Reuters has reported today that negotiators working to finalize the Trans Pacific Trade Pact (TPP) are getting close to finalizing an agreement now that they’ve made headway on the issue of auto parts. According to the report, negotiators have been working to remove a stumbling block from the agreement that makes it easier for automakers to sell cars in the U.S. with more parts purchased in Asia. The auto parts hurdle is just one of a few issues slowing down progress on the agreement, which also includes issues concerning dairy trade and patent periods for certain prescription drugs.
Countries involved in the discussions have been pushing for varying degrees of locally sourced vehicle content – from Japan, which has been pushing for a local sourcing threshold of 32.5 percent, to Mexico and Canada aiming for 45 percent, according to Reuters. The Motor & Equipment Manufacturers Association (MEMA) says it has been working closing with negotiators and is urging U.S. Trade Representative (USTR) Michael Froman to ensure that the TPP provides for fair rule of origin for motor vehicle parts.
In a Sept. 24 letter to the USTR, MEMA President and CEO Steve Handschuh noted, “While we are pleased with the constructive and cooperative manner of these discussions, I wanted to take this opportunity to reiterate the need to finalize an agreement with a fair rule of origin that will both promote U.S. trade and a strong, stable domestic supply base.
“We continue to believe that the rules of origin for motor vehicle parts should reflect any final agreement on finished motor vehicles,” continued Handschuh. “MEMA has identified more than 1 million direct U.S. motor vehicle component manufacturing jobs – jobs that are dependent on a strong final rule of origin. This jobs figure is tied to the light and heavy vehicle original equipment, aftermarket and remanufacturing industries, but does not include any additional sub-tier suppliers or other induced employment.”
“An insufficient rule of origin will likely have an immediate and negative impact on motor vehicle component manufacturers,” Handschuh noted. “MEMA supports and promotes U.S. trade and we hope to support the final TPP agreement.”
The full MEMA letter to the USTR can be viewed here.
