Auto-sector protection under TPP deal less than Ottawa touted

October 9, 2015

The Canadian government has omitted a key detail from its public explanation of what would change for this country’s vital auto sector under the Trans-Pacific Partnership trade agreement.

International Trade Minister Ed Fast, whose party hopes to capitalize on the deal, which would open Japanese markets for Canadian business, is pledging to make the agreement public in a matter of days.

But, contrary to what government documents and Prime Minister Stephen Harper have said, the local-content requirements for some auto components under the TPP deal are lower than advertised.

This is important because the agreement reached this week in Atlanta among Canada and 11 other Pacific Rim countries would eliminate Canadian tariffs on Japanese vehicles and make it easier for manufacturers to use offshore parts in cars. It would be a boon for low-wage Asian suppliers but a challenge for Canadian firms....

Summaries of the deal from the Department of Foreign Affairs and International Trade, and Mr. Harper himself, have focused on the fact that local-content requirements would be 40 per cent and 45 per cent for vehicle components.

However, some components will have local content thresholds as low as 35 per cent. This means 65 per cent of the content could come from countries outside the TPP zone.

Mr. Fast’s office defended the government’s explanations, saying they focus on the components that Canadian firms produce in large quantities...

It is expected more sophisticated components, such as engines, chassis and transmissions, would have higher local content thresholds, while simpler parts would have the lower thresholds....

This was excerpted from an 8 October 2015 edition of The Globe and Mail.


Topic(s): 
Rules of Origin & Trade Agreements / Trade Agreements
Information Source: 
Canadian News Channel
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