Japan-based auto makers in Canada are urging the federal government to resume talks with Japan on a bilateral trade deal in the wake of the new Trump government pulling out of the Trans-Pacific Partnership trade agreement.
The Japan Automobile Manufacturers Association of Canada has sent a letter to new International Trade Minister François-Philippe Champagne, saying the organization supported the phasing out of tariffs on vehicles and new rules of origin on vehicles and parts that were contained in the 12-country agreement.
"Should the TPP not proceed as a result of the U.S. decision to withdraw, we urge both Canada and Japan to resume and expeditiously conclude the bilateral EPA [Economic Partnership Agreement] negotiations which were paused in late 2014 to focus on the TPP," JAMA Canada executive director David Worts said in the letter to Mr. Champagne.
President Donald Trump signed an executive order Monday saying that the United States will not proceed with the TPP.
The new U.S. government has also announced its intention to renegotiate the North American free-trade agreement.
Sean Spicer, Mr. Trump's press secretary, told a news conference Monday that multilateral deals such as the TPP provide few benefits to the United States and reiterated several times that the new government favours bilateral agreements.
The TPP called for the phaseout of the tariff Canada levies on vehicles imported into this country from Japan.
The continuation of that 6.1-per-cent tariff puts Japan-based companies such as Honda Motor Co. Ltd. and Toyota Motor Corp. at a disadvantage compared with South Korea-based Hyundai Motor Co. and Kia Motors Corp.
The two Japan-based companies have invested several billion dollars in building and upgrading vehicle-assembly plants in Canada, while Hyundai and Kia do not assemble vehicles here.
Those two companies can import vehicles duty-free because of the Canada-South Korea free-trade agreement, which eliminated the tariff for Hyundai and Kia auto makers over three years beginning Jan. 1, 2015.
Mr. Worts said the Japan-based companies are also concerned about the renegotiation of NAFTA.
"Along with other stakeholders in the Canadian auto industry, we have growing concerns about the prospects for renegotiation of NAFTA due to the highly integrated nature of the auto industry in North America and the current realities of global supply chains that bring significant benefits to all auto makers and auto parts producers in NAFTA," he wrote.
In the more than two decades since NAFTA came into force in 1994, the auto industry in North America has restructured itself to take advantage of Mexico's lower costs in Mexico, its position between the two key markets of the United States and South America and its free-trade agreements with more than 40 countries.