The impact of a US-Europe free trade agreement on auto supply chains

An article in the New York Times (March 7, 2013) describes the possible impact of a US-Europe free trade agreement on automobile production. Executives at BMW and Mercedes claim that they would manufacture cars in the US and ship them back to Europe to reduce their costs, by eliminating the current 10% tariff on imprts into Europe. Others, like Fiat, expect to ship Alfa Romeo cars to the US. But the main impact will be the standardization of crash testing and other standards which will permit part commonality across the designs for the two regions. Given the greater flexibility of US employment and other rules, will the auto supply chains increase production, and thus employment in the US at the expense of Europe ? Will design locations move to Europe leaving production in the US or will these vary by company ? Will the results for autos be very different from the impact for other industries, such as pharmaceuticals ?

About aviyer2010

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