Canada will record the largest automotive trade deficit
in its history this year, according to a report from the Canadian
Auto Workers union, which is urging Ottawa to reconsider the
direction of its economic and trade policy.
In a report released Monday, CAW economist Jim Stanford said the
deficit _ where more vehicles and parts are leaving the country than
coming in _ is expected to be around $8 billion for 2007, the
largest single-year drop to date.
``Not only is Canada's automotive trade performance now the
worst-ever; it is still deteriorating at a record rate,'' Stanford
said in the report titled ``Canada's Deteriorating Automotive Trade
The report, which uses Statistics Canada data reported on an
Industry Canada website, predicts a year-end surplus in finished
vehicle trade of under $14 billion, offset by a deficit in parts of
close to $22 billion.
The previous largest automotive trade deficit was $3 billion
incurred in 1979, Stanford said, adding that was during the height
of the post-OPEC surge in sales of small imported vehicles after
gasoline prices soared in the wake of record world oil prices after
the Iranian revolution.
The report said 1999 was the best year for Canada's auto sector,
with a trade surplus of almost $15 billion.
``Instead of being a net supplier of high-quality automotive
products to the global economy, Canada is now a major net importer
of automotive products,'' Stanford said.
``This trade deficit inevitably translates into a loss of jobs in
domestic automotive production (since fewer jobs are supported by
exports, and more jobs are displaced by imports).''
The CAW report is part of the union's campaign to lobby the
federal government for more aggressive auto trade policy, in the
hopes of getting more Canadian-made vehicles and parts into Asian
and European markets by breaking down trade barriers in those parts
of the world. The union is pressing Ottawa to demand more auto trade
concessions in its general trade talks with South Korea, which
resume in Ottawa this week.
The study also comes as the Big Three North American carmakers _
General Motors, Ford and Chrysler _ continue to lose market share to
their Japanese and Korean rivals and pare thousands of additional
jobs to streamline production in Canada and the United States.
General Motors recently announced the end of a third assembly line
operation at its main plant in Oshawa, cutting 1,200 jobs, adding to
thousands of jobs cut in the last two years by Ford and Chrysler.
At the same time, however, Toyota and Honda are adding jobs and
production in Ontario as they increase their sales in North America
and expand plants in central and southwestern Ontario.
In the CAW report, Stanford noted that loss of jobs has battered
the Canadian industry, with more than 10,000 auto assembly jobs lost
since 1999, and more than 10,000 auto parts jobs eliminated since
Stanford said nearly 90 per cent of the deficit is due to five
large bilateral deficits with Japan, Mexico, Germany, Korea and
While Canada's automotive trade deficit with Japan is the
largest, exceeding $6 billion, the most unbalanced relationship is
with Korea. The report says Canada buys 183 times as much automotive
value as it sells in Korea.
Canada's automotive trade deficit with China, due mostly to
imports of auto parts, will reach almost $1 billion this year.
As a result, the CAW is calling on the federal government to stop
trade negotiations with Korea.
``Future trade talks must be integrated with a broader strategy
to support auto and other high-value Canadian industries, and must
feature focused measures to ensure that our automotive imports are
matched by equivalent automotive exports,'' Stanford said, adding
that the next round of negotiations begin in Ottawa on Tuesday.
``This is the wrong time for our own government to expose this
still-crucial export industry to even more damage from low-cost,
The report cites Industry Canada studies indicating that a
Canada-Korea trade agreement will spur an increase in Canadian
vehicle imports from Korea by 18,000-33,000 units per year.