause that excludes the chicken tax. And now negotiators of the Trans-Pacific Partnership want the same exclusion.

If the chicken tax is dropped as part of the TPP, it could have some interesting ramifications. To begin, the business case for building limited-production vehicles for this market would change. Typically, when deciding whether to offer a vehicle in a given market, automakers talk about demand and then scale. For scale, they typically have to sell hundreds of thousands of units over a life cycle to offset total production costs. If truckmakers could import a vehicle instead of making a large investment in production, they could sell fewer vehicles, charge less money and still turn a respectable profit per vehicle.

Let's consider the possibilities here.

Ford: This one is pretty simple — the global Ford Ranger. While Ford contends it doesn't want the Ranger competing with the F-150 on its U.S. sales lots, a rebirth of the midsize truck market caused by dropping the chicken tax could change the cost/benefit analysis. Ford could import the truck to the U.S., and this would help the company avoid overtaxing its pickup or SUV factories.

GM: There's been a lot of media buzz lately about a Chevy Luv coming back to the U.S. While it's difficult to see that happening with GM's U.S. plants churning out much more profitable full-size SUVs and pickups, importing a smaller vehicle from Brazil or China could make sense. The Brazilian market already has the Chevy Montana — sort of a modern El Camino — and GM's Chinese operations are growing. GM's China chief has speculated current growth plans could include exporting vehicles made there to the U.S.

GM has been talking about taking risks and offering a unique product for more customers. A fourth pickup could fit nicely below the Chevy Colorado and GMC Canyon, offering customers more choices than any other truckmaker, very much like it does with its SUV lineup.

Hyundai: Yes, even Hyundai could get involved in the compact truck market. There were strong rumors last year about a Santa Fe-based pickup, and Hyundai has been talking for more than a decade about building a unibody, front-wheel-drive pickup. Sure, it wouldn't challenge Ford's dominance, yet it could be a profitable offering. Think it doesn't make sense? Consider the success of the Honda Ridgeline.

Jeep: A Jeep pickup has been rumored for years, and Jeep's top executives have said they want a truck. With a perceived rebirth of a midsize market, the business case gets better for offering it. And now that Chrysler has announced it will build three Jeep models in China there could be new synergies to take advantage of.

Mitsubishi: Mitsubishi is struggling in the U.S., and a midsize truck could help dramatically increase its presence. What would it look like? It could be the GR-HEV diesel-electric hybrid Mitsubishi showed at the 2013 Geneva International Motor Show. Although it is a bit wild looking, a compact/midsize diesel-electric hybrid would certainly grab mileage-conscious customers' attention and give the company a strong technology footing.

Ram: At the 2013 New York International Auto Show, then Ram Truck chief Fred Diaz spoke about the possibility of bringing the Dakota back to the U.S. market. While that seems like a long shot (and Diaz said as much), what about a Fiat truck? The Fiat Strada could finally be imported into the U.S., filling a niche similar to the Subaru Baja, and could significantly help Chrysler meet the stricter corporate average fuel economy requirements.

Scion: We also spoke with Scion Vice President Doug Murtha at the NYIAS. He said the chicken tax is a big part of why Scion doesn't have a pickup truck. Dropping the tax could make it easier for Scion to, hypothetically, borrow a platform from Toyota and restyle it for quirky-loving Scion customers. Scale would also be a concern, yet with Toyota's many manufacturing facilities around the world, it would simply be a matter of planning and timing before Scion could ship it to the U.S. in 500-unit bundles.

 

Volkswagen-amarok II

 

Toyota: For years Toyota fans have been calling for the Hilux to come to U.S. shores. Could dropping the chicken tax bring it to the market? Probably not. However, it doesn't seem so farfetched that Toyota could move the Tacoma production overseas and share a platform with the Hilux. This would alleviate the capacity issue facing the company at its San Antonio plant, and Toyota could dramatically increase the amount and variety of cab/bed configurations for the full-size Tundra — the more profitable truck.

Volkswagen: VW has said publicly for years the main reason it didn't bring an Amarok-like pickup to the U.S. is strictly due to the chicken tax. Currently VW has one production plant in the U.S.; investing in expanding it to include truck production doesn't make sense, especially when you consider how much scale and complexity it would need to add.

While VW contends the Amarok is too small for the U.S., and company executives seem mixed on whether it makes sense to offer it in a larger size, having no tariff could create a completely new business case. Depending on how VW priced it, the company could import a limited number of the trucks and see if customers respond.

The Amarok is currently built in Argentina; however, VW has several plants in China and could export the truck from one of those facilities if needed.

Other manufacturers: Without a chicken tax, many smaller manufacturers — like Honda, Daihatsu, Mahindra and others — could find ways to import distinctive pickups into the U.S. They would simply need an outlet to sell them through and a plant with a good amount of excess production capacity (that might be the biggest challenge). To help with production costs, we could see any one of these manufacturers making partnership deals with Ford, GM, Chrysler and others to offer rebadged products on familiar dealer lots. In the strange world of auto making, stranger things have happened.

