Canadian auto industry threatened by free trade deal with Korea

Canadian auto industry threatened by free trade deal with Korea

Prime Minister Stephen Harper’s announcement, in South Korea, of a free trade agreement between Canada and South Korea poses a serious threat to Canada’s auto industry, says Unifor, Canada’s largest union in the private sector. “We cannot stand by a deal that secures a one-way flow of Korean auto imports into the Canadian market, undermining the jobs and industry on which so many Canadians depend, while precious little is done to strengthen our exports to Korea,” said Unifor National President Jerry Dias.

While there will be a three-year phased-in removal of Canadian auto tariffs on Korean vehicles and an immediate removal of Korean tariffs on Canadian exports, negotiators were unable to win similar protections to the ones the United States negotiated in its free trade agreement with South Korea.

The US deal with South Korea included protections against import surges into the US market and a ground-breaking “snap-back” provision which enables the US government to return tariffs to pre-agreement levels if Korean non-tariff barriers limit US exports. Even with these provisions, the US has suffered a worsening auto trade deficit.

Unifor and key industry stakeholders had made several suggestions that would have ensured expanded trade with Korea was fair and mutually beneficial, including:

  •     Tying reductions in tariffs to measureable targets in reducing trade imbalances in key industries, such as auto.
  •     Requiring Korean firms to invest and create jobs here as a condition of tariff-free access.
  •     Ensuring government keeps the necessary powers to intervene directly to remedy trade imbalances.

 

None of these recommendations were included in the deal.

“The problem is that Prime Minister Harper did not address the current trade imbalance. We needed our political leadership to broker a deal that addressed the reality that we have 100 000 Korean-made cars being imported to our market, while we are exporting only 100 cars to the Korean market,” stressed Dias.

Canada sold $3.7 billion worth of goods to Korea in 2012, but imported $6.4 billion. Unifor research reveals that 33,000 manufacturing jobs could be lost in a trade deal with Korea.

“We expected our political leadership to stand up for the rights, jobs and economic security of Canadians – and they have failed to do that,” said Dias.

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