KEEP YOUR DAMN Prior to WWII, Europeans considered chicken a rare item at their Sunday dinner tables, because it was expensive. The European economy was struggling, but grew stronger with help from the US. America was going crazy over German cars while Germany was just as excited about cheap chicken from the US. One single tax on chicken and cars unraveled into a damn CHICKEN! heap of consequences.

1956 1961 1962 1964 HUNGRY GERMANS CHEAP CHICKEN GOODBYE AMERICAN CHICKEN AUF WIEDERSEHEN The US began to produce so much chicken that businesses star- In order to meet the rising demand of chicken in, the US had to find German farmers could not keep up with the cheap American poul- America declined the import of light trucks from Germany to a val- ted exporting it to Europe in massive quantities by the early 60’s. a way to produce more chicken for less money. The demand was try. These angry farmers convinced the European Economic Com- ue of $5.7 million which is about one third of the value imported in Germany was demanding high numbers of chicken and american eventually met by the emergence of intensive rearing in poultry munity to establish tariffs on imported chicken, effectively shutting the previous year. Because Volkswagen trucks disappeard, Ameri- chicken was cheaper, thus america owned half the chicken im- farming. Geoffry Sykes, who pioneered scientific scientific poultry American producers out. They put a 50% tax on all US chicken. can trucks dominated the market. Shortly after that, Japanese com- port market in Europe. In Germany, only 1.1% of imported chicken farming, decided to put large flocks into even larger sheds, which This started the chicken war. Beginning in 1962, the US accused panies found a LOOPHOLE around the Chicken Tax by importing came from the US in 1956. Six years later, despite the cost and enabled farmers to increase revenue. Intensive rearing helped con- Europe of unfairly restricting their imports. By then, American ex- the entire truck but without the cargo box. Therefore, US customs effort of shipping, consumption rose to 23%. The Germans sure trol the chickens’ environment and eventually exploit economies of porters had lost 25% of their European chicken sales. classified them differently and theseCAB CHASSIS were able to ate a lot of chicken. scale to make the selling price of chickens lower. ditch the Chicken Tax.

EUROPEAN CHICKEN SALES LOST DEMAND FOR CHICKEN IN US CHICKEN PRICES VS. GERMAN VOLKSWAGEN SALES LOST CONSUMPTION from 1955 to 1965 1956 1961 1963 1964 60

23.0 % 50 100 % 66.6 % 75 % 40 25 %

30

1959 20 1980 VOLKSWAGEN FEVER 1963 CHEAP TRICK The Volkswagen vans were immensly popular in the US during the 10 US truck companies profited from those Japanese trucks because early 1960’s. In 1959, Volkswagen decided to hire an advertising they were new to small pickup truck models. Some of the American agency which increased VW sales immenesly. Iconoclasts, college THE US GETS EVEN small trucks were even almost entirely made from Japanese parts. professors as well as and recent grads were demanding Beetles PENCE PER LB. America was furious that their chicken had a higher selling price After having established a market for these kind of trucks, the CAB because of their value, quality, and functionality. The big demand 55 56 57 58 59 60 61 62 63 64 65 and was thus not selling well. In return, they created The Chicken CHASSIS were reclassified as light trucks in 1980. This effective- made sales units (total sales that a firm earns in a given reporting tax, or tarrif (a tax on imports or exports).The Chicken tax is a 25% ly closed the LOOPHOLE and got rid of the competitors of the US period) increase immensley. Everyone caught the Beetle fever. tariff on certain imported goods that was imposed in 1963 by the companies again. 10 United States under President Lyndon B. Johnson. Eventually, po- tato starch, brandy, and dextrine got the tax removed, but chicken OZ. PER WEEK US PURCHASE OF still got ta. President Johnson thought that by imposing the tariff 20 on the Volkswagen Bus’s commercial and pickup versions there’d be no politically detrimental UAW strike just before the 64 elec- 2009 1953 = 1,000 cars tion. President Johnson really thought he was clever, but look at what he started. STRIPPING TRUCKS 1959 Nobody wants the Chicken Tax. This becomes clear when US truck manufacturers, meaning exactly the companies the tax supposed to protect, start getting creative through LOOPHOLE truck models. TARIFF ACT OF 1963 Ford takes this to a new extreme with their TRANSIT CONNECT FAT CHICKS (2009–2013). With this model, Ford decided to build the car in Tur- POTATO STARCH 25¢ PER LB. key before shipping it to the US. This included rear seats, carpets, and windows, so it does not classify as a light truck after it crosses 1955 1965 BRANDY $5 PER GAL the US border. Once the US gets the car, they want to sell it as a DEXTRINE 3¢ PER LB. light truck which is why they remove the rear seats, carpets, and AUTOMOBILE TRUCKS 25 % AD VAL windows, box them up, and send it back to Turkey. This process lets the US obtain the car without having to pay the Chicken Tax. Even 24 % 55 % though this procedure is costly, it was still cheaper for them to strip the trucks.

