Automotive Import Regulations

United States and Canadian vehicle regulations differ greatly from world regulations. Worldwide, United Nations / Economic Commission of Europe [UN/ECE] regulations are used in nearly every country, or are at least recognized and are permitted to be used, for the vehicle in question. In the U.S. and Canada, the vehicle regulations are vastly different. UN/ECE regulations are not recognized in North America, and vehicles that conform to UN/ECE are illegal to import, operate, possess in the U.S. and Canada. It is ridiculously expensive to convert the vehicle to be compliant with U.S. Federal Motor Vehicle Safety Standards (FMVSS) or Canada’s Canadian Motor Vehicle Safety Standards (CMVSS). In most cases, it is usually higher than the value of the vehicle itself. The average cost to do this is about $15,000 U.S. Dollars. There are slight differences between CMVSS & FMVSS, such as height of seat belts, speedometers, bumper height, and among other things, but it’s nearly the same set of regulations.

Most automotive manufacturers dislike FMVSS / CMVSS, with the exception of Ford, General Motors, and Chrysler [The “Detroit Big 3”]. The “Big 3” want FMVSS to stick around because it means that consumers in the United States and Canada are essentially locked out of getting a vehicle by non-official or non-conventional means due to the non-conformity to FMVSS [e.g. private vehicle importation]. Automotive manufacturers have to spend a ridiculous amount of money to get their engines EPA-certified and to get U.S. specification airbags, seat belts, bumpers, headlights, side reflectors, DOT-certified [Department of Transportation] tires, electronic systems, windshields, the list goes on and on and on. Secondly, automotive manufacturers have to spend money to get the U.S. specification vehicle crash-tested by NHTSA [National Highway Traffic Safety Administration] and the IIHS [Insurance Institute for Highway Safety]. Lastly, if the vehicle in question is going to be sold in California, or states that abide by California CARB [California Air Resources Board] emission standards, it will need to be smog tested and have California-specification emission control systems. In most cases, this will require a complete overhaul of the emissions equipment and sensors to CARB certified, California-specification “smog-free” model. This whole process is done before the vehicle is ever even on sale. Ever wondered why it takes a few months to get a new, recently-introduced, import vehicle? (presuming it is destined for the U.S. in the first place). That is why. This is the process put in a nutshell. By the way, you cannot buy a vehicle in another country [e.g. Mexico] and drive it across the U.S. or Canadian border. U.S. or Canadian Customs & Border Protection will confiscate the vehicle, unless it is proven that the vehicle in question does conform to FMVSS or CMVSS and meets federal EPA emissions standards. If a vehicle is imported into California, or states that abide by California CARB emission standards, the vehicle will be checked for a CARB certified, California-specification emission control system.

Next: The Chicken Tax. The Chicken Tax is a 25% percent tariff first imposed on the U.S. in 1963. It originally taxed 3 items: Potato Starch, Chickens, and Light Trucks. The tax was a response to then-recently imposed taxes that Europe taxed on our imported American chickens. Diplomats attempted to solve the issue diplomatically, but that quickly went down the gutter. Over the decades, the tariff was modified to remove Potato Starch and Chickens. What’s missing? Light Trucks. Back in 1963, Volkswagen was selling a good healthy abundance of their Type 2 (Split-Windshield) vans and trucks. The tariff was designed to specifically target foreign automakers seeking to sell imported pickup trucks. Today, the tariff continues to protect domestic automakers (The Detroit “Big 3”) in the pickup truck / cargo van segment of the U.S. automotive industry from often-more-efficient imported models. It is the tax’s only purpose today since the other two items that used to be taxed has been repealed. The best selling automobile in North America is the Ford F-150, and has been for at least 30 years. The only “foreign” pickup trucks that are currently on sale in the United States / Canada, is the Toyota Tacoma & Tundra, Nissan Frontier & Titan, and the Honda Ridgeline. These are not foreign pickups since they are all built / assembled in NAFTA [North American Free Trade Agreement] signatory countries, which would be Canada, The United States, and Mexico, one of the three. If built elsewhere, the 25% percent Chicken Tax would then apply. Automakers, including the domestic American “Big 3”, have exploited loopholes since the enforcement of the Chicken Tax. Most, but not all loopholes have been closed. General Motors imported the Chevrolet LUV pickup as a chassis cab only, and then went to a General Motors assembly plant to have the pickup bed installed, back in the 1970s and 80s. Mercedes-Benz currently ships their Sprinter cargo vans from knock-down kits into the United States, and builds them at their Ladson, South Carolina plant. However, Mercedes-Benz imports Sprinter passenger vans directly from Germany, because passenger vans are not considered a “light truck”. Basically, the Chicken Tax only applies if the vehicle’s purpose is for cargo duty, like a pickup truck or cargo van. Passenger vans do not apply because those are for transporting people, not cargo, despite the ability to unbolt and remove the rear seats and carpet on most vans.

Some people think the Chicken Tax should stick around and stay because it forces automotive manufacturers to build factories and assembly plants in the United States and Canada, hence, creating more jobs. This reason can be easily shot down, because manufacturers could build factories and assembly plants in Mexico, taking advantage of considerably lower wages there, since the Chicken Tax charges no duty when vehicles are built or assembled in Mexico. By the way, it does not matter where the vehicle was imported from. As long as a vehicle was assembled or built in a NAFTA signatory country, it is duty free. This applies to all vehicle classes, like regular passenger cars, light trucks and even motorcycles.

Sources:

Ending The “Chicken War”. Abolishing The 25 Percent Truck Tariff – PDF