Trans-Pacific Partnership: Officials claim it's a win for auto sector

Details on the Trans-Pacific Partnership are emerging Monday, with Canadian officials saying they got a 'win' for the automotive sector.

Auto Parts Manufacturing Association of Canada calls deal 'reasonable'

Auto parts makers weigh in

8 years ago
Duration 4:47
Flavio Volpe of the Automotive Parts Manufacturers Association looks at the potential of TPP

The Trans-Pacific Partnership is a win for the Canadian auto sector, say government officials after negotiating that 40-45 per cent of imported cars and auto parts be made in one of 12 TPP countries.

Foreign affairs officials claimed Monday they had "protected the auto sector" in the new deal with 11 other Pacific Rim countries, stipulating 45 per cent of imported vehicles and core parts will originate in a TPP country; and 40 per cent of other auto parts will have to originate in a TPP country.

Under the North American Free Trade Agreement, the rule is that 62.5 per cent of the value of cars and 60 per cent on auto parts imported from a NAFTA country must be made within the NAFTA region.

"Let's be absolutely frank and clear. Canada's automotive sector is an export-based industry," Prime Minister Stephen Harper said in a TPP briefing to reporters in Ottawa. "Our view is the rules that we've achieved mean that our automobile industry is going to have unprecedented access to the global market."

"You're either in or you're out. We chose to be in." Harper said.

Harper said an announcement on further funding for the automotive sector would be coming within the next few days.

Although TPP negotiations were held in secret, publication Inside U.S. Trade reported during the summer that the Japanese wanted 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.

Unifor official feels 'sickened and betrayed'

Canadian union leaders and auto parts makers were critical of Japan's alleged request. They reiterated their criticisms on Monday.

"I feel sickened and betrayed," said Chris Taylor, the president of Unifor Local 200, which represents Ford workers at the Essex Engine Plant in Windsor. "We've known this deal has been in the works for several years. The Harper Conservatives have made it clear they will pursue trade deals at any cost."

Even though the 45 per cent content quotas split the difference between current NAFTA rules of 62.5 per cent and the Japanese demand for 30 per cent, Taylor said the deal is "selling out the auto parts and auto manufacturing industry."

"We've been saying at least stick what is covered under NAFTA," Taylor said. "In our mind, [Canadian negotiators] bowed down to the pressures of the United States and Japan and buckled."

Unifor economist Jim Stanford says Canadian auto plants face "a dire" outcome and claims the deal would cost Canada's auto sector 20,000 jobs.

"It doesn't sound like negotiations, it sounds like [Canadian negotiators] were hell-bent and determined to get this agreement done at any cost and the cost is the automotive parts, automotive industry and our jobs," Taylor said.

In September, the Automotive Parts Manufacturers' Association of Canada joined with its Mexican and U.S. counterparts to draft a letter to Trade Minister Ed Fast to 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.

Windsor Mayor Drew Dilkens said the full impact of the TPP won't be known until all of the details are clear.

But he sounded concerned about how changes to tariffs and content rules will be phased in for Canada as compared to the United States.

TPP called 'reasonable' deal

In a statement issued Monday, the APMA called the TPP "reasonable."

"Canadian negotiators made a significant, material advance on the automotive parts rules of origin from the proposal they rejected in Maui and these new reasonable terms will have varying effects on Canada's automotive parts manufacturing." the statement read, in part. "On one hand, prospects to supply vehicle assembly in foreign markets will open for large Canadian suppliers with multinational footprints and access to mobile capital.

"On the other hand, small and medium sized suppliers to Canada's vehicle assembly supply chain will face new competitive pressure from large, multinational firms from TPP countries and further abroad."

Speaking to those criticisms of lower parts quotas, Harper said it was critical for Canada to be part of the deal.

"I believe that this sector has a bright future under this deal. It's a good deal for the sector," Harper said. "Being left out of this deal would have been devastating for the auto sector."

Eighty-five per cent of what Canada's auto sector produces is exported, according to the federal government.

"Canada's strong TPP autos outcome provides access to important new markets that Canada does not currently have free trade agreements with — including Japan, the world's third-largest economy — and protects and strengthens the integrated North American auto industry as a key competitive advantage," Foreign Affairs, Trade and Development says on its website.

'Deal will lay off thousands'

Meanwhile, the Council of Canadians questions the legitimacy of the deal, which had largely been negotiated in secret. The council claims thousands of jobs will be lost.

"The Harper Government has signed a deal that will lay off thousands of auto workers and put thousands of dairy farmers in jeopardy while giving even more foreign corporations the right to dictate Canadian policy. Stephen Harper has no right and no mandate to sign a deal that we are just learning about during a federal election," Maude Barlow, national chairperson of the Council of Canadians said in a statement.