WASHINGTON -- In the background of the free-trade debate that has raged in Washington this summer, a sacred cow of U.S. auto and trade policy is under threat.
The 25 percent tariff imposed on imported pickups and commercial vans, known as the "chicken tax," stands to be significantly rolled back through big-ticket trade deals being hammered out with Pacific Rim nations and the European Union.
With the legislative pieces now in place, the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership are closer to becoming reality. The Pacific Rim deal seeks to create a 12-nation free-trade bloc encompassing some 40 percent of the world's economy. The EU deal would lower trade barriers and seeks to align regulations between the U.S. and EU.
Both would remove the chicken tax. Critics of the tax say it has priced imported trucks out of the market, shielding the Detroit 3's biggest profit machine from robust foreign competition. The tariff also has had other effects, experts say, such as stifling pickup innovation and motivating Japanese automakers to build U.S. factories.
"It has provided a competitive advantage for the domestic pickup producers," says Daniel Ikenson, an economist and trade expert at the Cato Institute, a Washington pro-business think tank. "The response of the Japanese manufacturers has been to invest in production lines here in the United States."
After months of heated debate, Congress passed a bill last week that would give President Barack Obama authority to negotiate and send free-trade agreements to Congress for an up-or-down vote, free of amendments. With the so-called fast-track authority ready for Obama's signature, the wheels on the Pacific treaty can shift into high gear, and a final version of the deal could go to Congress by the fall. The EU deal is expected to take longer to finish.
Truck lovers have long hoped that removing the tariff would create a flood of new, smaller pickups that today are available only overseas.
But trade watchers and auto industry experts agree that a barrage of new pickups would be unlikely. Free-trade deals would roll back the tariff gradually over several years, even decades, they say.