The North (America) counterattacks, or at least tries to
It seems that the ghost of Chinese electric cars has achieved what seemed impossible: uniting neighbors who usually complain to each other. The Canadian Auto Parts Manufacturers Association (APMA), in an outburst of continental camaraderie, has come out to call for the renewal and modernization of the Treaty between Mexico, the United States and Canada (USMCA). Their argument, wrapped in the banner of economic security, is that if we don’t tighten our belts—North Americans, that is—the Asian manufacturers are going to eat our toast, or rather, our car battery.
The APMA, with a seriousness that is almost impressive, warns that our beloved region could be left behind in the global automobile race. The reason? A fragmented market. Because, of course, nothing facilitates the advance of a fierce competitor more than seeing us arguing among ourselves about tariffs and regulations, while they flood the planet with their products. The association points, with a trembling finger, towards high-value sectors such as batteries and electric vehicle production, where China is advancing at a pace that they say is as natural as a massive state subsidy.
Subsidies, overcapacity and the art of selling cheap
The Canadian organization does not bite its tongue and denounces that Chinese manufacturers, driven by government aid, have created overcapacity that distorts global prices. Come on, they produce so much that prices drop, a commercial strategy as novel as bartering. This phenomenon, according to his dramatic story, threatens the industrial bases of the three T-MEC countries, with one sector particularly affected: printing. Yes, that crucial activity that turns sheets of metal into car parts and that, apparently, cannot compete with prices that, suspiciously, seem to be below cost. Who would have thought?
In its exhaustive analysis sent to US trade authorities, the APMA painted a harrowing picture of the industrial cluster between Ontario and Michigan, allegedly hit by what they call “Chinese predatory practices.” Basically, they accuse China of saturating the market with products at ridiculous prices, compromising the viability of key industrial operations. Because, in APMA’s ideal world, competition is wonderful… as long as it’s not too good.
The president of the association, Flavio Volpe, came on stage to emphasize with pomp and circumstance that Canadian and Mexican manufacturers are the pillars that support the competitiveness of the United States. According to their narrative, Canada provides components of such high quality that they keep factories running, while Mexico offers attention, industrial capacity, labor flexibility and strategic integration. A very diplomatic way of saying: “We make the pretty parts and our neighbors to the south assemble them efficiently, so please, America, don’t leave us alone in this.”
The wish list to save the industry
To face this automotive apocalypse, the APMA has not sat idly by. He has presented his list of proposals to modernize the T-MEC, which includes gems such as simplifying compliance with the rules of origin (because bureaucratic paperwork is as fun as a puncture), supporting the transition to electric vehicles, harmonizing digital customs systems and, of course, strengthening access for SMEs to the supply chain. He also called for strengthening dispute settlement mechanisms, because what would a good treaty be without a legal fight from time to time?
Finally, the association, perhaps to sweeten the pill, highlighted that the USMCA has promoted greater regional integration, increases in investment, more regional content and, most importantly, more employment in the North American automotive industry. A happy ending that, no doubt, they hope will convince everyone that together we are stronger… especially against a common enemy that sells cheap cars.
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