TPP talks closer to clearing hurdle

Atlanta, October 1

Negotiators trying to clinch a Pacific Rim free trade deal made headway on Wednesday over how to remove a stumbling block and give automakers a freer hand to sell cars in US with more parts purchased in Asia.

People briefed on the closed-door talks said Canada and Mexico signalled a willingness to open the North American auto market to more parts made in Asia, one of the key hurdles to sealing a broader deal on the Trans-Pacific Partnership (TPP).

The TPP seeks to cut trade barriers and set common standards among a dozen nations reaching from Japan to Chile, but talks have become snared over a small set of issues, including dairy trade and patent periods for biologic drugs.

Japan has pushed hard during talks in Atlanta for a deal on auto parts, a crucial issue for Japanese carmakers, led by Toyota Motor Corp, who depend on sales to the US market and want flexibility in how and where they source parts.

Australian Trade Minister Andrew Robb said ministers meeting on Wednesday had detailed remaining issues.

An earlier round of talks in July had failed after Mexican officials objected to a proposal by Japan and the US on autos concerning the ‘rules of origin’ that determine whether a vehicle can be exported without tariffs.

In Atlanta, officials from Mexico and Canada were aiming for a 45 per cent threshold for local content on vehicles, two people briefed on the talks said.

If it becomes part of the final trade deal, it would mean more than half of a vehicle could be sourced from outside the 12 countries participating in the TPP and still be sold in the US without tariffs.