Auto industry representatives from Canada, the U.S., and Mexico are pushing for better protections for their domestic car makers in the super-secretive Trans-Pacific Partnership (TPP), as negotiations between Japan and the three nations commence this week.
TPP talks in July were derailed partly due to the discovery of a secret deal between the U.S. and Japan about the auto industry matter.
At issue is a U.S.-Japan agreement that cars and car parts that are sold duty-free in TPP member countries would require just 45% and 30% domestic content, respectively. Canada and Mexico were not party to this agreement, and have now issued a letter to the trade representatives of their countries along with the U.S. that is pushing for a domestic content rule of 50% for both cars and car parts.
The September 8th letter warns that there are three million jobs in the industry at stake, and that the industry accounts for 20% of all trade between the three nations. Current duty-free rules between the three countries mandates that 60% of a light-duty vehicle in addition to a similar percentage for car parts, must be made in Canada, the U.S., or Mexico.
The loss of the manufacturing sector is just as big of an issue in Canada, as it is in the U.S. and plans are being made to continue TPP negotiations in the run up to the October election there. Such a move is controversial, but was justified as being necessary in order to protect Canada’s interests. Normally, matters of state are not dealt with during what is called Canada’s “caretaker mode,” during which period elected officials are restricted in their abilities and are supposed to conduct routine matters only until the election has passed.
Public sentiment in the U.S. on the TPP has been negative in overall, with a July New York Times/CBS poll showing that 63% of the U.S. public believes in using protectionist trade policies in order to help domestic industries, and only 30% stating that free trade should be supported without conditions.
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