CAW urges government to protect auto sector; reduce loonie, change trade policy

TORONTO – The Canadian Auto Workers union is calling for an end to free trade negotiations with automaking countries in Europe and Asia unless they first open their markets to Canadian-made vehicles.

The CAW, which has failed to convince successive Conservative and Liberal federal governments to curtail auto imports from countries the union considers to be closed to North American imports, said free-trade agreements with the European Union, Japan, South Korea and Thailand won’t help.

“There is no conceivable scenario under which Canadian automotive exports to these countries would be significantly enhanced under a free trade agreement,” the union said in a 50-page report released Monday.

“Indeed, Japan’s tariffs on automotive imports are already zero (despite which the country is one of the most closed auto markets in the world), so it is hard to imagine a free trade deal having any impact whatsoever on its auto purchasing patterns.”

Even government studies show that free trade agreements with these countries would promote a much larger increase in automotive imports from those countries rather than exports from Canada, the report said in calling for Ottawa to rethink its auto trade policy.

“Canada is one of the only auto producing jurisdictions in the world that doesn’t have a formal national auto policy. This is a huge weakness,” CAW national president Ken Lewenza said Monday in Toronto at a media conference.

“Several of Canada’s important auto facilities are facing key investment decisions over the next couple years. As a country, we need to win those investments or our industry will shrink,” Lewenza added.

The report comes as the CAW prepares to embark on a series of town hall meetings booked in eight cities across Ontario, where most of Canada’s automotive manufacturing sector is located.

The union aims to address the improvements in the auto sector that have been made since two of the Big Three Detroit automakers faced bankruptcy nearly three years ago.

“It’s one thing to go and lobby government every time there is another investment made by the companies,” Lewenza said in a telephone interview.

“It’s another to have a long-term strategy that says to the companies that if they invest in Canada these are the rules you’re going to get and benefits you’re going to get.”

Calls from the union for an open discussion could spark a debate that is percolating over trade policies and fair trade, said Harold Chorney, a professor of political economy and public policy at Concordia University.

“There’s an increasing growing number of skeptics about (trade agreements), even in the economics profession,” he said.

“This is a genuine policy debate that needs to happen,” he added.

A statement issued by federal Industry Minister Christian Paradis did not respond directly to the CAW initiative, referring instead to what it call the “decisive action” taken by the Conservative government to support the restructuring of General Motors and Chrysler.

“We will continue to support manufacturing by providing tax relief, eliminating tariffs on machinery and equipment, and creating an environment that promotes innovation, research and development.”

The statement said those policies were seeing results as GM recently announced it would continue to assemble its Chevrolet Impala sedan in Oshawa, investing $68 million and securing 350 jobs.

“Honda recently said it would be building its next generation CR-V in Canada and Toyota announced last summer it will invest up to $500-million into its Canadian operations in Cambridge and Woodstock, (Ont.),” it added.

In its report, the CAW pointed to unbalanced trade policies which, it says, have made it a “one-way street” of imports to Canada over exports to practically every country except the United States.

Trade policy-makers should take on the responsibility of resolving a dramatic and growing imbalance in Canada’s international trade relationships in automotive products, the report said.

The CAW proposals include all levels of government agreeing to purchase vehicles from automakers that have made manufacturing commitments to the country. This would include Crown corporations and vehicles used by government-financed public services such as education and health-care, it said.

The union also suggested the loonie should be brought back down to a “fair-value” level.

Possible moves could include an intervention from the Bank of Canada or the government preventing foreign takeovers of resource assets, the union said.

“While in theory the global financial system relies primarily on a system of freely floating exchange rates, in practice governments and their central banks regularly intervene in currency markets to influence currency outcomes,” the report said.

China has a banking system that is operated by the state, while other countries like Japan, Brazil and Switzerland regularly intervene to manage their exchange rates, it noted.

The union defended hourly wages at the Canadian operations of the Detroit Big Three, countering claims from the automakers that pay is notably higher here than in the United States. It said the automaker’s estimates don’t factor in that expenses are also higher in Canada, from gasoline to books.

“We need good jobs now and into the future to support our families, to strengthen our communities and of course, pay taxes,” Lewenza said.

“You can’t do that with a $10 an hour, or $12 an hour, or even a $15 an hour job — and I think everyone understands that.”