What's Up Mac - Free Trade Gains Coming to Germany

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By Mac Gordon

Michigan Bureau

GENEVA-German automakers are looking for an unexpected windfall from their U.S. assembly plants.

The Obama administration has nodded approval for extension of a free-trade agreement to European vehicles built in the Southeast U.S.

Three of the major German automakers, excluding Porsche, maintain a U.S. assembly plant-BMW in Spartanburg, SC; Mercedes in Tuscaloosa, AL, and VW in Chattanooga, TN.

The German transplant facilities are liable for a 10 percent European Union import tariff on their products built in the U.S., but not those from Germany, Austria, France or Czechoslovakia

BMW CEO Norbert Reithofer told a Geneva media conference that its revenues could spike by millions of euros if free-trade green lights go into effect.

The same benefits would be applicable for German-based suppliers such as Siemens and Thyssen Krupp.

Mercedes-Benz director Joachim Schmidt said that it plans to assemble C-class sedans at Tuscaloosa beginning in 2014, assuming that the U.S. widens free-trade coverage.

Ford's Europe president, Steve Odell, said that the U.S. automaker plans to add the Mustang to its export list, now including the C-Max compact van made in Europe and imported to the U.S.

When Fiat finally re-exports Alfa Romeo cars to the U.S., it will benefit from the free-trade pact, as do Korean producers Hyundai and Kia on cars imported from the U.S. and exported from South Korea, or back and forth from Europe.

German automakers especially see major gains from free-trade, inasmuch as they sell more cars in North America than they do in Germany.

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