Statement on TPP

TORONTO, Oct. 5, 2015 /CNW/ - On behalf of the members of JAMA Canada, we would like to congratulate the Minister of International Trade, the Hon Ed Fast, and the Canadian trade negotiators for reaching a successful conclusion to the Trans Pacific Partnership or TPP. As a plurilateral trade agreement, the TPP was a complex and challenging initiative for trade liberalization that will have long term benefits for all member countries, including Canada and Japan.

With respect to the automotive provisions in the TPP, we support the provision of forward-looking, flexible rules of origin (ROO) which reflect the realities of current global supply chains. We believe this flexibility would enhance the competitiveness of our members in Canada and not distort our supply chain in Canada, which has been built up over almost 30 years. ROO flexibility is necessary since automakers rely on global value chains.

While we were hoping that auto tariffs would be eliminated on implementation, which would have ensured a level playing field with the Canada-Korea FTA tariff provisions, we are pleased that Canada was able to secure a relatively quick automotive tariff phase-out in the TPP. In particular, we acknowledge this a better outcome compared to the longer phase-out of US auto tariffs. This makes sense given that auto tariffs between the US and Canada are not aligned (in fact Canada's 6.1% tariff is two and a half times higher than the US passenger vehicle tariff), so there is no reason for Canada's tariff phase-out to be aligned with the US.

Like US automakers in Canada, Japanese automakers are deeply integrated in North America. Since the mid-1980's, Japanese automakers have invested about $10 billion cumulatively to manufacture vehicles in Canada for the North American market. In 2014, production in Canada set a new record of 972,000 vehicles, with a record export of 766,000 units. And with record production, exports and sales in Canada, direct and indirect employment is also on the rise - now in excess of 72,000 across Canada.

What's more, every year since 1993, Canada has been a net exporter of Japanese brand vehicles. In 2014, Japanese brand exports were six times greater than total vehicle imports from Japan. Currently over 78% of Japanese brand auto sales in Canada are vehicles built in North America. The remaining 22% that our members import from Japan are critical to meeting the diversified transportation needs of Canadian consumers, particularly for smaller manufacturers that have not yet reached economies of scale in NAFTA production.

Finally, we look forward to working closely with the Canadian government to achieve both bilateral and regional trade agreements with Japan. In our view quick tariff phase-outs and forward looking rules of origin are vital to maintain a balanced and competitive market in Canada. Overall, we remain committed to a Canadian auto industry that is economically vibrant, environmentally sustainable and globally competitive.

SOURCE Japan Automobile Manufacturers Association of Canada

David Worts, 416-968-0150 or 416-578-7734 (cell), [email protected]