Auto industry skeptical of TPP side deal on autos with Japan
OTTAWA — Autoworkers and manufacturers are rejecting assertions by Canada’s trade minister that the county won major access for them into the highly protected Japanese market in the recently rebooted Trans-Pacific Partnership.
International Trade Minister François-Philippe Champagne told the Senate trade committee last week that Canada won its greatest market access ever into the Japanese market when it signed on last month to the new version of the pact that was salvaged after the Trump administration pulled the U.S. out
Champagne said the agreement between Canada and Japan is contained in a side-letter, not in the text of the agreement, which he told senators is nonetheless “enforceable.”
That’s not possible, say representatives from the autoworkers union and trade associations representing Canadian automobile manufacturers. They said side agreements are not enforceable unless they are part of an actual trade agreement. And they reiterated past concerns that Canada’s decision to join the new TPP, without the U.S., would ultimately cost Canadian manufacturing jobs and undermine the country’s interests in wrestling with the U.S. over automobile roadblocks in NAFTA renegotiations.
The text of the new TPP has not been released and Champagne’s office says the side letter with Japan isn’t ready to be released. Champagne pledged to release the letter during his Senate testimony on Wednesday in which he heralded the deal with Japan on autos as a breakthrough.
“We were able to achieve something that has never been achieved before, which is the largest market access for Canadian auto manufacturers in Japan, removing non-tariff trade barriers with respect to safety standards,” Champagne said. “We’ve achieved that in a side letter, which is enforceable — the first time that the government of Japan is giving a side letter on auto which is enforceable.”
Champagne said the letter also contains a “most-favoured nation clause,” which means if Japan strikes a better deal with another party — the U.S. or Europe — those better terms would automatically apply to Canada.
Jerry Dias, the president of Unifor, the union representing autoworkers, said the letter carries no weight because it is not part of the agreement.
“A side letter is unenforceable. We didn’t even push hard enough to get it folded into the body of the agreement,” said Dias, who predicted the agreement would lead to a flood of Chinese parts into the North American auto market — something the Trump administration is trying to avoid by pressing for higher continental content in autos at the NAFTA negotiations.
Flavio Volpe, president of the Automotive Parts Manufacturers Association, said there’s no indication the side letter will address any real trade barriers in Japan.
“Side letters are political agreements to deal with an issue that was too difficult to find an enforceable, termed agreement on,” he added. “In business, anyone seeking an enforceable covenant would put it in the actual contract.”