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DRIVING CONGRESS TO ACT ON NATIONAL SECURITY TARIFFS

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DRIVING CONGRESS TO ACT ON NATIONAL SECURITY TARIFFS

Volkswagen GTI is turbocharged with room for…tariffs?

The Volkswagen Golf GTI is a perennial winner of Car and Driver’s 10Best award. The German-built sport hatchback combines “speed, handling, build quality, an attractive interior, and room for the family,” all for under $30,000. Car and Driver raves about the GTI’s turbocharged engine and notes it’s a formidable challenger to competing “hot hatches.”

Apparently, the U.S. Department of Commerce believes that the GTI poses another challenge — maybe a turbocharged threat to America’s national security.

In a still-confidential 2019 report, the Department reportedly found that imported autos like the GTI “threaten to impair the national security” and recommended that the president impose tariffs as high as 25 percent.

All revved up

The president would enact these tariffs under Section 232 of the Trade Expansion Act of 1962. As TradeVistas’ Andrea Durkin has detailed, Section 232 is a little-used Cold War-era law under which Congress delegated broad authority to the president to restrict imports for national security reasons. The law is also the basis for current controversial duties on steel and aluminum.

The proposed tariffs have generated opposition from vehicle manufacturers, suppliers, economic analysts and members of Congress. The Alliance of Automotive Manufacturers notes that a 25 percent tariff on autos and parts would raise the price of an average imported car by an estimated $6,000 (and add $2,000 to a U.S.-built car) while potentially leading to the loss of over 600,000 American jobs. The Association of Global Automakers (now merged with the Auto Alliance to form the Alliance for Automotive Innovation) questions how passenger cars and light trucks are relevant to national security, suggesting that “America does not go to war in a Ford Fiesta.” Statements from Administration officials suggest that the “national security” justification for auto tariffs may be a pretext to gain negotiating leverage in other contexts.

Sourcing of US Light Vehicle Sales 2017

Congress may put the brakes on Presidential tariffs

With the possible exception of avid inventor Ben Franklin, America’s founders would be astounded by the GTI. They might be equally astonished, however, by the Trump Administration’s assertion of broad authority to impose tariffs. After fighting a revolution against “taxation without representation,” the founders believed it was vital to entrust the power to impose tariffs and other taxes to the people’s representatives. Specifically, Article I, Section 8 of the Constitution vests Congress with the “power to lay and collect taxes [and] duties.”

Since 1934, after its disastrous experience with the Smoot-Hawley tariffs, Congress has increasingly delegated specific trade and tariff powers to the president, subject to a variety of limitations. Presidents have generally used these powers judiciously and to reduce tariffs to expand trade. For example, when President Kennedy signed the 1962 Trade Expansion Act (which enacted Section 232), he emphasized the importance of opening trade and reducing trade barriers and warned against “stagnating behind tariff walls.”

President Trump has taken a maximalist approach to his delegated powers to impose tariffs, particularly for “national security” reasons. In response, Congressional critics from both parties point out that under the Constitution, Congress should be the ultimate driver of tariffs, not the president.

Other concerns with the Administration’s application of national security tariffs include a lack of transparency in determining tariffs and administering tariff exclusions, its use of an overly broad definition of national security, and the cascading impacts on U.S. producers from higher metal prices. Legal experts are also concerned that the Administration did not follow the law when it imposed new tariffs on derivative steel products (including nails and bumpers) and when it extended its review of auto tariffs when time limits under Section 232 have likely expired.

Cost of Autos 232 Tariffs

Time for a trade law tune-up?

Congress could rein in presidential national security tariffs by simply repealing Section 232. However, even critics of current tariffs recognize that there are circumstances where the president might need authority to adjust trade in response to national security threats. Accordingly, Congress has focused instead on bipartisan proposals to place additional limits on the president’s ability to employ Section 232.

The Trade Security Act of 2019, introduced by Senator Rob Portman (R-OH) and Representative Ron Kind (D-WI), would bifurcate the Section 232 process. The Department of Defense (DoD) would first investigate whether there is a national security basis for restricting imports of an article. If DoD finds that an article poses a security threat and the president decides to act, the Commerce Department would then recommend tariffs or other measures to address the threat. The Portman-Kind bill would also enable Congress to disapprove any Section 232 trade restriction imposed by the president through a resolution of disapproval that would itself be subject to a veto by the president. This legislation would not impact current Section 232 tariffs on steel and aluminum.

The Bicameral Congressional Trade Authority Act of 2019introduced by Senator Pat Toomey (R-PA) and Representative Mike Gallagher (R-WI) would also require DoD to take the lead in investigating whether an article poses a national security threat, while also adopting a tighter definition of national security. Notably, under this legislation, no proposed Section 232 action by the president could take effect unless Congress first passes a resolution of approval. The Toomey-Gallagher bill would also (i) repeal current steel and aluminum duties unless Congress passes an expedited resolution of approval, (ii) direct the independent U.S. International Trade Commission to report to Congress on the economic impacts of Section 232 actions, and (iii) require that the USITC administer the tariff exclusion process for future Section 232 actions.

