Auto-Parts Dispute Taps the Brakes on Pacific Trade Deal

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By William Mauldin and Dudley Althaus, The Wall Street Journal Sep 08, 2015

North American and Japanese industries disagree on rules of origin for components

A fight over how cars are assembled is pitting North America’s auto industry against Japan’s in a dispute now holding up a major trade agreement spanning the Pacific.

The spat over which cars should be eligible for duty-free trade surfaced during high-level talks in late July that failed to wrap up the 12-nation Trans-Pacific Partnership. The auto impasse is the most recent complication to finishing the TPP talks, along with dairy trade and the intellectual-property protections afforded to biologic drugs, as well as the election season in Canada and the approaching campaigns in the U.S. and Japan.

Japanese auto makers rely to a larger degree than their North American peers on components produced in other countries, such as China and Thailand, outside of the proposed TPP bloc. They don’t want the agreement to disrupt that supply chain.

The Mexican auto industry is leading a campaign to ensure cars freely traded within the TPP have at least half their components originating in the bloc. American labor groups and some suppliers, worried about more jobs being moved overseas, also favor tighter rules in the TPP.

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