Stephen Harper is being accused of sacrificing Canada’s 80,000-job auto-parts industry in his eagerness to sign on to a massive Pacific Rim trade deal – one his government is negotiating in the middle of the federal election campaign.
The Conservative Leader made waves Thursday when he signalled that he’s determined to be part of a Trans-Pacific Partnership agreement even over the objections of the auto sector, whose members fear it will lead to a flood of foreign parts, produced by cheaper labour, killing their industry. “The auto sector has concerns, as do others … I’m not suggesting they will necessarily like everything that is in [the agreement],” Mr. Harper said, adding he was confident, however, that the deal would “conclude successfully.”
The chances of a deal even before Canadian voters go to the polls Oct. 19 have soared on news that the United States is playing host to what it hopes will be the final round of the TPP talks in Atlanta at the end of September. An agreement would cover 12 countries from Chile to Japan, where the big prize is access into the latter’s heavily-protected domestic market.
Mr. Harper’s comments came during the second party leaders’ debate in Calgary where Mr. Harper, NDP chief Thomas Mulcair and the Liberals’ Justin Trudeau offered competing visions on how to kick-start Canada’s sluggish economy.
Ontario’s economic development minister sounded the alarm Friday over what he called “unilateral federal decisions made in back rooms,” saying it would be “reckless and shameful” for the Conservative government to proceed with the deal as envisioned.
“Suggesting that Canada will be entering into an agreement that may negatively impact the auto-parts sector here in Ontario is not only disrespectful, but shows a lack of true economic leadership,” Brad Duguid said. The Liberal minister’s government has clashed with the Harper Conservatives before, but Mr. Duguid on Friday called for them to work together, asking the Tories to consult with Queen’s Park on the TPP.
Japan and the United States, the two most influential players in the TPP talks, have already agreed on changes to domestic content rules for cars sold within the proposed Trans-Pacific Partnership trade zone. Vehicles would need only 45 per cent domestic content, and auto parts, just 30 per cent domestic content, to be sold free of tariffs. Currently, Canadian auto parts jobs are protected by NAFTA content rules that require more than 60 per cent of cars and parts to originate within Canada, the United States or Mexico.
Mr. Mulcair, who questioned whether Mr. Harper has the legitimacy to negotiate for Canada so close to an election, accused his rival of undervaluing an “industry that provides tens of thousands good, well-paid jobs in Ontario.”
“We need a Prime Minister who goes into trade negotiations fighting tooth-and-nail to make sure we get a good deal for the industry,” said Mr. Mulcair in a written statement. “Last night we learned Stephen Harper’s negotiating position is ‘meh,’ looks like we’ll lose some more jobs but that’s the price you pay.”
Asked to elaborate further on Friday, the Conservative Leader said, “I think it is vitally important that should such a deal arise that Canada be part of the future trading network in the Asia Pacific region.”
The Canadian auto-parts industry has been built up and sustained through a series of trade agreements, starting with the 1965 Canada-U.S. Auto Pact, which required that vehicle makers produce $1 in value-added production in Canada for $1 worth of vehicles they sold here.
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers Association, said he’s counting on Ottawa to protect his sector. “[Mr. Harper] said two important things [Thursday] night that we agree with: Canada cannot remain outside the TPP and we cannot afford for our auto sector’s global competitiveness to be harmed. When the final agreement is done, we will be looking to see that this balance was achieved.”
Jerry Dias, president of Unifor, Canada’s largest private-sector union, questioned why Mr. Harper has ruled out walking away from the TPP table. “He just showed he’s the world’s most incompetent negotiator. He just finished signalling to Japan that he’s signing the deal under any circumstances.”
It was the Auto Pact that first led to Canada to become a major production base for the Detroit Three – so much so that their vehicle production exceeded what was required under the agreement.
Their growth provided a nearby market for auto parts makers and helped spur the rise of Linamar Corp., Magna International Inc. and others into global powerhouses.
Other trade measures – both official and unofficial – led to two Japan-based auto makers opening assembly plants in Canada and expanding them. The investments by Honda Motor Co. Ltd. and Toyota Motor Corp. also boosted the domestic parts industry and sparked investment by Japan-based auto parts makers that set up shop mainly in Ontario to supply the assembly plants.
The auto parts manufacturers group has won support from the Canadian Steel Producers Association and Unifor, which represents more than 20,000 workers at the Canadian units of the Detroit Three auto makers and tens of thousands more at parts makers.
The steel producers group said about one-third of the $14-billion worth of steel its members shipped last year was to auto makers in North America.
The 50 per cent threshold for North American content of auto parts and vehicles is a “reasonable compromise” to the 62.5 per cent figure now in place in the three NAFTA countries, the association said.
“We do not believe Canada’s domestic interest should be compromised to the potential advantage of low-cost jurisdictions outside the TPP,” it said.
Unifor has urged its members to tell candidates running in the federal election that Canada must maintain current content levels.
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