Trade tariff could cost American jobs

KTM, Piaggio say import duty would close U.S. operations

By Motorcycle.Com Staff, Dec. 11, 2008, Photography by Freeman G. and Piaggio
The American Motorcyclist Association says a proposed tariff on European motorcycles will send many Americans to the unemployment line.

“In this tough recessionary climate, it’s ludicrous for the U.S. Trade Representative to even consider imposing a 100 percent motorcycle and scooter tariff, because the move will cost countless Americans their jobs,” says Ed Moreland, AMA vice president for government relations.

“This very day, the Administration and the U.S. Congress are planning to bail out troubled U.S. automakers to the tune of billions of dollars to save American jobs,” says Moreland. “How, in good conscience, can the U.S. Trade Representative turn around and propose a measure that will spell the end of many motorcycle and scooter dealerships, and put their employees out in the street?”

Motorcycles with engine displacements between 50cc and 500cc are among a list of over 100 European-produced goods the U.S. Trade Representative (USTR) is considering for a 100 percent import duty. The proposed tariff is a response to the European Union’s ongoing ban on American beef treated with growth hormones.

The tariff could double the cost of small engine displacement motorcycles from companies such as Aprilia, Beta, BMW, Fantic, Gas Gas, Husaberg, Husqvarna, KTM, Montesa, Piaggio, Scorpa, Sherco, TM and Vespa.

Piaggio Group Americas, a company that includes Piaggio, Vespa, Aprilia and Moto Guzzi, released a statement opposing the proposed tariff.

A 100% import duty could mean machines such as Piaggio's prototype hybrid MP3 may not see the light of day in the U.S.“We urge USTR not to punish the U.S. employees of a healthy and growing personal transportation company, along with the 400+ U.S. dealers and employees that retail our scooters and small displacement motorcycles, when the only focus of this trade dispute is an agricultural product,” says Paolo Timoni, president and CEO of Piaggio Group Americas. “We also urge USTR not to punish the American consumer who in rapidly increasing numbers is choosing to add these clean-running, fuel-efficient machines to their transportation fleets in order to reduce U.S. fuel consumption, foreign oil dependence and today’s massive congestion and environmental issues. Finally, we urge USTR not to impose measures that would quickly force Piaggio Group Americas and a significant number of its dealers out of business.”

In a statement submitted to the USTR, Jon-Erik Burleson, president of KTM North American, says the tariff would also force his company to shut down.

“KTM North America, Inc, will be forced to completely close United States operations if a one-hundred percent tariff is placed on the 51cc to 500cc motorcycles,” Burleson wrote in his statement. “The KTM dealership network is comprised of numerous small business owners. Traditionally, small and medium size businesses have been the American backbone for generating U.S. jobs and with the possibility of the proposed tariff, the tradition of small business ownership will be shattered for many individuals.”

KTM may be forced to close American operations if the tariff is levied on 51cc to 500cc motorcycles.Kathy Van Kleeck, senior vice president of government relations for the Motorcycle Industry Council, submitted a statement to the USTR estimating the tariff would cost 3,276 dealership jobs and force 177 single-line dealerships out of business.

“The MIC does not understand why USTR would target the small-to-medium displacement motorcycles concerned for retaliation in this trade dispute,” Van Kleeck wrote in the statement. “Including these European motorcycles will not benefit any U.S. motorcycle producers. Motorcycles have nothing to do with the trade dispute over meat and meat product imports into Europe. Imposing tariffs on motorcycles will not target the European industries benefiting from the EC’s trade restriction or help the U.S. agricultural interests injured by Europe’s exclusion of beef. Retaliation should continue to be focused on the agricultural and food product sectors, where the unfair practice complained of occurs.”

This would not be the first time that such a tariff was considered. In 1999, the World Trade Organization Dispute Settlement Body granted the U.S. the right to impose tariffs on EU goods. Motorcycles were considered for the tariff in 1999 but were not included on the list of goods affected by the import duty.

In 2003, the EU revised its restrictions on U.S. beef and claimed that it complied with WTO requirements. However, the WTO Appellate Body released a report on Oct. 16, 2008 rejecting the EU’s claim and permitted the U.S. to continue to impose trade measures. On Oct. 31, a committee of trade experts and economists began accepting input on revising the list of goods affected by the tariff.

“The WTO found over 10 years ago that the EU’s ban on U.S. beef was not supported by science and was thus inconsistent with WTO rules. When the EU failed to bring its measures into compliance with its WTO obligations, the United States imposed tariffs on certain imports from the EU, as authorized by the WTO.  Since that time, we have been trying to resolve this dispute with the EU without changing the composition of tariffs,” said USTR Susan Schwab. “It is now time to revisit those tariffs to see if modifications would be appropriate.”

The USTR says it intends to announce any modifications to the existing tariffs by the end of the year.

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