Pacific trade pact negotiators move closer to deal on rules for autos

Sept 23 (Reuters) - Japan, the United States, Mexico and
Canada are moving closer to a deal on rules for the automotive
industry in a landmark Pacific trade deal, a leading obstacle to
agreement on the 12-nation pact, officials briefed on the talks
said on Wednesday.`
Although two-day talks between negotiators from the four
nations on auto trade did not reach a final agreement, ministers
were readying for meetings in Atlanta next week for a final push
to get the deal over the finish line.
The United States has not confirmed the meeting of top trade
officials from the 12 nations in Atlanta. But Canadian Trade
Minister Ed Fast told Canadian Broadcasting Corp he would be in
Atlanta next week and would make sure the Trans-Pacific
Partnership, which will cover 40 percent of the world economy,
would be in the country's best interests.
"If Canada is not part of the TPP, our whole auto industry
will be at risk, because we will lose lots of opportunities to
expand our markets within the Asia-Pacific region we are
looking to include clauses that would safeguard our industry,"
he said, declining to give details.
Canada, the United States, Mexico and Japan have been
working to resolve an impasse over how much local content is
needed before cars can be traded duty-free, one of the issues
which blocked a deal at the last TPP ministerial meeting in
July.
Mexico and Canada, partners with the United States in the
20-year-old North American Free Trade Agreement, have built
automotive supply chains based on a threshold of 62.5 percent
local content, and objected to having a much lower threshold in
the TPP, which they feared would favor Asian auto parts makers
such as Thailand.
An official close to the TPP negotiations said the auto
talks in San Francisco were productive and progress was made in
narrowing gaps on the outstanding issues.
"While agreement on a landing zone was not reached, the
four parties took an important step forward and agreed to
continue their work in the near future," he said.
Another official cautioned there was still a long way to go,
but a third said the plan was to come to an agreement in
Atlanta, where ministers would meet from Sept. 30 until Oct. 1
or Oct. 2. All four parties are committed to coming to an
agreement but there are no final figures yet, the third source
said.
A low local content threshold would mean that Japanese
carmakers such as Toyota Motor Corp 7203.T could source inputs
from fellow Asian nations and still qualify for duty-free
imports to the United States under the TPP, which is set to
scrap tariffs of 2.5 percent on cars and 25 percent on light
trucks, likely phased out over 20 or so years.
U.S. unions want the threshold be at least as high as NAFTA
and rise to 75 percent. Auto parts makers in Canada and Mexico
have said the minimum must be 50 percent.