Detroit — Chrysler Group LLC chief executive Sergio Marchionne said the United States should be cautious about signing a free trade deal with Japan, but questioned if a trade deal could include limitation on currency.
“I’ve never really understood and I still don’t know how in any type of free trade agreement you can sort of box in currency,” Marchionne told reporters Tuesday on sidelines of the North American International Auto Show. “If you know that your contracting partner is effectively manipulating the currency, you shouldn’t be signing the free agreement in the first place because that’s the best evidence of a nontrade barrier that exists.”
Detroit’s Big Three automakers — including Chrysler — through a trade group unveiled a proposal to prevent currency manipulation in a proposed free trade pact.
Automakers, the United Auto Workers union and many members of Congress are making a big push to convince the Obama administration to include currency provisions in the Trans-Pacific Partnership.
The U.S., Japan, Mexico, Canada and eight other nations have been negotiating a Trans-Pacific Partnership that would create a free trade zone accounting for 40 percent of the world’s economy. Australia, Brunei, Chile, New Zealand, Malaysia, Peru, Singapore and Vietnam are also part of the talks.
The Obama administration has shown no signs of including currency provisions in a free trade deal, preferring they be addressed through the G-20 and other international forums.
Marchionne said if Japan is successful in reaching a free trade deal with the U.S., they would push for similar pacts with Europe and Canada.
The American Automotive Policy Council offered a proposal, based on International Monetary Fund commitments already made by all TPP member countries, “will result in a trade pact that ensures that currency manipulation practices by a TPP members do not frustrate the market access commitments set forth in the final agreement,” the group said.
Marchionne — who also heads Fiat SpA, the majority owner of Chrysler — said he didn’t think the free trade deal between Korea and Europe had benefited European automakers. He also questioned whether a proposed Korean-Canadian free trade pact made sense.
“We need to be very, very careful that we understand the implications and the benefits of a free trade agreement with anybody,” Marchionne said. “We need to be very, very careful before we start embracing the concept of a flat world on the trade side without realizing what the implications are. There are some things that just don’t work.”
Without an even playing field, a trade deal can do “damage” to one side, he said.
Last summer, GM CEO Dan Akerson wrote President Barack Obama raising concerns about Japan.
Ford Motor CEO Alan Mulally has accused Japan of manipulating its currency and urged a tough line in trade talks.