Trans-Pacific Partnership Negotiations

All of the scenarios we've discussed could be included in the TPP negotiations. The trade pact aims to cut tariffs and set common standards on a slew of trade items between as many as 12 different nations. And depending on how you slice it, these countries cover more than 30 percent of the global economy. Currently, the holdup is centered on differences between Japan and the U.S. Negotiators are working hard to overcome these differences.

"We understand the challenges," U.S. trade representative Michael Froman said about talks with Japan, according to Businessweek. "These changes relate to fundamental reforms and the market opening of sectors in Japan that have traditionally been closed."

In the end, many believe the globalization of the auto industry and the proliferation of platform sharing (see the One Ford Plan and the global Mustang and Ranger) means the chicken tax may not be as important or beneficial as it once was. However, it still has a significant impact on the North American truck segment. With trade negotiators pushing for the TPP to be done by year's end, meaning the tax could potentially go away in the next two years, we could be looking at a dramatically changing truck landscape for the pickup customer. Will we be driving a Ford Ranger in the U.S. sometime soon? Who knows? One thing is for sure though: We need to keep a close eye on the ongoing negotiations.

Manufacturer images; stock photo of Air Force One

 Ford Ranger II

 

Comments

Don't forget the reciprocal benefit, to sell F-series, Silverados, and Rams to other countries. In Australia, people pay well over $100,000 to have these vehicles bought, shipped over, and converted to right-hand-drive. The US is missing out on export opportunities. Ford just woke up and realized people all around the world know what a Mustang is, want to buy it, but haven't been able to.

Bring the Global Ranger and VW truck here and leave the Chinese garbage over there. I just can't imagine that Chinese knockoff would sell here unless it sold for under 10K. Of course far as we know they don't want to bring it to the United States and they shouldn't.

my experience from the forums & talking to service members, Europe is another hot spot for full size trucks, particularly Germany. I heard of guys selling their well used truck & buying an E class to bring back home. I'd love to see the global ranger here. & I'm not convinced that the foreign makes would quit building them here either, it's still an expense & risk to build overseas & then ship.

Keep the tax! If they want to sell here then they can build here and give people jobs here!!

@ johnny doe

I second that!

Consider the success of the Honda Ridgeline that`s the last line at Hyundai possibilities.

I was rolling on the floor when i read that sentence. Success of Honda Ridgeline anything to boost Japanese car company like most car journalist do.

Check sales numbers every month you will see what I mean and please wake up M. Williams. Anyway the Ridgeline is not a truck.

3/4 ton payload
4x4
Ridgeline Truck

@johnny doe - and where is most of the stuff you own made?
Ever shop at Wallmart?

There are those that argue that the Chicken Tax is ineffective.

We will find out soon enough.

@Mark Willaims
Thanks, for this article. It is a good piece of journalism.

I do envisage a this turning into a $hit fight.

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The chicken tax has lost the US some trade. But, overall the US is one of the fairer countries to do trade with and the chicken tax is an anomolie, a dumb one at that.

I do think the US would import a significant number of midsizers vs the number or full size exports.

What the chicken tax has done is removed the design and engineering and manufacture of a lucrative global product into other countries. The US could of and should have corned this market globally. But it didn't and now it has to fight to regain if it wants to regain a larger share of the overall pickup market.

It could be exporting billions of dollars worth of vehicles globally of a quintessentially American icon. But it can't, because UAW, US government, Big 3($) shortsightedness.

The US as the land of pickups could of been the centre for pickup manufacturing globally.

The chicken tax has reduced choice in the US to the consumer. There are many competitive and viable products out there globally. Even in Australia it is viable for us to import a Kia light truck the K2900. This truck is imported at the rate of less than one thousand vehicles per year. But, it is viable and gives more choice.

If the manufacturer of a vehicle can offer the massive trim levels that the pickup manufacturers offer, then this shows how little the competition is.

More competition would reduce the number of trim levels, to manufacture cheaper and more competitive products.

Full size trucks, even the aluminium one will remain big sellers in the US. But, as prices will inevitably rise with the use of more exotic materials and gas engines becoming more 'Euro' like.

Like I've stated the direction the US has been heading in has been unsustainable for it's light truck an pickup market and free trade agreements will also change the future look of the US vehicle makeup.

It's a matter of time.

But rather than some of you guys who will argue the virtues of full size trucks, the smaller trucks also have benefits the full size can't offer.

As I've mentioned previously, I'm not a midsize fan, even though some try to create this illusion as a debating topic.

Full size trucks are nice, (except for those stupidly large grilles).

@johny dope, All 'mericum and the other names you go under.

