CAW urges government to protect auto sector, reduce loonie, change trade policy
April 19, 2012 by David Friend The Canadian Press
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 foreign imports.
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. “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.”
The report said that 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 to those countries.
The report calls for Canada to re-think 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. “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.”
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; 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,” Lewenza said.
In the 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 our international trade relationships in automotive products, the report said.
The proposals also 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 automakers’ 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 $10 an hour, or $12 an hour, or even a $15 an hour job — and I think everyone understands that.”