The Trudeau Liberal government is already getting flack over the new TPP deal especially over the effects on the auto sector, which is central to the Ontario economy, and the dairy industry which is important in parts of Ontario and Quebec. Although it looks like it may help the beef industry, this sector is located mostly in Western Canada and mostly votes Conservative. Since the Conservatives are at least as supportive of free trade as the Liberals, this provides the NDP with an opportunity. The new TPP deal could also throw a boomerang into NAFTA negotiations with the US.
Some representatives of the Canadian auto industry slammed Canada’s decision to sign a revised Trans-Pacific Partnership on Tuesday, calling the deal harmful to the auto sector and warning that it undermines Canada’s position in NAFTA negotiations.
International Trade Minister François-Philippe Champagne announced Tuesday that Canada and the ten countries that remained in the deal after the U.S. backed out had agreed to sign the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
But the agreement was swiftly criticized by several representatives of the Canadian auto industry, including Flavio Volpe, president of the Auto Parts Manufacturers’ Association, who said in an interview with the Financial Post that “this could not be a worse time to make a dumb move.” Canada struck the TPP deal just as negotiators began the sixth — and pivotal — round of NAFTA talks in Montreal.
Volpe said the TPP agreement’s automotive rules of origin, which originally stipulated that vehicles must contain between 35 and 45 per cent TPP-produced content in order to gain duty-free access to the Canadian market, will make it easier for TPP countries to import vehicles to Canada while hampering the national auto industry’s ability to compete. At the same time, the U.S. has proposed increasing the North American content rule under NAFTA to 85 per cent, and introducing a U.S.-content rule of 50 per cent.
“That regional content means the majority of the parts and materials for vehicles can come from outside TPP countries — namely China — and you didn’t get anything in return,” Volpe said.
“What they’ve done is given access to the Canadian and the Mexican markets to nine additional countries at the exact same time that we’re hosting the Americans in NAFTA negotiations, who want to increase regional value content to keep out parts from China… You lose moral authority to say that you’re a defender of fortress North America.” ...
Despite the side-letter with Japan, Canadian Vehicle Manufacturers’ Association president Mark Nantais said he is still concerned that market access to TPP countries will not improve under the new agreement.
“This will disadvantage auto companies that have invested millions in jobs and sustaining manufacturing in Canada, while providing a competitive advantage to the TPP countries involved,” he said. “We are concerned that access to various TPP markets has not been materially improved at all by this agreement.”
Volpe said the Canadian government should not have signed the TPP deal — or, at least, left the automotive portion out of it — until the uncertainty surrounding NAFTA negotiations was resolved.
“If you want to sell cars out of the back door of the factory to Canadian consumers, you are going to have to compete with a TPP-sourced car that does not have to meet any of the higher NAFTA requirements…. You are conceding your home market,” he said.
Unifor president Jerry Dias, whose union represents more than 23,000 Canadian auto workers, said Canada moving ahead with TPP “completely undermines the entire negotiating strategy in Montreal.”
“In one fell swoop, they cut off the legs of the NAFTA negotiating committee,” Dias said in an interview, adding that the biggest winner of the TPP deal was U.S. President Donald Trump.
“Canada was in such a rush to show Trump that we can trade with others that we completely undermined ourselves…. This shows that we have no strategic vision. It makes absolutely no sense.”