Reality CheckJames B. Treece
CAR DOMESTIC-CONTENT LABELS will make it easier to "buy American," say U.S. auto execs. The federally mandated labels, on new cars as mf Oct. 1, list what percentage of parts are U.S. or Canadian, the topmost foreign countries supplying parts, the country the engine and transmission parts come from, and where the car was assembled. Detroit says foreigners hoodwink U.S. buyers into thinking a car is North American-made when most of its parts come from abroad.
IN REALITY, the rules are severely skewed to make Detroit look good and everyone else look bad. Because only parts are tallied--not labor--the wages paid to American workers in Japanese-transplant operations aren't counted. Moreover, the formula for identifying a part as domestic is so arbitrary that the same car could carry a label showing homegrown content as high as 53% or as low as 11%, according to the National Highway Traffic Safety Administration. Reason: rounding up or down. A part whose subcomponents are 70% domestic gets rounded up to 100% homegrown. If it's only 69% domestic, tough: It counts as 0%.