Canadian daily The Globe and Mail reported on Wednesday that Mexican and Canadian representatives are jointly seeking a new proposal for each country’s respective auto sector. This in light of the long-awaited signing of the Trans-Pacific Partnership (TPP) by many countries so far involved in the negotiations.
The common cause between the two North American countries is said to have emerged upon realizing that Japan and the United States recently reached an agreement regarding “how much of an automobile must be manufactured within the 12 participating countries to avoid hefty import tariffs,” as stated by the Globe.
“Mexico and Canada have to bring a proposal to the Japanese,” said an unnamed source who the Canadian newspaper claims is familiar with the negotiations. “We have to come forth with counterproposals that will be acceptable to all four of us.”
According to the same source, the U.S.-Japan agreement took place without consulting negotiators from either Mexico or Canada, much to the concern of both bands. The matter is a sensitive one as both Canada and Mexico have major auto sectors intricately connected and, to many extents, privileged by the North American Free Trade Agreement (NAFTA).
The concerns stem from the efforts of both the U.S. and Japan to secure the right to use cheaper auto-parts from non-TPP countries in the manufacturing of automobiles, once the treaty is signed. Inside U.S. Trade reported efforts on behalf of the Japanese to ensure the right to manufacture up to 70% of a vehicle with non-treaty parts, whereas American representatives sought to ensure this percentage was lower.
Certain exemptions resulting from talks between the U.S. and Japan would have priced out parts made in Canada – and ostensibly those also made in Mexico – as Japan would have the right to buy cheaper parts in non-TPP countries.
It would seem as though Mexico and Canada were not informed of the talks between the U.S. and Japan.
Japanese representatives at the TPP talks held in Hawaii last week were reported to have been genuinely surprised and not very pleased that their Canadian and Mexican counterparts had not been let in on their talks with the U.S.
Both Canada and Mexico hold major positions in terms of motor vehicles production. Based on 2014 numbers from the Paris-based International Organization of Motor Vehicle Manufacturers (OICA), Mexico is 7th in the world with Canada occupying 10th place. Both produced a total of over 5 million units last year.
This impasse is not too welcome for those looking forward to the prolonged signing of the treaty. Currently with only Brunei, Chile and Singapore as signatory countries, there are nearly ten countries actively negotiating their membership in this agreeement which seeks to form a massive trade deal among countries on the Pacific Rim.
Since its original signing in 2006, talks have been ongoing yet inconclusive due to the number of countries interested in joining and the numerous commercial interests at stake. The talks themselves have been the source of some controversy due to their secretive nature. To date, no one outside of the process has access to minutes of any of the meetings.
The displeasure with the U.S.-Japan deal is furthermore credited with extending the talks beyond July, shooting down many predictions of a comprehensive signing by early summer.
Currently both Mexican and Canadian representatives are meeting with Japanese negotiators to hammer out an alternative auto-parts deal.