Just sticking your head in the sand regarding products from overseas will not stem them. It will hurt the US.

The full size trucks you guys manufacture are quite good. But just because you want something doesn't mean you view should be thrusted onto others.

That ideal you have of forcing others to do what YOU want is Un-American. Maybe people like you should move to China in a more authoritarian environment where government thinks like you do. Your ideals should marry up to communism quite well.

Nothing says 3rd world quite like a Mahindra. And I'm sure it drives as good as it looks. :)

@Big Al like a dog on a bone.

@papa jim
Spare ribs, yummy ;) That is sort of American import into Australia.

In all seriousness papa jim, I've done quite a bit of research into this topic.

From my research I think overall the US has thrown away an industry.

The US could of been the worlds largest designer and exporter of pickup globally.

Were are most of the commercial vehicles designed globally (all vehicles) now? I understand the liking and desire of a full size V8, as I'm a V8 person myself, hence my liking of the newer turbo diesels.

But V8s are going to be dead in the water and only a few will be sold in more prestigious products in the future, even prestigious pickups.

The normal 'Joe' will have to be content will small V6s, diesels, etc.

I think the Colorado might change things a little, but then you guys will only have one decent (half decent if our Colorado is anything to go by) midsize offering.

"Let's consider the possibilities here..."

Let me add, I want a pony.

This agreement is about trucks on your stupid list.

It is about Obama subjugating US sovereignty to global fascism run by huge supranational bureaucracies composed of citizens of the world.

Wake up.

You might enjoy:

The Mythss and Reality of Free Trade:
http://www.eagleforum.org/psr/1996/mar96/psrmar96.html

*Not about trucks on your list.

Tim, You are new to to contributing on PUTC, but you need to do more research before you start promoting global fascism on PUTC that has nothing to do with trucks or your Christmas wish list. You hate most of those trucks anyways. Luckily Obama cannot pass a treaty and it has to pass through the Senate by a 2/3 majority and doesn't have a chance in hec of passing.


Obama has billed the TPP as a “trade agreement” that will create U.S. jobs. The pact, however, actually has little to do with reducing trade restrictions. Tariffs are now a minimal factor for most global trade. Lori Wallach, director of Public Citizen’s Global Trade Watch, points out that only five of the TPP’s twenty-nine chapters are about trade at all.

But the remaining provisions cover such immensely important measures as the creation of a kind of corporate supremacy over the democratically established regulations enacted by member nations. If an existing law threats to diminish profits, corporations in the TPP nations would be entitled to bring their complaint to an international dispute panel of anonymous corporate members, who could impose major financial penalties on the “offending” countries. “The Trans-Pacific Partnership,” Wallach concludes, “is a Trojan horse for a host of awful measures that have nothing to do with trade and would never get through Congress in the light of day.”

@Big Al

The climate change advocates have taken some blows lately and there's no consensus for any of the leading economies to take on the responsibility for reducing carbon soon.

The price of fuel in the states is up since January but overall has been in a range (locally) from 3.15 to 3.80 during the last four years.

Stable fuel prices and less concern about Climate will cause a new paradigm to emerge. The current scheme is about dead.

@Scott,
So how many 'disputes' have been raised at an international court regarding trade?

As in anything we do and have as humans there will be upsides and downsides. FTAs will offer more upsides than downsides.

As a matter of fact the larger the economy (country) entering into an FTA the larger the pressure to provide advantage to the larger country. So in theory the US with the largest economy globally will be advantaged more than any other nation entering into FTAS.

Reseach and understand economics, trade, and finance if you are going to spruik total and utter nonsense.

Really, what a pure piece of garbage you have just put forward.

Use real data and proven cases. Not just spew out crap that is unsupportable. Fear mongering is what you are doing. Use logic and data to prove you views.

Australia is a leading global player in FTAs and we have had only one case against us regarding FTAs and that was from the tobacco lobby.

http://www.abc.net.au/news/2014-04-07/free-trade-agreement-explained-bilateral-fta-tpp/5371314


I mean and please wake up M. Williams. Anyway the Ridgeline is not a truck.


Posted by: JoBlow | Apr 23, 2014 3:10:30 PM

These articles are not by M. Williams. It's by Tim Esterdahl, editor of TundraHeadquarters dot com and apprent Obama global fascism hack or a very nieve individual.

BAFO, You are still hanging around here like a bad inner thigh rash.

Can one invoke Godwin's law when one uses fascism in an argument?


@Scott - do you actually understand what you posted??

"It is about Obama subjugating US sovereignty to global fascism run by huge supranational bureaucracies composed of citizens of the world."

As opposed to huge supranational corporations based in the USA?

Why does Ford favour FTA's with the EU but not Japan?