Two bills in Congress to brake 232

Getting out of neutral

For the past year, Senate Finance Committee Chairman Chuck Grassley (R-IA) has been attempting to meld the Portman and Toomey bills into a compromise measure that would attract veto-proof majorities in Congress. Despite considerable bipartisan support, Grassley notes that this effort has faced two challenges. First, there’s opposition from Republicans who see the legislation as a rebuke of President Trump. Second — as any student of U.S. trade history could have predicted —interests that benefit from new national security tariffs are now lobbying intensely to retain these tariffs. Despite this opposition, Grassley has vowed to continue efforts to enact Section 232 reform in 2020.

More potholes ahead?

Meanwhile, Volkswagen’s GTI and other imported autos will continue to face the threat of national security tariffs. And that threat won’t necessarily subside if a Democratic president takes office next year. Some Democrats have already proposed using the Trump Administration’s expansive reading of Section 232 to advance their own policy goals — particularly to address the climate crisis. Carbon-emitting autos like the GTI would be a prime target for new tariffs.

The GTI was designed for Germany’s smooth, high-speed autobahns. When it comes to U.S. national security tariffs, however, the GTI’s road ahead may continue to be full of potholes.

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Ed Gerwin

Ed Gerwin is a lawyer, trade consultant, and President of Trade Guru LLC.

This article originally appeared on TradeVistas.org. Republished with permission.

automotive cybersecurity

Automotive Cybersecurity Market to Cross USD 837 Mn by 2024

The automotive cybersecurity market is set to grow from its current market value of more than $187 Mn to over $837 Mn by 2024, as reported in the latest study by Global Market Insights, Inc.

In an era where connected cars are deemed to mark the future of mobility, the market is indeed set to occupy a pivotal stance in smart and sustainable tech space. The cyber threats or security breaches in connected cars enable external access to the vehicle’s network and not just compromise the driver’s data privacy but can also pose serious threats to the driver’s physical safety and car’s operation. With data security breaches becoming intensely sophisticated, the automotive cybersecurity industry has turned out to be an inevitable investment spot that would aid the automotive sector’s continued roadmap toward connectivity without risk.

Speaking of competitive trends, strategic collaborations and partnerships have emerged as two of the top-notch measures adopted by the automotive cybersecurity market giants. One of the recent trends in this regard has been the JVs established between the automotive companies and technology conglomerates, in a bid to understand and resolve the security complexities in modern or connected vehicles.

The compulsion of connected services in vehicles for offering features like improved comfort, convenience, road safety and assisted parking will greatly benefit the automotive cybersecurity market, which apportioned revenues of over USD 187 million in 2017. With the mounting probability of a vehicle being hacked, a number of IT companies are partnering with automakers to develop security features and enhance vehicle safety measures. The  industry caters to every type of vehicle, from average passenger and luxury cars to heavy-duty trucks. Estimates suggest that close to 70 million connected vehicles will be running on the roads by 2020, a significant surge in comparison with the 2016 figure of 28 million. These statistics represent the vast amount of electronic control units (ECUs) that would be required in order to enhance the vehicles, instigating the market.

The network security dominates the automotive cybersecurity market and is projected to generate a market revenue of USD 236.4 million over the forecast timescale. The in-vehicle networks carry a variety of personal and operational identifiable information such as microphone recording, location, and call and navigation history, due to which protecting the data and messages over the network bus is important for privacy and operational security. Moreover, network protocols, such as Local Interconnect Network (LIN), Controller Area Network (CAN), automotive Ethernet, FlexRay, Wi-Fi, 5G network, Bluetooth, and Dedicated Short-Range Communication (DSRC), also aggravate cybersecurity threats. Therefore, it is important to adopt improved security techniques by interacting with security-enhanced network protocols to provide authenticity, integrity, and reliability of transmitted data.

One of the recent instances that validates the growing stance of collaborations & JVs as prominent growth tactics has been the partnership between SafeRide, one of the formidable automotive cybersecurity market players and Netherland based digital platform security giant, Irdeto. Under the terms of the recently inked partnership, SafeRide in collaboration with Irdeto is claimed to provide the OEMs and tier -1 automotive suppliers with a holistic cybersecurity solution for autonomous and connected vehicles.  Allegedly, SafeRide’s flagship vSentry solution would be integrated with Irdeto’s famous Connected Transport solution, Cloakware, to offer a multi-layered approach in protecting the platforms against tampering, automated attacks, and reverse engineering.

Europe’s automotive cybersecurity market is witnessing a fast growth rate and is projected to reach USD 224 million by 2024. Germany dominates the European automotive cybersecurity industry as it is the home to some of the leading automobile manufacturers including Ford, Volkswagen, BMZ, Audi, Mercedes-Benz, Opel, and Porsche. These companies are working with various software cybersecurity providers to increase the security offering aimed at maintaining passenger safety while traveling. For instance, in 2016, Volkswagen collaborated with three Israeli cybersecurity experts to establish an automotive cybersecurity company aimed at making vehicles and their ecosystem highly secured against cyber-attacks.

