[CTC] TPP Auto Meeting Ends Without Deal, But Sufficient Progress To Go To Atlanta

[Arthur Stamoulis]

Two articles below…

Inside U.S. Trade
Daily News
TPP Auto Meeting Ends Without Deal, But Sufficient Progress To Go To Atlanta
Posted: September 23, 2015
Negotiators for the United States, Japan, Canada and Mexico fell short of an agreement on the automotive rules of origin for the Trans-Pacific Partnership (TPP) during two days of joint talks that wrapped up Tuesday (Sept. 22) in San Francisco, but narrowed the gaps enough that they hope to reach a deal at a series of pivotal meetings in Atlanta next week, according to informed sources.
The outcome appears to have given all TPP parties enough confidence to move ahead with their plans to hold a chief negotiators meeting and ministerial in Atlanta, at which they will aim to conclude the broader 12-party negotiations.
Although both the chief negotiators meeting and the ministerial had been previously confirmed, several sources had held open the possibility that the ministerial could be canceled if the four major auto-producing countries did not make sufficient progress in their talks in San Francisco.
The chief negotiators meeting is slated to begin Sept. 26 at the Westin Peachtree Plaza Hotel in Atlanta, to be followed by the ministerial starting on Sept. 30 and lasting until Oct. 1, with the option to extend through Oct. 2 if needed. But sources said the ministerial would likely be extended through Oct. 2. Previously, Inside U.S. Tradereported that the ministerial would take place Oct. 1-2.
Labor unions and steel producers from the U.S., Canada and Mexico took advantage of the San Francisco meetings to push their demands for the automotive rules of origin in TPP to require at least as much regional content as the North American Free Trade Agreement (NAFTA).
NAFTA set a 62.5 percent regional value content threshold for autos and light trucks, along with their engines and transmissions, and required 60 percent regional content for other auto parts.
In a joint statement sent to reporters on Sept. 22, the leaders of the AFL-CIO, Canadian Labor Congress, and the Mexican National Workers Union blasted the TPP countries for not even considering “a content requirement for autos and auto parts that meets the NAFTA rule, let alone exceeds it.” They argued that more liberal rules of origin would “cede auto supply chain jobs to other countries both inside and outside of TPP.”
The labor leaders cited the auto rules of origin as one of three areas in which the TPP falls short of protecting North American workers. The others are its failure to include enforcement disciplines on currency manipulation, and its inclusion of investor-state dispute settlement.
“As TPP negotiators scramble in San Francisco to find common ground, North America's working people ask them to think hard about what they are scrambling to save,” the labor leaders wrote.
The statement by the labor unions came a day after steel producer associations from the NAFTA countries sent a letter to their governments saying they “strongly oppose” lowering the regional value content thresholds for autos and autos parts from the NAFTA levels. They added that they share the “concerns” about the U.S.-Japan deal on the automotive rules of origin express by auto parts makers from NAFTA countries.
The U.S.-Japan deal entailed regional value content thresholds of 45 percent for finished vehicles and 30 percent for auto parts, along with a list of seven auto parts that would automatically be deemed originating.
“We urge our governments to negotiate a TPP agreement that maintains strong rules of origin and regional value content requirements, to sustain benefits currently accruing to NAFTA steel producers, their integrated supply chains, and the NAFTA economy,” they wrote. “The TPP must not confer an advantage to producers whose primary supply chain is located outside the NAFTA region.”
The three associations said motor vehicle production accounts for a “significant portion” of the the steel demand from North American mills. “Our supply chains are inextricably linked and the health of our countries' respective steel industries is tied directly to the ongoing prosperity of North American automotive parts and vehicle manufacturing,” they said.
The letter was signed by the leaders of the American Iron and Steel Institute, Canadian Steel Producers Association, and Mexican steel industry group CANACERO.

Froman Cites 'Steady Progress' On Autos, Other TPP Issues; Mum On Ministerial

Inside US Trade
Posted: September 22, 2015 
U.S. Trade Representative Michael Froman on Tuesday (Sept. 22) said Trans-Pacific Partnership (TPP) countries are making “steady progress” on narrowing their differences on key outstanding issues, including the automotive provisions, but declined to say whether they would be in a position to hold a ministerial meeting at the end of the month.

“That work continues, including the work that you referred to on autos that's going on in San Francisco,” Froman said, referring to talks between the U.S., Japan, Canada and Mexico taking place Sept. 21-22 on the automotive rules of origin. “We're making steady progress and we're going to continue to monitor that work … so that we can bring this to a close as soon as possible.”

He did not elaborate on what progress was being made, saying only that TPP countries have been working bilaterally and in small groups since the July ministerial to come up with “landing zones,” or potential compromises, on the handful of outstanding issues that remain.

TPP negotiators have identified the major stumbling blocks in the talks as the automotive rules of origin, dairy market access and monopoly protections for biologic drugs.

The U.S., Japan, Canada and Mexico held a first round of joint auto talks on Sept. 10-11. None of the parties made concessions at that meeting, although they did discuss potential options for moving forward.

Froman sidestepped a question about whether the ministerial meeting -- which informed sources say is slated to take place in Atlanta Oct. 1-2 -- has been confirmed, or whether it will be held only if negotiators make sufficient progress on the auto issue this week. Other sources said the ministerial will start on Sept. 30 and last until Oct. 1, with the option to extend through Oct. 2 if needed.

The New Zealand government has confirmed that TPP chief negotiators <http://insidetrade.com/node/149974> will meet in Atlanta beginning Sept. 26.

Froman spoke at an event on Asia's economic architecture hosted by the Center for Strategic and International Studies, where he was asked whether he sees a window for congressional approval of a final agreement during 2016.

He responded that his job requires him to be optimistic, but that USTR's current focus is on completing a TPP agreement as soon as possible, consistent with the standards it has set out for itself.

He added that the Obama administration both in the context of the U.S.-Korea free trade agreement negotiations and the TPP itself has demonstrated its willingness to hold off on reaching an agreement in order to get the best deal possible for the United States. After that happens, USTR will work with Congress to get the agreement passed, he said.

Froman also did not respond directly when asked by Philippines Ambassador to the United States Jose Cuisa how long TPP countries that have a significant presence of state-owned firms in their economy would be given to comply with the proposed disciplines on state-owned enterprises (SOEs).

But Froman did signal that there may be transition periods for implementing the SOE commitments that would vary by country. “We're working country by country on their particular issues, and trying to tailor the agreement accordingly,” he said.

Froman stressed that the SOE disciplines are only intended to capture state-owned firms that engage in commercial activity by trading goods and services, and in that context to ensure that they operate on a commercial basis and do not receive benefits that disadvantage private competitors.

He stressed that these obligations would not extend to SOEs that provide public services domestically. “We all have SOEs that deal with public services, whether it's hospitals or other things of that sort,” he said. “That's not what it's intended to get at.”

TPP ministers agreed more than a year and a half ago <http://insidetrade.com/node/140078> that the SOE disciplines would not apply to government support provided to SOEs for the delivery of services in their home-country market.
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