I will believe this when I see it. Detroit and the unions will fight this. The only way that the manufacturers will support this is if they plan on using their plants in China, Thailand, and other low cost countries to produce many of their cars, trucks, and crossovers and import them to North America. GM and Ford have been building their capacities in China at a record pace, but then the Chinese auto market is the fastest growing market in the World. I am for the repeal of the Chicken Tax but I do see Ford, GM, and Chrysler benefiting the most from importing products made with cheaper labor even though there would be more competition in the truck market. Maybe in the long run vehicle prices would not go up as much but then maybe not because the manufacturers would increase prices anyway and increase their profit margins. In the short term prices could go down but in the long run as some of the competition is squeezed out of the market the few strong will survive. The Chinese will have to improve their quality in the long run if they are to compete.

Well, as long as Chevrolet Motor Company and even FoMoCo win in the end, who cares. Like Hyundai or VW can compete with a Chevrolet. Chevrolet's only threat is Ford but they have earned their due respect. Blue Oval & Bowtie to battle in the end.. Dodge might be a threat to Chevrolet though. Still, not globally.

@Lou BC--Agree, this agreement is less about Obama and more about opening up markets with cheaper labor and production costs. There has to be a benefit for the major manufacturers. The only down side I can see is that the full size pickup market will not have the protection from the Chicken Tax but then the manufacturers might see that the benefit of cheaper production costs outweigh the added competition.

@papa jim
What has climate change got to do with the chicken tax and FTAs??

Come on, you can do better than that.

There was global trade for millennium. This isn't a new concept.

@ljm, did you even read the article moron? Gm itself is a threat to Chevy globally. They already shut down Chevy of Europe for Opel and Chevy is a joke in China for Buick. Even Chevy of U.S. for Gmc. Wow, just wow! City slickers are out of touch! Even the Dodge nuts are out of touch on here. The only U.S. based company who has it right is 1 Ford. The rest are stuck in 1930 with a zillion brands. Lead, follow or get out of the way! Chevrolet under GM leadership really needs to get out of the way. Because following hasn't helped them much.

Big Al--Maybe papa jim never heard of Marco Polo. Maybe he thinks Columbus was taking a sailing trip and accidentally landed in the Americas. Why would the King and Queen of Spain finance Columbus' trip?

@Jeff S
I do think there is some truth in what you have stated.

The problem is the length and breath of the effect of the chicken tax is that global pickup and commericial vehicle design and production off shored.

The US does manufacture pickups, but for a local market. The protection offered by the chicken tax to mainly Detroit has limited the export of all US commercial vehicles around the globe.

It's all well and good for some who blog on this site to use the 'we are Americans' and we only want full size trucks, but I think full size and smaller commercial vehicles could have been manufactured side by side in the US over the past 50 years.

The chicken tax in the shorter term did work, but in the longer term it has now damaged the US commercial vehicle market.

No one wants to use US style commercial vehicles outside of the US, Canada and Australia.

The European's have really won out here, which is a disappointment.

This is sort like Charles Darwins theory on evolution and using the Galapagos Islands as an example.

It shows that Detroit's model of globalised production didn't work to the point where Detroit went broke, literally.

It still requires life support to exist or it will perish without the chicken tax. Since the GFC Detroit is changing it's way, but it is ever so reliant on the 'US' pickup to exist.

Detroit only has China, and like the US has done in the past do you think the Chinese will support it's own indigenous vehicle industry or Detroit?

I don't trust the Chinese, the Chinese will look after themselves first. Which has to be expected.

@Jeff S
It is odd that you mention the Spanish (even though Columbus was Italian).

The Spanish became the most powerful nation globally due to the way it traded (generally plundering). But it's model wasn't able to compete against the British, Dutch and French.

The Spanish model was more or less and extension of the feudal system, a more efficient feudalised system.

The Dutch and British were much better at global trade. The Dutch and British actually had extremely similar trading models.

But the British won out. Why? Because they adopted industrialisation more readily than the Dutch.

If the Dutch took on the industrial model like the British maybe the world would be different. The Dutch at the time were more liberal on a societal level.

But, the British won out. America, New Zealand, Canada, etc arose from the British. Look at the best countries in the world.

I do laugh at how some perceive the level of taxation or whatever as an example of standard of living or what socialism is, but it appears the liberal (Historically Protestant) countries have the best standards in the world overall, ie, Scandanavia, German, Dutch, US, Australia, NZ, Canada, etc.

The more Protestant sub cultures of the Western world have advanced greater than the more orothodox and conservative Western Sub cultures.

Why? Because the Protestants were able to remove itself from government and let government govern for the good of the people.

It seems the further south and east you go the more conservative and orthodox the culture became and more restrictions it placed on progress.

This is occurring now globally. As I've stated industry and manufacturing is changing. The countries that fight off the changing world and try and use protectionism will fail eventually like the Spanish model.

This proves that more liberal we are as nations in adopting and trialling different ideas will allow us to progress and remain more competitive.

