Japanese car makers are urging Thailand to join the Trans-Pacific Partnership (TPP) signed by 12 Pacific Rim countries on Oct 5, saying Thailand's automotive industry will benefit greatly in the long run.
The economic partnership with the US, Canada and other countries will give a boost to the Japanese automotive industry after the elimination of tariffs for vehicles and auto parts, said Yoshihiro Yano, vice-president of the Japan Automobile Manufacturers Association.
Japan is one of 12 countries that signed the pact. TPP members account for 40% of global trade and a combined US$28 trillion in GDP.
"We'd love to see more members in the TPP including Thailand, as membership would enable Thailand to enjoy direct privileges for the automotive sector in particular," Mr Yano said, citing the issue of rules of origin for cars under the TPP.
Rules of origin determine how much of a product must be made within a free trade area for it to receive duty-free treatment. Car makers rely heavily on global value chains in which different parts are made in different countries.
Japan prefers liberal rules of origin because its industry's supply chains include non-TPP countries such as Thailand, while Canada and Mexico want stricter rules because their industries benefit from preferential access to the US market via the North American Free Trade Agreement.
Import tariffs by the US are now levied at 2.5% for auto parts imported from Thailand and 25% for pickup trucks.
Last year, Japanese makers produced 27 million vehicles worldwide including 10 million in Japan.
"Emerging countries have more room to grow in the automotive sector and can represent the future trend of vehicle sales and exports in the long term," Mr Yano said.
He said Japanese car makers remained confident in Asean despite sluggish sales and production caused by the unfavourable economy.
Asean car sales from January-August fell by 7.7% year-on-year to 1.96 million vehicles. The three countries where sales shrank the most were Indonesia (671,641 sold, down 19.1%), Thailand (491,963, down 15.1%) and Malaysia (434,282, down 2.3%). The Philippines, Singapore and Vietnam reported strong sales.
Mr Yano expects Asean sales will surge to 7.2 million vehicles in 2025 from 3.19 million last year.