Ford's Hinrichs on how to improve NAFTA

Hinrichs: Stop forex manipulation, standardize cars

Hinrichs: A NAFTA update can serve as an example to the world.

DETROIT -- Ford Motor Co. believes a modernization of the North American Free Trade Agreement should include protections against currency manipulation and a homologation of standards among the region's three countries.

Speaking to Automotive News, Joe Hinrichs, Ford's president of the Americas, said if those features are addressed in an update of the 23-year-old pact among the United States, Canada and Mexico, NAFTA could be an example for future trade deals. It was one of the first times Ford has hinted at what specific updates it wants out of the looming renegotiation.

"We can, as a country and region, provide some good templates and examples for the future of trade agreements beyond the NAFTA region," he said. "I think, in the end, the people involved know what's at stake here and we'll clearly end up somewhere that will make sense for the United States and the industry."

President Donald Trump last week said he would renegotiate the agreement with Canada and Mexico, walking back previous reports that he would pull out of the deal.

"We don't know how it will play out," Hinrichs said. "It's our belief -- and I think the industry's belief -- that the integration of the North American auto business has certainly served the North American continent well relative to its competitiveness vs. the rest of the world, and that's important for all of us to remember."

Critics, including Trump, argue that NAFTA has led to job losses in the United States as automakers have invested in Mexico because of its low labour costs. By 2018, Ford will make nearly all of its cars in Mexico, while it has reserved U.S. plants for its higher-margin light trucks.

Ford, which was outspoken in calling for currency manipulation protections in the now-dead Trans-Pacific Partnership, said those protections are necessary in any update to NAFTA, even though it isn't suspicious of the United States' two partners.

"Traditionally we don't see the Canadian dollar or Mexico peso being manipulated by the government, but we believe trade agreements should incorporate mechanisms around currency manipulation and the like," Hinrichs said.

A homologation of safety and other vehicle standards would save car companies time and money, he said.

GM, like Ford, is in favor of improving the trade deal, CFO Chuck Stevens said last week.

"We want a balanced playing field," he said.

Stevens said GM supports simplifying the deal's local-content and origination rules. If Trump changes NAFTA in a way that increases the cost of imported parts or vehicles, "we're hopeful there would be a period of transition so we can adjust to it," Stevens said.

Trump must give Congress 90 days' notice if he plans to renegotiate the deal. Commerce Secretary Wilbur Ross said last week the administration is working with lawmakers to kick-start renegotiations.

"The most important thing in the context of it all, we need a healthy auto industry in North America and of course the United States to support the economy and jobs," Hinrichs said. "We want to make sure, in the end, that's what we get."

Nick Bunkley contributed to this report.

You can reach Michael Martinez at mdmartinez@crain.com -- Follow Michael on Twitter: @MikeMartinez_AN

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