Putting on blinders and sticking your head in the sand will on allow for regression of progress.

This is what made the US a great nation. By accepting.

@Mark Williams ,
Hyundai is developing a Large Sprinter type Van and its cab chassis equivalent for Europe and elsewhere
http://www.caradvice.com.au/thumb/770/382/wp-content/uploads/2014/04/Hyundai-3.jpg

Nissan is developing a new Global Navara , not based on the Titan like the old Navara was (unlike Frontier), will use 2.8 Cummins
Looking at 5 litre V8 Cummins for new Nissan Patrol. The New Pathfinder will be different from current US Model being very much off road capable built on a substantial BOF chassis.
http://www.carsales.com.au/news/commercial/nissan/navara/new-york-motor-show-new-nissan-navara-near-43098?R=43098&Cr=5&surl=aHR0cDovL2VkaXRvcmlhbHN5c3RlbS5jYXJzYWxlcy5jb20uYXUvRGVza3RvcERlZmF1bHQuYXNweD9Ocz1wX0RhdGVBdmFpbGFibGVfRGF0ZVRpbWUlN0MxJk49Mjk4MSs0Mjk0OTY3MjgyKzQyOTQ5NjcyNzkmVGFiSUQ9MTQwODYxMCZRcGI9MSZzaWQ9MTQxQTgyQTE4OTA5Jm51bT0yMCZObmU9MjA.

The New Hilux and Mitsubishi Triton will be introduced as well. The Mitsubishi will be a 1 tonne Ute with a diesel engine as like before but with a parallel hybrid to be added later. This can be used with the diesel to increase power of the vehicle.

@Alex,
No benefit selling RAMS, Silverado's etc as they are LHD from factory not RHD. "Chicken Tax" does not affect that or diesels meeting Euro V regulations.

Why have ridiculous regulations on vehicle emissions unless you are a climate greenie? Why have CAFE regulations unless you feel good when you stretch your gasoline mileage?

There are some places that benefit from lower oxides of nitrogen in vehicle exhaust, and there are circumstances where optimizing fuel economy is a key tactic for achieving ones goals.

The majority of these rules came from two mistaken notions:

1. the world is quickly running out of energy (it's not)
2. the vehicle exhaust is making the glaciers melt.

There is a new order coming.

Nice! VW will be force to put up, or shut up!

But nothing will change. Small truck OEMs that want to sell their trucks in America already do. Or already have. Some left screaming like little girls...

Best part about it is I'll ease tensions and open doors to US cars and trucks all over the world.

@DeverMike/Paul/Tom Lemon/Greg Baird/TRX4Tom/Dave/Hemi V8/Tom Terrific/sandman 4x4/lautenslager/zveria/Bob/US Truck Driver/Glenn/Jason/Hemi Rampage/smartest truck guy/Maxx/SuperDuty37/Ken/Ron/johnny doe/jim/ALL1/Frank/Idahoe Joe/The Guy/AD/Casey/papa jim/Young Guy/BeeBe/Steve/Chris/The truck guy/Alex/Mr Chow/Yessir/All Americans/Scott/Buy American or say Bye to America or whoever you want to call yourself.

Quit the crap, really.

It's getting long in the tooth.

You want to debate, but it has to be on your terms.

Learn to debate with good information, then we might be able to have a decent debate.

Opinions are good, but if they are only your view to support the UAW, then how good are they. Look at what you guys have done to Detroit.

Terror tactics (union tactics) don't work on me.

If PUTC wants the UAW or whatever to control this site I suppose it's their decision.

It's not kids like I've been told by PUTC.

They don't seem to care. So this will go on.

@Robert Ryan
That's an interesting article.

I'm very much looking forward to what Toyota and Nissan will have on offer.

The Ranger, BT50 and Amarok are currently the best pickups on offer globally and I think Nissan and/or Toyota will trump one of them. But Mitsubishi with the Triton might pull a rabbit out of it's hat. Mitsubishi like GM have never really lead, so it will make it even more surprising.

Another trend not discussed is the US is moving away from SUVs and globally we are getting more BOF SUVs.

@Lou_BC
Why doesn't Ford favour FTAs with Japan in comparison to the EU?

Well, Ford doesn't have the marketing power in Asia like it does in Europe.

Whereas the Japanese have a brand globally.

Their are a lot of assumptions being posted as they were fact in this article. I really don't care how much research one does about this subject, at the end of they day what you say is still and ASSUMPTION, and NOT a FACT. No matter how much you want to believe that your theories are fact while others are bogus, they are still just theories.

