Steven Chase is a political reporter with The Globe and Mail, one of Canada's leading newspapers.  The headline on this story was "NAFTA countries reignite negotiations over TPP auto-parts dispute."  The reference to Hawaii, of course, is to the ministerial on Maui that had been billed as the meeting that would essentially wrap up the TPP negotiations.  It didn't.  Progress was made, we are told, but, in addition, new controversies came to the fore.

As for the U.S.-Japan deal on auto-parts, our understanding, from different reports, is this. Under NAFTA, cars need at least 62.5 percent North American content to qualify for NAFTA benefits.  Under the plan reportedly worked out between the United States and Japan, that threshold would come down by quite a bit.  It could be as low as 30 percent for auto parts and around 45 percent for vehicles.   It is an arrangement that would work well for Japan, as a lot of the parts in Japanese built cars come from Thailand, which is not a TPP country.  It is also an arrangement that might work for U.S. automakers, as it would give them more flexibility in terms of their own sourcing of auto parts.

It is not, however, an arrangement that works well for Canadian or Mexican auto-parts producers.  To the contrary, it would, almost certainly, erode their respective shares in the production of cars sold in North America.  As for how well the Canadian and Mexican teams had been briefed on the U.S.-Japan agreement before the Maui ministerial, Mexico's foreign minister, José Antonio Meade, spoke to that during a recent visit to Canada.   "I think it was safe to say it was a surprise," he said.

Here in the United States, it may have been a surprise to the AFL-CIO as well.  In any event, AFL-CIO president Richard Trumka is not happy about it.  On Wednesday, August 26, The Detroit Free Press ran an article that quoted extensively from a letter Mr. Trumka sent to U.S. Trade Representative Michael Froman on the auto-parts issue.  The labor leader talked about thousands of good American jobs in an iconic industry being at risk.  "I hope," he wrote, "it is not the case that the Canadian and Mexican negotiators are actually holding a harder line than our own government on this issue."

To change the focus slightly, it would be interesting to know just what line the U.S. negotiating team is taking with their Canadian and Mexican counterparts on this now very hot-button issue. 

These developments raise a host of issues, not the least of which is the question, are there any useful, guiding principles for trade policy?

Take the notion of "preference erosion."   It is a phrase more commonly associated with WTO negotiations than with TPP, but the principle applies in both arenas.  Those who have preferences don't want to watch that advantage slip away, notwithstanding the wider benefits that might flow from a lowering of barriers all around.  

And if you juxtapose the yarn-forward issue in the TPP textile and apparel negotiation alongside the question of auto-parts from non-TPP countries, you will find yourself facing a not dissimilar conundrum.  But one thing at a time.  We will limit our comments, our confession, to the NAFTA-"preference erosion" question, and the following somewhat contradictory thoughts:

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Another tremendous issue here - the multi-billion dollar question - is the question of momentum:  Has the steam gone out of the TPP juggernaut?  Or is that train moving rapidly toward its destination, even if momentarily hidden in a tunnel of quiet negotiations?  Whichever it is, that discussion can wait until next week.

NAFTA countries reignite is a link to August 20 report in The Globe and Mail that was the source for today's featured quote.

AFL-CIO on TPP and Autos takes you to the August 26 story in The Detroit Free Press with the quotes from Richard Trumka's recent letter to Ambassador Froman.

Canada and Mexico Warn is an August 23 article by Steven Chase with details of position being expressed to the United States by Canadian and Mexican negotiators.