Cash for clunkers plan revives trade fight

Import brand automakers and dealers warned on Thursday that a vehicle scrappage proposal before the Senate would violate trade agreements and could weaken the economy.

The Senate could vote on the plan on Thursday, 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 on Thursday to call senators and ask them to reject the proposal, sponsored by Democratic Sens. Tom Harkin of Iowa and Debbie Stabenow of Michigan.

The sponsors want to add the scrappage amendment to a $900 billion economic stimulus bill. The amendment's prospects are uncertain.

Steel battle

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.

'Ominous sign'

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 increasing protectionism.

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.

By Harry Stoffer- Automotive News