Steel groups want higher NA auto content in TPP

NAFTA steel leaders say weaker rules of origin will adversely impact the steel industry.

OTTAWA — Trade associations representing steel producers in the US, Canada and Mexico are expressing concern over recent developments in the automotive portion of the Trans-Pacific Partnership (TPP) negotiations.

The leaders of the American Iron and Steel Institute (AISI), CANACERO (Mexico), and the Canadian Steel Producers Association (CSPA) sent letters to their government trade agencies citing concern over proposals to weaken the “rules of origin” for the auto sector, which they say would adversely impact the steel industry.

Based on reports, they say proposed changes would lower regional value content (RVC) for auto parts and light-duty vehicles – currently set by NAFTA at 62.5% for autos, light-trucks, engines and transmissions, and 60% for other auto parts.

“Our members strongly oppose lowering such regional value content requirement,” the letter stated. “The TPP must not confer an advantage to producers whose primary supply chain is located outside the TPP region.”

“We are very much opposed to any measures in the TPP agreement which would undermine the long-term global competitiveness of Canadian steel-makers, and their customers,” said Joseph Galimberti, president of the CSPA.
Unifor, which represents auto workers in both the assembly and parts sectors, warns Canadian auto jobs are at risk and is urging Canadian negotiators to stand firm on regional content rules for automotive products, and other auto-related provisions.

Jim Stanford, Unifor’s economist, calculated that such lower thresholds would reduce the required regional content by 24 percentage points, enabling much of the supply chain to move out of the TPP zone. He estimated that could threaten as many as 26,400 Canadian auto jobs (in both parts and assembly), some $6 billion of lost auto parts shipments, and lost assembly output.

The union says vehicles would be tariff-free even if only 45% of their content is made within the TPP zone, and auto parts with as little as 30%. Other concerns include rapid elimination of tariffs on Japanese imports, no guarantees of reciprocal exports to Japan and other Asian countries, and currency manipulation.

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