Mexico economy minister says 'lot of progress' on autos in TPP talks

Thu Oct 1, 2015 11:32am EDT
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By Ana Isabel Martinez

ATLANTA Oct 1 (Reuters) - Mexican Economy Minister Ildefonso Guajardo said on Thursday that negotiators meeting on a Pacific Rim free trade deal were very close to an agreement on autos and auto parts but that a final accord would depend on other elements of the trade deal being discussed in Atlanta.

"We made a lot of progress in the auto issue but still we are pending in a couple of areas where we need to close," Guajardo said. "We are ready. What we need is everything to fall into place at the same time."

The Trans Pacific Partnership (TPP), which seeks to cut trade barriers and set common standards among a dozen nations reaching from Japan to Chile, has become snared since July over a small set of issues, including trade in autos and auto parts.

The auto issue is crucial for Japan, whose automakers, led by Toyota Motor Corp, depend on sales to the U.S. market and want flexibility in how and where they source auto parts.

The stakes are also high for Mexico, which has experienced a boom in auto-related investment because of its proximity to the United States, relatively low labor costs and participation in the North America Free Trade Agreement.

A previous round of TPP negotiations failed in July after Mexican officials objected to a proposal by Japan and the United States on autos concerning the "rules of origin" that determine whether a vehicle can be exported without tariffs.

Officials from Mexico and Canada offered support for a 45-percent threshold for local content on vehicles in discussions earlier this week, two people briefed on the talks said.

"There is a lot of progress. A very small step to finish," Guajardo told Reuters, when asked about the 45-percent threshold. "It's very near to finish."

That would give automakers a much freer hand on sourcing parts from Asia than they are allowed under NAFTA. (Reporting by Ana Isabel Martinez; Writing by Kevin Krolicki; Editing by Jeffrey Benkoe)