A study of fine print in the Trans Pacific Partnership free-trade agreement reveals an even larger threat to the health of Canada’s auto supplier sector than previously feared.
Provisions found in supporting documents – or “buried in an appendix to an annex,” in the words of study author John Holmes – would allow automakers and parts producers to substitute parts from low-cost nations and still qualify for tariff exemptions under the trade deal.
While much of the attention on the TPP has been focused on the end of duties on vehicle imports, “Our sense is that it’s the regional content values on auto parts that poses the most serious challenge to the industry within Canada,” said Holmes, emeritus professor of geography at Queen’s University.
Co-authored by Jeffrey Carey, a research Fellow with the Automotive Policy Research Centre at McMaster University, the study was prepared for the Canadian Centre for Policy Alternatives, an Ottawa-based think tank.
The wide-ranging TPP is still to be ratified by Canada and 11 Pacific Rim partners. It could face its greatest test in the United States, where Republican presidential candidate Donald Trump has vowed to rip up the agreement and Democratic candidate Hillary Clinton wants to see changes made before she would sign on.