Print PDF

Practice Areas

TPP Offers Opportunities for Automotive Sector; ST&R Webinar to Review

Friday, December 18, 2015
Sandler, Travis & Rosenberg Trade Report

The Trans-Pacific Partnership will eliminate tariffs and includes other provisions that will benefit U.S. companies producing motor vehicles, motorcycles and auto parts. Sandler & Travis Trade Advisory Services will conduct a webinar Jan. 7, 2016, to review TPP’s automotive provisions and the practical impact they will have.

The International Trade Administration states that U.S. exports of automotive products to TPP countries with which the U.S. does not already have a free trade agreement – Japan, Malaysia, Vietnam, New Zealand and Brunei – totaled $2.4 billion in 2014 but most ($1.9 billion) went to Japan, where the simple average tariff is only 0.2 percent. Exports to Vietnam, where the average tariff is 22.2 percent and applied tariffs can reach 75 percent, were $131 million, while exports to Malaysia, which has an average tariff of 20.5 percent and a maximum of 50 percent, were just $74 million. Japan’s tariffs will be eliminated as soon as TPP takes effect and Malaysia’s will be gone within 11 years, including 74 percent immediately. Vietnam will move more slowly, with only 32 percent eliminated when TPP takes effect but 70 percent eliminated within four years.

To ensure that these benefits will go to TPP partner countries, the Office of the U.S. Trade Representative adds, the agreement includes strong rules of origin for both autos and auto parts that are more accurate, more easily verifiable and more enforceable than those of NAFTA.

The ITA notes that TPP also ensures that recovered materials derived in the region and used in remanufactured goods count as TPP materials, allowing more goods to count as TPP originating and thus benefiting from preferential duty treatment.

Further, a separate U.S.-Japan agreement addresses a wide range of Japanese non-tariff measures that have limited market access for U.S.-made autos and auto parts, including transparency in regulations, standards, certification, financial incentives and distribution. There are also expedited procedures and a rapid consultation mechanism to head off any new non-tariff measures that may emerge as well as a special safeguard mechanism to address possible import surges.

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines