Cash for clunkers plan revives trade fight
February 5, 2009 - 12:38 pm ET
UPDATED: 2/5/09 1:22 p.m. EST
WASHINGTON -- Import brand automakers and dealers warned today that a
vehicle scrappage proposal before the Senate would violate trade
agreements and could weaken the economy.
The Senate could vote today on the plan, which would offer $10,000 to
any moderate- or low-income consumer who trades in a car or truck that
is at least 10 years old and buys a new one that is more fuel-efficient
and "assembled in the United States." The trade-ins would be scrapped
rather than resold.
The U.S.-made mandate "smacks of the protectionism that led to the Great
Depression," said Barbara Nocera, the top Washington lobbyist for Mazda
North American Operations.
The Association of International Automobile Manufacturers, which
represents 14 other import brand automakers, also opposes the proposal,
spokesman Kim Custer said.
The American International Automobile Dealers Association urged its
members today to call senators and ask them to reject the proposal,
sponsored by Democratic Sens. Tom Harkin of Iowa and Debbie Stabenow of
"We should not take away the consumer's right to free choice. Any relief
for consumers during these economic times should apply to all new
vehicles for sale in the U.S. -- not just those assembled here," said
AIADA President Cody Lusk.
The sponsors want to add the scrappage amendment to a $900 billion
economic stimulus bill. The amendment's prospects are uncertain.
Lawmakers already have battled over provisions that would require
U.S.-made steel to be used in public works projects.
Alan Reuther, the UAW's legislative director, told Automotive News on
Jan. 30 that if U.S. taxpayer dollars are spent on an economic stimulus,
they should be targeted to create U.S. jobs.
Another scrappage proposal, sponsored by Sen. Dianne Feinstein,
D-Calif., does not include the made-in-America language. But sources
told Automotive News that Feinstein would not offer her plan if
interested parties -- including automakers -- could not reach consensus
on its details.
The Detroit 3 and import brand automakers generally favor the main goals
of scrappage legislation: to stimulate showroom traffic and vehicle
sales and to reduce fuel consumption by the nation's car and truck fleet.
The proposals also are known as cash for clunkers, fleet modernization
and accelerated retirement.
Hobbyists and makers of aftermarket parts and accessories oppose
scrappage proposals, saying they destroy vehicles that collectors and
restorers want or low-income people need.
Nocera, Mazda's director of government and public affairs, said the
Harkin-Stabenow amendment probably violates the North American Free
Trade Agreement and World Trade Organization rules.
She said the amendment's authorization of the U.S. Treasury Department
to issue regulations could further restrict qualifying vehicles,
possibly based on domestic content.
Nocera called made-in-America stimulus proposals "an ominous sign" of
The Harkin-Stabenow plan requires that a newly purchased vehicle must
get at least 5 mpg more than the one traded in for scrappage. A new car,
van or SUV must get at least 25 mpg in combined city-highway driving. A
pickup must get at least 20 mpg.