IN THE LOOP

The inner circle shows the timeframe of the existance of the loop- hole status of the most important loophole truck models. The map in the center features the countries in which parts for these mod- els got manufactured.

SALE, SALE, SALE ! The most outer ring shows the sales percentage of each manufac- 2015 turer in the light truck segment in the year 2015. The big three are clearly dominating the market with a total percentage of 59.5 % 19% The split between the lighter and the darker teal gives information LET’S PARTNER UP about the amount of US manufactured and imported parts within Over the years there have been different trade agreements made each company. that have a direct influence on the US light truck industry: NAFTA: North American Free Trade Agreement, 1994 An agreement between Canada, and the US made it pos- sible to manufacture cars in each of those countries without any 22% extra tax. This has lead many international car companies to move their manufacturing plants to Mexico, Canada or even the US itself. 1971–1980 TPP: Trans-Pacific Partnerhip, drafted 2015 Ford This model was handled as a Cab A trade agreement between twelve Pacific Rim countries wanted to Chassis and thereofre didn’d fall increase trading, so will eventually eliminate taxes. This would open under the chicken. GM both the US market for Japanese trucks but also the Japanese car market for American cars and in doing so get rid of the Chicken Tax on trucks from those countries. CHEVROLET LUV TTIP: Transatlantic Trade and Investment Partnership, in process 1971–1980 d e h A trade agreement between the US and the European Union with s i The Chevrolet LUV got marketed as l b the aim of multilateral economic growth. It is still in progress, but a t a Chab Cassis. s e should it come through the TTIP would make the Chicken Tax more

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Mercedes Benz SUBARU BRAT Subaru 1978–1984

The Bi-Drive-Recreational-All-Terrain Kira

Transporter (BRAT) was marketed as Hyundai

1.7% Honda a coupe utility truck by welding a pair

of seats to the cargo bed and adding carpet, seat belts and grab handles. 2.8% DUMPING THE CHICKEN TAX? 2% With the impossible back and forth between various countries, nu- merous trade agreements made, tariffs broken, and unhappy farm- 2.3% ers and car manufacturers, it all comes down to wether we should 11.2 % abolishing the Chicken Tax or not. WITH CHICKEN TAX 6.5% + Double-edged issue for US automakers SOURCES + Foreign pickup trucks are not in the highly profitable U.S. market www.en.wikipedia.org/wiki/List_of_General_Motors_factories www.en.wikipedia.org/wiki/List_of_Chrysler_factories 7. 7 % + US automakers can’t import their own trucks from other markets www.en.wikipedia.org/wiki/Trans-Pacific_Partnership www.en.wikipedia.org/wiki/List_of_General_Motors_factories WITHOUT CHICKEN TAX www.online.wsj.com/mdc/public/page/2_3022-autosales.html www.content.time.com/time/magazine/article/0,9171,875410,00.html + U.S. automakers can import their own trucks from other markets www.papers.ssrn.com/sol3/papers.cfm?abstract_id=1440355 www.content.time.com/time/magazine/article/0,9171,829587-1,00.html + Resurrect Foreign-Made Pickup Trucks in the US www.content.time.com/time/magazine/article/0,9171,894606,00.html www.cato.org/publications/commentary/big-threes-shameful-secret + Many smaller manufacturers (Honda, Daihatsu, Mahindra, etc) could www.jalopnik.com/156838/the-free-trade-boys-are-clucking-repeal-the-chicken-tax Manufactured in the United States find ways to import distinctive pickups into the US www.enr.construction.com/opinions/editorials/2009/0603-PromoteInnovation.asp www.wsj.com/articles/SB125357990638429655www.presidency.ucsb.edu/ws/index.php?pid=75178 Manufactured internationally and imported www.cato.org/publications/trade-briefing-paper/ending-chicken-war-case-abolishing-25-percent-truck-tariff Congress passed a bill in October, giving Obama the authority to www.autobytel.com/auto-news/global-vehicles-and-thailand-argue-against-chicken-tax-on-imported-pickups-105325 Loophole light truck models negotiate free-trade agreements with Congress in an up-or-down www.trucktrend.com/news/163-news090601-mahindra-planning-kit-assembly-of-diesel-pickups-to-avoid-chicken-tax/ *Other: , Mitsubishi, Volvo, Audi, BMW, Porsche, Fiat vote manner. While the final version of the bill is expected to go to

Congress this fall, the European Union will take longer to finish its version of this free-trade agreement.