Auto parts makers in Canada, the U.S. and Mexico have urged their governments not to give in to demands from Japan for less NAFTA-made content in vehicles at new talks on the Trans-Pacific Partnership.
Canadian and Mexican negotiators are in Washington today trying to work out terms for automotive issues in the trade deal which would open up freer trade among 12 Pacific nations.
- What is the Trans-Pacific Partnership?
- Trans-Pacific Partnership talks: Key issues preventing a deal
The key issue in talks with Acting Deputy U.S. Trade Representative Wendy Cutler and Japanese officials is "automotive rule of origin," a term that describes how much content in autos and auto parts must be made within NAFTA.
The TPP talks broke down in July when Mexico and Canada balked at content rules that could have meant Japanese vehicles could be imported with fewer parts made in North America.
Canadian, Mexican parts makers join forces
Flavio Volpe, president of the Automotive Parts Manufacturers' Association of Canada, said he has been told by Trade Minister Ed Fast that Ottawa "would continue to block any outcome in TPP negotiations that would hurt the automotive parts sector."
The APMA joined with its Mexican and U.S. counterparts to draft a letter to Fast yesterday to again urge Canadian officials to reject any deal that would eat into the North American share of parts manufacturing.
"An inadequate content rule for parts will dramatically impact our domestic parts manufacturing industry and the jobs that come with it," the letter said.
Although TPP negotiations are held in secret, publication Inside U.S. Trade reported the Japanese want a rule that vehicles can be imported tariff-free to North America with just 30 per cent content from the U.S., Canada or Mexico.
The Japanese are reported to be negotiating a side deal with the U.S. on the issue. That could open the door for Japanese vehicles with much cheaper parts made in China, Thailand or other Asian countries to be imported tariff-free.
Under NAFTA, the rule is that 62.5 per cent of the value of cars and 60 per cent on auto parts, must be made within the region.
Going for 50% content
The parts makers say they could live with 50 per cent of the value of parts or content in finished cars and trucks made in North America, a proposal made by the vehicle manufacturers.
"We would like to take this opportunity to urge your continued vigilance in finalizing a Trans-pacific Partnership that allows for domestic, regional and global growth for motor vehicle component manufacturers," APMA and its Mexican and U.S. counterparts say in the letter to Fast.
They point to the three million automotive-related jobs in North America.
Jim Stanford, economist for autoworkers' union Unifor, says Canadian officials have no mandate to negotiate away Canadian jobs, particularly as an election is under way.
Canada already incurs an annual $5 billion deficit in bilateral automotive trade with Japan, he said.
"We are working with our local union activists in auto communities (many of which are close ridings) to raise awareness of the TPP threat, make it an issue in the election, and pressure the candidates to commit to protecting auto interests," he said in an email to CBC.