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White House says Trans-Pacific trade deal would boost auto sector

October 9, 2015
The Trans-Pacific Partnership will immediately eliminate tariffs on about 80 percent of auto parts in all 12 of the countries in the pact, and that could have a dramatic impact on parts production, the Detroit News reported Oct. 6.
The TPP, which was formed in 2005, could help auto suppliers sell more U.S.-made parts abroad, but could in the long run allow some parts production to be moved abroad.
Auto parts imported to the U.S. currently are taxed with a 2.5 percent to 5 percent tariff. While officials noted that some parts — "green energy" ones including lithium-ion batteries will have tariffs for up to 15 years — the majority will be dropped immediately.
The deal also reduces the amount of content needed to classify a part as tariff free under the agreement. Parts will have to have 35 to 45 percent net cost from one of the 12 nations to qualify.
The North American Free Trade Agreement required 62.5 percent of the content from one of the three nations.
"Malaysia currently puts a 30 percent tax on American auto parts. Vietnam puts a tax of as much as 70 percent on every car American automakers sell in Vietnam," President Obama said in support of the TPP. "Under this agreement, all those foreign taxes will fall. Most of them will fall to zero. So we are knocking down barriers that are currently preventing American businesses from selling in these countries and are preventing American workers from benefiting from those sales to the fastest-growing, most dynamic region in the world."