My assumption is that any wave of smaller less capable trucks will not have a major impact on full size truck sales. Why.... because smaller trucks will have to meet a much stricter mpg requirement than bigger trucks. A small truck will have to meet a 44 mpg rating by 2025 which a 2.0L 140 hp TDI turbo diesel Jetta can't even do with a highway mpg of 42 mpg. Imagine how much balls you would have to cut off such a vehicle to get it to that rating. Bigger trucks with a 65-75 footprint will only have to meet a 30 mpg by 2025. Manufacturers are not too far off from that number with even today's trucks. My assumption is that American trucks will remain the same size, but will get lighter and receive more fuel efficient engines with the same or similar power of today's engine. Smaller trucks would be castrated too much to the point where they won't be able to do anything as a truck, and you might as well get a car. If your main premise is fuel efficiency they you might as well get a car anyways since they will get better fuel economy than any truck made. These small trucks like the Ranger and BT50 are kinda like mopeds and ugly women. They are fun to ride and all, but you don't want to your friends to see you on one because you would have to forgo your "Man Card" or be prepared to get laughed at.

@ALL1
How is it one vehicle can reach better targets than another, using the same technologies?

Hmmm......We have 4x4 crew cab midsizers already at 40mpg that can tow 5 500lbs. Europe even has 1 ton pickup/utes getting 54mpg.

Also, don't look at the US as your source of information. There is a whole world out there.

Doesn't seem to match up, does it?

It think full size trucks will become SUV alternatives and the Euro Van style trucks will become cheap workhorses.

Midsizer or full size, they are normally SUVs, not work vehicles.

It will make it easier for a person to choose a CUV then. But a business needs a commercial vehicle, like the Euro van style trucks.

The problem with full size trucks isn't the fact it isn't achievable, but the cost to the consumer.

So, if cheaper imported trucks can be landed in the US without the 25% chicken tax they might be competitive.

Like I stated the US might not have commercial vehicles that can achieve good FE, but Asia and Europe are already there.

@Big Al from Oz - my question was for a guy who was parroting from some right leaning site.

@All1 - I do think that the repeal of the chicken tax will not have a huge impact on the full sized pickup market for the very reasons you have cited. Large trucks already have more favourable emission and mpg standards which indirectly is a tariff to any competition. One could consider it a technical barrier to small trucks not an official one.

I do wonder if makers of small trucks will stop making anything that falls into a true compact truck category. We've seen Toyota state that they will stop making reg cab Tacoma's and GM will not offer a reg cab Colorado/Canyon.

We could see the South American Montana and the Fiat Strada imported as true compact trucks.

I do suspect that the elimination of the tariff will only help niche markets. VW could import the Amarok to offer VW fans a truck just like Honda does with the Ridgeline.

@Big Al

Okay, lets take your BT-50 then to see if it matches up.

A four door 4x4 Mazda BT-50 with a 200hp/350lb-ft 3.2L diesel is rated at 9.2L / 100Km in Australia. That is 25.5mpg in US mpg (not imperial). In imperial mpg that 9.2L / 100Km would be 30mpg. You might be converting to imperial and not US mpg in your little spew of numbers above. There is a big difference. So....what was it that you were saying?

Oh and I forgot to mention that that 25.5 mpg(US) in diesel with your truck is equivalent to a gas vehicle getting 22mpg with current gas/diesel prices of diesel being $.60 cents more per gallon than regular.

Scott is part right, but mostly wrong. He is right that Obama with no executive experience will negotiate a bad deal.

He is wrong with that anti-TTP piece he was quoting. It is not from "right wing" site, but a socialist site run by Ralph Nader. It is YOU who is laying down with socialists and marxists.

He is wrong about Tim going off on the TPP. If you read past the first sentence, you would see he just used this as a going off point to write on the chicken tax. There is at least one chicken tax post on PUTC every year and it's that time again.

Scott, Get your facts straight and stop bashing others by quoting marxist/liberal blogs that are out to deceive you.

Scott, Read this.....


Trans-Pacific Partnership: Old Fallacies Return


Kyle Niewoehner

May 10, 2012 at 6:30 pm

With negotiations over the Trans-Pacific Partnership (TPP) between the U.S. and eight other countries set to resume this week in Dallas, opponents are dusting off the same old discredited arguments against international trade. In a recent Huffington Post article, Leo Hindery of the New America Foundation dismissed the TPP as “deeply flawed.”

His article repeats the oft-heard argument that trade is responsible for American job losses and advances the notion that the unfair practices of other nations (abetted, of course, by U.S. trade agreements) have “cost America millions of manufacturing jobs in just the last decade.” There is not a shred of truth to this assertion.

As Heritage Foundation research shows, trade has had little effect on overall manufacturing employment. Rather, trade has forced a reallocation of jobs to the firms and industries that use labor most efficiently, resulting in higher U.S. living standards.

The overall decline in manufacturing jobs is mostly attributable to the advance of technology, not “unfair” trade. Contrary to popular perception, U.S. manufacturing production has grown considerably over the last few decades, rising 46 percent from 1987 to 2010 even while employment in the sector dropped by a third.

This was made possible by the extraordinary growth in worker productivity, which increased an incredible 115 percent over the same period. Productivity growth, in turn, was generated largely with technological advances, as demonstrated by a 500 percent expansion in the use of information processing technology and a nearly 100 percent increase in capital employed per hour of work from 1987 to 2007.

Trade is not guilty of killing American jobs. In fact, this is actually one of the few politically controversial issues on which virtually all economists agree. In a recent poll of 41 prominent economists by the IGM Economic Experts Panel, not a single one disagreed with the premise that the benefits of free trade outweigh the costs.

The TPP would give U.S. companies expanded access to the markets of Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. Japan, Canada, and Mexico are also eager to join. Even without Japan and the NAFTA duo, TPP nations account for almost 200 million people. Expanding trade access to these countries offers a rare opportunity to boost the struggling U.S. economy.

As the negotiators convene in Dallas, the U.S. team should not allow 18th-century trade fallacies to derail the expansion of mutually beneficial trade links with our partners around the Pacific Rim.

http://blog.heritage.org/2012/05/10/trans-pacific-partnership-old-fallacies-return/

Tim E., You should read this piece. Look at all of the meaningless pronouncements made since 2008. Don't get your hopes up on getting the chicken tax removed and Hiluxes and Rangers and whanot starting to arrive any day now because Obama took another trip.

http://blog.heritage.org/2014/04/22/president-obamas-asia-trip-trans-pacific-partnership/


President Obama’s Asia Trip and the Trans-Pacific Partnership


Bryan Riley

April 22, 2014 at 3:47 pm

(1)

As President Obama travels to Asia, one item sure to be on his agenda is the Trans-Pacific Partnership (TPP), a trade agreement currently being negotiated between the United States and 11 other countries.

Since the U.S. joined the negotiations in 2008, about the only thing the countries involved seem to have accomplished is to become ever more adept at announcing how much progress they are making, as the following statements demonstrate:
•2008: “In their discussions, the Ministers emphasized the importance of the Trans-Pacific Partnership Agreement as a vehicle for Trans-Pacific-wide economic integration. This regional agreement sets a high standard that will enhance the competitiveness of the countries that are part of it and help facilitate trade and promote investment between them, increasing their economic growth and development. The Trans-Pacific Partners welcomed the addition of the United States as a significant step forward in advancing this goal.”
•2009: “In short, we expect the TPP agreement to serve as a model for the future of American trade. We recognize that today’s workers, businesses, and farmers have different concerns than they did a generation ago, and we intend to update our approach to trade in keeping with a changing world. In these negotiations, we will talk about new technologies, emerging business sectors, and the needs of small businesses alongside labor, environmental, and more traditional trade concerns in the context of a regional approach to trade. Already, [U.S. Trade Representative] staff have begun meeting with their counterparts from Trans-Pacific Partnership nations.”
•2010: “The United States and the other Trans-Pacific Partnership (TPP) countries—Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam—concluded the fourth round of negotiations in Auckland, New Zealand today, continuing to make steady progress across the range of issues under discussion. Noting that President Obama and the other TPP Leaders instructed them to conclude the negotiations as swiftly as possible, the negotiators pressed ahead in the 24 negotiating groups.”
•2011: “Negotiators are working to reach the broad outlines of an agreement by the Asia-Pacific Economic Cooperation (APEC) Leaders Ministerial meeting in Honolulu in November.”
•2012: “We are determined to build on the momentum we have achieved to close as many of these chapters as possible this year, recognizing that the agreement is a single undertaking and must result in a balanced package that all TPP countries can embrace.”
•2013: “We, the Ministers and Heads of Delegation for Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam, have just completed a four-day Ministerial meeting in Singapore where we have made substantial progress toward completing the Trans-Pacific Partnership agreement.”
•2014: “We, the Ministers and Heads of Delegation for Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam, have just completed a four-day Ministerial meeting in Singapore where we made further strides toward a final agreement.”

So far, it appears that the TPP has resulted in lots of talk but too little action. The goal for President Obama should be to avoid a trip that generates similar meaningless pronouncements but instead results in a real breakthrough toward a beneficial TPP agreement.

http://blog.heritage.org/2014/04/22/president-obamas-asia-trip-trans-pacific-partnership/

@Dave and @ALL1 I can see many vested interests not being too happy with a Free Trade Agreement with Europe and Japan. I guess we will get statements about how small, non FE, unreliable these imports will be. That flies into the face of how we experience US vehicles, which generally have been considered problematic.

@ALL1
The figure you quoted is average FE on the highest spec'd, biggest engine we have in the BT50. I'm actually getting around 8.6 litres per hundred. That's a 50/50 split on driving.

You guys don't have a pickup anywhere near the capability as my ute obtaining that kind of FE.

You talk about zveria and some of the other guys regarding the stretching of information.

As you say lets compare apples to apples.

