September 27, 2013: Justice drops the hammer on auto-parts fixing, but is it too late?

Posted by mmcmullan on 09/27/2013

Good morning and TGIF!

There’s been a lot of news about the ongoing Trans-Pacific Partnership (TPP) trade negotiations this week. Last weekend, United States Trade Representative Michael Froman hosted his counterparts from the 11 other participating countries for more talks in Washington, and everybody left the party still far apart. Then on Tuesday, a bipartisan group of 60 U.S. senators sent Obama administration officials a letter asking them to insert a rule against currency manipulation into any final TPP deal.

And then came yesterday’s news. From the New York Times’ Jaclyn Trop:

Nine Japanese automotive suppliers, along with two former executives, have agreed to plead guilty to conspiracy and pay more than $740 million in criminal fines for fixing the price of auto parts sold in the United States and abroad.

Yikes. This is only the latest, writes Trop, who notes that 20 companies and 21 executives have been charged so far in the ongoing Justice Department investigation. But there’s more to it than that. Diane Bartz and David Ingram at Reuters quote department official Scott Hammond, who said this price-fixing activity lasted for at least a decade:

"Every time we discover a conspiracy involving the automotive industry, we seem to find another one," said Hammond.

We’re very glad this investigation is bearing fruit. But it’s worth noting that the punishment comes long after the damage has been done. Alliance for American Manufacturing (AAM) President Scott Paul recently wrote in the Detroit News that the auto parts manufacturers in Michigan have been struggling against anti-competitive practices by our trading partners for years now, and the sector has shed a lot of jobs because of it. Is another trade deal like the TPP that rewards this bad behavior the right answer? Here's Leo Gerard, president of the United Steelworkers:

Today’s announcement may be celebrated by the prosecutors, but it only adds to the concerns of workers who see the Administration embracing Japan’s entry into the (TPP) Free Trade Agreement negotiations. Japan cheats, it’s that simple.

Elsewhere around the web:

Deal: Complete. Smithfield Foods Inc. has been sold to Shanghui International, a major China-based meat processor. The deal is historic, reports the Associated Press; it’s the largest takeover of a U.S. company by a Chinese firm. But Smithfield’s future success will be closely watched, writes David Kesmodel of the Wall Street Journal:

The acquisition's closing caps months of debate over the implications for U.S. food safety and the deal's fairness given China's limits on foreign investment in many of its industries. The integration of the two companies will be closely watched amid speculation the merger could spark other major food and agriculture deals between the U.S. and China.

The Obama administration’s manufacturing agenda, which has been seemingly sidelined for the last few months, is moving slowly forward. The White House has announced 44 grants to communities nationwide through its Investing in Manufacturing Communities Partnership (IMCP) program, which will reward municipalities with funding that lay out plans to attract manufacturers. One went to the Coachella Valley in Southern California, another went to the Quad-Cities area in Illinois and Iowa, and another to Prince George County in Virginia.

Your pals at AAM are happy to see movement on manufacturing from the administration, but there’s plenty more we could do to support a manufacturing agenda. We even provided the president with a handy list a few months ago, which you can read right here.

AAM’s manufacturing fact is ready for some football:

For the next few days the Alliance for American Manufacturing (AAM) is presenting Huddle, Politico’s weekday morning newsletter that previews what’s happening every morning on Capitol Hill. Click here to sign up and get it in your email.

Have a good Friday, everyone! You’re only hours from the weekend.


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