The companies functioning in the automotive cybersecurity market are investing in research and development strategies aimed at bringing about innovations in the automotive cybersecurity solutions. Some of the major vendors operating in the automotive cybersecurity industry are Audi, BMW, Ford, Honda, Nissan, General Motors, Volvo Car Group, Volkswagen, BT Security, Cisco Systems, Lear Corporation, Symantec Corporation, Argus Cyber Security Ltd., Intel Security, Arilou Technologies Ltd., Continental AG, and Karamba Security.

Source: https://www.gminsights.com/industry-analysis/automotive-cybersecurity-market

U.S. Holds Advantage as Auto Industry Shifts to Autonomous Vehicles, New Report Shows

The United States is well-positioned to emerge as a global leader in connected and autonomous vehicles (CAVs), but a new report released today by the Information Technology and Innovation Foundation (ITIF), the world’s top-ranked science and technology policy think tank, shows that tariffs on automotive imports would threaten its competitive advantage in the automobile industry. The report recommends that, rather than impose tariffs, Congress and the administration should adopt a more robust set of innovation policies to strengthen and secure America’s CAV leadership.

“The automobile industry is moving in a new direction focused increasingly on connected and autonomous vehicles. Because the United States already has a competitive advantage in IT hardware and software, the U.S. auto industry has a significant opportunity to reemerge as a global leader,” said ITIF President Rob Atkinson, lead author of the report. “The goal now should be to continue building on America’s strengths, not to impose tariffs that disrupt the market. In order to leverage America’s competitive advantage, the administration should make sure it is the most attractive location in the world to develop, test, and produce autonomous vehicles.”

The new report offers a series of policy recommendations to ensure America’s continued leadership in CAVs, including: ensuring the U.S. regulatory system tilts toward experimentation, testing, and deployment of AVs, harnessing the tax code to enable AV innovation and competitiveness, ensuring companies in the United States have access to a world-class engineering and computer science workforce and supporting industry cooperative, pre-competitive research and development.

“Autonomous vehicles may still be in early development, but there is little doubt they are the future of transportation,” said Caleb Foote, ITIF research assistant and co-author of the report. “The administration should make the most of this opportunity by ensuring the country’s regulatory and innovation policies related to AVs are the best in the world.”

Port of Hueneme Sets Cargo Volume Record

Oxnard, CA – The Port of Hueneme realized its highest international trade year in its 77 year history and its second highest year for domestic and international freight combined.

The benchmark year included a 30 percent increase in auto exports. The total tonnage for FY 2013-2014 came in at a strong 1,438,596 metric tons representing a less than 1 percent decrease from last year’s all-time high.

“This represents a continuing path to economic recovery keeping the Port at strong trade levels,” according to a statement issued by the port.

Strong growth in freight activity was seen in the Port’s niche markets of automobiles, high and heavy cargos, fresh produce, fertilizer, and domestic commodities. Automobile imports boasted a robust 7.1 percent increase over last fiscal year while exports exploded by 31 percent over 2013 scoring the second best year on record.

A large percentage of the export increase was driven by more foreign manufacturers such as Honda, Toyota, Nissan, and Acura operating from new facilities within the US and sending their US-manufactured vehicles to the Asian market. Hyundai/Kia leads the import arena with a strong 10 percent growth.

Wallenius Wilhelmsen Logistics (WWL) is the leading shipper handling agricultural and heavy equipment cargo at the port, and provides shipping and technical processing for automobiles. The company also handles the bulk of the high and heavy cargo, as well as the transport and processing of automobiles.

On the fruit side of the Hueneme’s business portfolio banana imports remained strong at 655,589 metric tons. Other fresh fruits and vegetables handled by port customers grew by 1.6 percent.

Other customers of the port includes Yara North America Inc., who manages the liquid bulk fertilizer and Air1 Diesel Exhaust Fluid (DEF) through the port and across North America.

DEF is a high purity solution of urea in water, used to chemically reduce NOx emissions from trucks, buses and other units powered by diesel engines. Yara North America is the world’s largest producer and supplier of Air1 and the Port of Hueneme is a key supply point for the company’s western US customer base.

Volumes of ‘shallow draft’ cargo such as fish, lube oil, and vessel fuel were down marginally for the year, while the offshore domestic oil trade held steady.

The Port of Hueneme moves $8 billion in goods each year and consistently ranks among the top ten US ports for automobiles and fresh produce.

09/26/2014

Alfa-Romeo to Expand North American Dealership Network

Auburn Hills, MI – An initial group of 86 dealers have been awarded Alfa Romeo franchises in the US and Canada.

According to the Italian auto maker, 82 of the new dealers are located in 33 states, with California, Texas, and Florida having the largest concentration of dealerships.

There are four Alfa Romeo dealers in Canada in this first group.

The initial pool of dealers was drawn from existing FIAT and Maserati brand dealers.

“The 86 dealers will be the first to sell the all-new 2015 Alfa Romeo 4C coupe and limited-edition 4C Launch Edition when the iconic Italian sports car brand returns to the North American market later this year,” the company said, adding that it anticipates that its North American dealership network will eventually exceed 300 franchises.

06/16/2014