Canada and Mexico drawn into deal-breaking auto talks in TPP negotiations

Canada and Mexico are joining forces and working to come up with a solution to preserve their respective vehicle assemblers and parts if a deal opens North America to Asian imports.  The United States had already cut a deal with Japan on how much vehicle content needs to come from TPP countries when Canadian negotiators showed up at the Maui Talks.

(http://www.theglobeandmail.com/news/politics/us-excludes-canada-mexico-from-tpp-auto-negotiations/article25842330/)

Canada and Mexico are voicing displeasure as they were being excluded from the discussions on auto parts. There are some rules which would hurt the Canadian supply chain as it would mean Japan could import lower-priced parts from outside the TPP region at the expense of Canadian suppliers. Canada is in fact at the center of both major obstacles to a TPP deal that were cited by some negotiators: the future of auto and dairy trade. Canadian officials have made it clear to the U.S. and Japan that the Trans-Pacific outcome on autos must protect and respect the integrated structure of the [North American] industry. Now, Mexico and Canada are preparing their own suggestion for vehicle-content rules.

Mexico and Canada have to bring a proposal to the Japanese so that it will be acceptable to all four countries. Japanese negotiators were ultimately upset with Washington over how it handled the auto-content talks at the Trans-Pacific negotiations. Japan had feared the content rules it sought were not conditions that Canada and Mexico would accept, but the U.S. had played it down.

Canada is fighting at Pacific Rim-area trade talks to maintain its privileged commercial relationship with the United States and at the same time prepares itself for a new agreement that would grant 10 other countries even better access to U.S. markets than the North American free-trade agreement provided. Canada is the ninth largest vehicle producer in the world, and its auto sector is the largest manufacturing employer in this country. The industry, including parts manufacturers, directly supports more than 550,000 jobs across Canada according to the Canadian Vehicle Manufacturers’ Association.

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