Despite the expiration of the U.S.-Canada Autopact trade agreement Feb. 19, the Canadian government will resist lobbying attempts to negotiate “safeguards” for its auto industry, Deputy Prime Minister Herb Gray tells Ward's Automotive Reports.
“The Autopact safeguard levels were not a basis for activity by the auto manufacturers,” Mr. Gray says of investment by the Big Three. Automakers “were driven by the good features of doing business in Canada. In other words, they're not responding — they haven't for 20 years or more — to the safeguard levels in the Autopact.”
The 1965 agreement requires North American automakers to build one car in Canada for every one it sells, in exchange for exemption from paying duty on products they import into Canada.
Canada announced Friday it will charge a 6.1% tariff, beginning Feb. 19, on the 30,000-50,000 imports that arrive annually.
The Canadian Auto Workers union wants to meet with Ottawa to solicit support because the cutbacks by DaimlerChrysler Corp. could claim 5,000 Canadian jobs by 2003.
The expiry of the Autopact is “going to make it very, very difficult to get the new investment for jobs for the future,” says CAW President Buzz Hargrove.
Mr. Gray rejects this notion. Canada benefited during the first 15 years, but its auto industry has since grown sufficiently to stand on its own, building 2.6 cars in Canada for every one sold.
“What happened was, on one or two occasions, when companies didn't meet their requirements, rather than pay back the duty … they made an investment instead,” Mr. Gray says. “That's how the big van plant, the Pillette Road van plant, happened to be built in Windsor.”
Ironically, Pillette is the only DCC plant in Canada slated to close.
Car companies are lured to Canada by its skilled work force, money-saving health-care system and the weaker Canadian dollar, says Mr. Gray. Returning to Autopact safeguard levels, “would be a sign of catastrophe for the Canadian overall auto industry.”