An agreement in principle on the Trans-Pacific Partnership is closer to reality now that 11 countries have agreed to a number of key changes, but it’s still unclear what a finalized deal would mean for Canada’s automotive sector.
The 11 remaining TPP countries have been working to revive the Pacific-Rim deal, which was abandoned earlier this year by U.S. President Donald Trump.
"Ministers are pleased to announce that they have agreed on the core elements of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),'' the group announced in a communique Saturday.
The countries have agreed that the framework "maintains the high standards, overall balance and integrity of the TPP while ensuring the commercial and other interests of all participants and preserving our inherent right to regulate, including the flexibility of the parties to set legislative and regulatory priorities."
Canada’s International Trade Minister Francois-Philippe Champagne said the TPP partners have also established a framework to deal with rules of origin issues related to the auto sector and on how the countries will proceed with including cultural exemptions into the treaty.
"We don't settle for just any deal," Champagne said.
The association that represents Canadian auto parts makers is concerned about what the TPP’s content requirement in vehicles and parts might be.
Before the United States abandoned the TPP, the deal’s rules of origin required for assembled vehicles to receive duty-free status would be 45 per cent, and it was 30-45 percent for certain categories of auto parts.
Automotive Parts Manufacturers’ Association President Flavio Volpe said those requirements “are not positive to Canadian-based auto parts manufacturing.
“In NAFTA, those numbers are 62.5 and 60 per cent, and the U.S. wants it to go higher,” Volpe said. “We can’t be in two boats at once.”
Champagne did not say what the rules of origin requirements might eventually be.
Prime Minister Justing Trudeau predicted Saturday that the TPP talks would help Canada in its tough renegotiation of the North American Free Trade Agreement.
“The reality is that showing we are in the process of diversifying our economic interests helps us in the NAFTA negotiations,” he said.
“It gives us more credibility when we want to explain that we won't accept any agreement — we wait until it's in the interests of Canadians.”
The Canadian Press contributed to this report.