Trade Union Rips USTR on Reports of Weak TPP Rules of Origin on Autos
The Trans-Pacific Partnership should include a mandate that TPP auto, auto parts and light truck trade meets the 62.5 percent regional value content (RVC) threshold in order to qualify for the pact’s benefits, and RVC should ultimately top off at 75 percent, said AFL-CIO President Richard Trumka in a letter to U.S. Trade Representative Michael Froman. Trumka lashed into reports that the U.S. struck a deal with Japan for RVC rules of origin of 45 percent on autos and 30 percent on parts.
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Canadian and Mexican TPP negotiators met with acting Deputy USTR Wendy Cutler in Washington on Aug. 20 (see 1508200059). Auto trade remains a critical sticking point in the talks, experts say (see 1508030024). Reuters recently reported the Mexican government is sticking to a demand for a 50 percent RVC rule of origin (see 1508180018).
The pact will potentially comprise twelve countries, and that breadth of economies should mean a more stringent rule of origin, said Trumka in the Aug. 21 letter. “Even if the NAFTA ROO stayed the same – at 62.5 percent -- applying that rule to TPP would allow the same content to be produced in nine additional countries, dramatically increasing the opportunity to move auto supply chain jobs out of North America,” he said. “A strong ROO limits the ‘leakage’ of benefits of a potential TPP to non-TPP countries.”
Trumka dismissed the Japanese argument that longer TPP auto tariff phase-outs require a looser rule of origin. Strict rules will facilitate more trade with U.S. companies, he said. “In fact, denying automakers the ability to source mainly from non-TPP countries (while benefitting from lower TPP tariff rates) provides exactly the right incentive for Japanese, American, and other automakers to source additional parts from the U.S.,” said the letter.
Email ITTNews@warren-news.com for a copy of the letter.