Show me a 4x4 crew cab full size that can carry 2 400lbs and tow 7 800lbs or there about that can get 25.5 average or over 30 on the highway.

You can't. You will now start and tell me about how heavy the BT50 is comparison to others.

Look at a comparison of capable equivalence. Seating numbers, load, tow, FE, off road capability, etc.

The nearest pickup for off road capability in the US to my vehicle would be a Tacoma, not a full size as they are more cumbersome.

I can quote 2WD diesel utes here that are using less than 7 litres per hundred average.

I can also quote about US full size trucks getting 9mpg and that was an Eco Boost Ford.

@Lou_BC
I do think you are correct in the near term for full size pickup numbers.

The reality is the US isn't in the position to make changes very quickly. It will take years to wind back such a large tariff like the chicken tax.

Detroit will fold if the tax was dropped overnight.

By that time the US commercial vehicle sector will have transformed in a more orderly fashion.

@Robert Ryan

regarding vehicle quality, despite adding greater complexity to vehicles during the last fifty years--manufacturing errors per thousand vehicles produced are well under control.

A lot of models are actually producing their best quality figures ever. Please ignore government stats on the topic; similarly try to tune-out the noise from the unions.

Greater openness in trade is a reality that governments and workers groups cannot ignore or prevent. It is reality in this 21st century time of instant mobile communications, and formats such as this one that allow us to inquire among ourselves via instant transcontinental contact.

@papa jim,
Could not agree more, there has been massive improvements in vehicle quality. Jeep as an example has made huge improvements in build quality, NVH. That is with the Grand Cherokee they sell here. Not that much with the other Chrysler vehicles and Jeep models.Recently Jeep has been having electronic and overheating problems with their latest model Cherokee. A case of three steps forward and two back, but under Sergio they appear to be going forward overall.

@Dave
Australia has agreed to FTAs with the Japanese and Koreans.

The problem the US is having is with industry that don't want to relinquish the monopoly they have.

If industry are hesitant to compete, then don't you think the consumer might be paying too much for certain products.

I read on this site quite often on how the 'average' American pickup is pulling $10k profit. So, why not bring in something to challenge that pricing

FTAs are about increasing business and trade on both sides of an agreement.

Believe it or not Australia exports cheese, but the Japanese had a tariff on our cheese going into Japan. Why? Because we can produce cheese cheaper. The Japanese can produce cars cheaper than us. We had a 5% tax on Japanese cars. We also have a tax on Japanese home electronics. The same goes for Australian beef exports to Japan and many other products.

So, why not remove the cheese, beef, etc taxes and the car tax? Who and what are benefiting from this?

The Japanese get cheaper cheese and we get cheaper cars. What happens now? Well, we all have more money to spend on something else. What does this do? It creates employment and money.

What does this do in the end. It makes the Chinese want to have more trade with us. Why? Because Japanese stuff is cheaper in Australia and the Japanese are getting cheaper food.

So, we will do a deal with the Chinese and on and on.

No different than how a country operates internally.

Do you buy you food and gas from the most expensive places?

So, why should a country?

@Big Al

According to other data, the best a 5 seater 4x4 BT-50 with a 3.2L can get is 7.4L/100Km going by the AU/EU test standards. ( http://www.fuelmileage.com.au/list-car-manufacturers/2011/Mazda ) That is equivalent to 31mpg(US) on AU/EU "extra-urban" highways test that has an average speed of 63Km/h (39mph) in their short less than 4 minute test run with various ups and downs in the speed. The US uses a much longer highway mpg test of over 12 minutes(10 miles) and has an average speed of 48mph also with various ups and downs on the speed.

Put that BT-50 to the US test and I bet it would receive a lower mpg number here, and this is with slow as a slug with 3.2L diesel. Imagine what a 44 mpg light truck would be. Although that might be okay for your standards, that is unbearable to US standards.

Another thing you neglect to look at in the FE numbers is speed limits of both countries. As you know(or should), speed kills FE fast especially after 65mph(105Km/H). What is your average speed when you get that 8.6L/100Km average? Our speed limits here, both highway and city, are on average much higher than Australia's. The average urban/city speed limit in Australia is 50Km/h (31mph) and the average rural/highway speed is 100Km/h (62 mph) with a few areas being 110Km/h (68mph). In contrast, urban/city areas in the US is on average 55mph (88Km/h) and out rural/highways are mostly between 70-75 mph (112-120Km/h) with the acception of a few States being over or under that.

Lastly, your weight limit standards on your vehicles are vastly different then ours too. I can guarantee that the capacities of that BT-50 would greatly be reduced here in part to our higher average speeds among other things. Things are different here weather you like them or not OR think it is bad or good in your eyes. Now I know the US can't be as perfect as Australia(<---sarcasm) because we all know Australia is without fault even if they do have fuel subsidies and regulation on imports as well.



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