|
 The Trans Pacific Partnership, or TPP, which seeks to cut trade
barriers and set common standards among a dozen nations reaching
from Japan to Chile, has become snared over a small set of issues,
including trade in autos and auto parts, since July.
The auto issue is crucial for Japan, whose automakers, led by Toyota
Motor Corp <7203.T>, depend on sales to the U.S. market and want
flexibility in how and where they source auto parts.
The stakes are also high for Mexico, which has seen a boom in
auto-related investment because of its proximity to the United
States, relatively low labor costs and participation in the North
America Free Trade Agreement.
Over the past two years, eight automakers, including Honda Motor
<7267.T>, Mazda <7261.T> and Nissan <7201.T>, have opened or
announced new auto plants or expansions of existing facilities in
Mexico.
A previous round of TPP negotiations failed in July after Mexican
officials objected to a proposal by Japan and the United States on
autos concerning the "rules of origin" that determine whether a
vehicle can be exported without tariffs.
Officials from Mexico and Canada were aiming for a 45-percent
threshold for local content on vehicles, two people briefed on the
talks said.
If part of a final trade deal, that would mean the majority of the
vehicle could be sourced from outside the 12 countries participating
in the TPP and still be sold in the United States - the bloc's
largest market - without tariffs.
Japanese trade negotiators separately pushed for a 32.5 percent
local origin threshold for auto parts separate from the rule
covering vehicles, the people briefed on the talks said.
It was not clear whether those two proposals were being taken up
together or how any trade deal would calculate local content. Rules
for such calculations under the NAFTA accord are complex.
NAFTA sets a 60-percent local origin threshold for auto parts and a
62.5 percent threshold for finished vehicles for tariff purposes.
Those rules have been credited with driving the auto industry's
investment-driven boom in Mexico since 1990 and Mexican officials
had earlier wanted a similar standard in the TPP.
[to top of second column] |
A more liberal set of rules, like those under consideration by trade
negotiators in Atlanta, could allow automakers more flexibility in
buying cheap and low-margin parts like interior plastics from
producers in Asia who could undercut suppliers in Mexico on price,
Mexican industry officials have said.
It would also invite criticism from U.S. union groups and Democrats
in the U.S. Congress who have urged that the TPP hold to the
standards for auto tariffs contained in NAFTA.
A TPP deal would also mean the United States scraps the tariff of
2.5 percent on Japanese car imports and the punitive 25 percent
tariff on trucks.
Auto parts makers in Canada and Mexico, for their part, had pushed
for a minimum threshold of at least 50 percent of local content in
any TPP agreement.
A Pacific trade deal would be a legacy-defining achievement for U.S.
President Barack Obama, who has said the deal would open key markets
to a range of U.S. exports.
U.S. officials have also promoted the trade deal as a counterweight
to China's rising influence in the region.
(Reporting by Ana Isabel Martinex and Krista Hughes; Writing by
Kevin Krolicki; Editing by Ken Wills; Editing by Ken Wills)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
