1. TRANS-PACIFIC PARTNERSHIP (TPP)
IMPORTANCE TO INDIANA
11/11/2018

2. OUTLINE Misconceptions about TPP Example of impact Competition
Secondary effects
State activities
Questions

3. TRANS-PACIFIC PARTNERSHIP
More than just tariffs!
Non-tariff barriers to trade
Standards
Government procurement
Intellectual property
Rules of origin
Etc.
More than just manufactured goods
Services
Investment

4. AUTOMOTIVE TARIFF EXAMPLES
A Mercedes M-Class Utility vehicle made in Tuscaloosa, Alabama carries a 10% EU import tariff not levied on Mercedes sedans made in Rastatt, Germany.
Europe’s Carmakers Look Forward to U.S. Trade Pact, New York Times (March 2013)
A car exported from Tennessee to Brazil costs 55% more than one exported from Mexico.
America’s Car Capital will soon be…Mexico, Forbes (2014)

5. TPP & TTIP: THE NEED When: April 26, 2012 Where: Ingolstadt, Germany
HQ AUDI AG
Who: Dr. Jürgen Unser
Project Lead – AUDI NA site selection
What: Meeting between Kent Anderson
and Dr. Unser regarding AUDI NA
site selection
Why: Bring AUDI to Indiana!

6. AUDI – BACKGROUND INFO AUDI Q5 production
Moving from Ingolstadt to Mexico
World vehicle – not market specific
Export driven factory
Europe 50%
USA 15%
South America 5%
Africa 5%
China made there
Rest of Asia 25%

7. What was the driving cost(s)?
AUDI’S MESSAGE
Four hour meeting with Dr. Unser, mostly listening
AUDI’s first NA factory
Mexico vs USA
Project team split 50:50
Side 1: Make them where you sell them
Side 2: Make them where it is less expensive
What was the driving cost(s)?
Labor?

8. ADVANTAGE MEXICO
Tariffs were the driving factor behind AUDI’s decision to build their first North American factory in Puebla, Mexico
€1,050 Euro per vehicle in tariffs – advantage Mexico vs. USA

9. U.S. FREE TRADE AGREEMENTS (20 Countries)

10. List of Mexico Foreign Trade Agreements
(44 Countries)
Signature of free trade agreements
1994 Mexico-USA and Canada (NAFTA)
1995 G3 between Mexico, Venezuela and Colombia (Venezuela has withdrawn)
1995 Mexico-Costa Rica
1995 Mexico-Bolivia
1998 Mexico-Nicaragua
1999 Mexico-Chile
2000 Mexico-Israel
2000 Mexico-European Union
2001 Mexico-Norway, Switzerland, Iceland and Liechtenstein
2001 Mexico-El Salvador, Guatemala and Honduras
2004 Mexico-Uruguay Economic Partnership Agreement
2005 Mexico-Japan
Plus more… a total of over 40 treaties

11. Existing Vehicle Assembly Plants in Mexico
Source: Geo-Mexico

12. New Assembly Plants in Mexico announced since 2009
Audi
Kia
Infiniti
Mercedes
Toyota
BMW
Mazda
All new assembly plants announced since 2009 for North America
are being built in Mexico.
Source: CAR (2014); Forbes, Oct. 2014

13. CUMULATIVE INVESTMENT BY COUNTRY, SINCE 2009

14. SECONDARY EFFECTS
Tariff free exports to geographic areas covering 70% of world’s GDP
Automaker’s located in Mexico must buy at least 62.5% of their auto parts in North America.
US based automotive suppliers that can cost competitively deliver to Mexico are being pressured to establish operations in Mexico so that OEMs can meet trade agreement local content requirements.

15. STATE ACTIVITIES Governor letters supporting TPA
IEDC support of local TPA events
Lilly event with Congressman Young
Indy Chamber event
IEDC participation in USTR calls

16. Vice President, Business Development
Thank You
KENT ANDERSON
Vice President, Business Development