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Canada-South Korea free trade talks a non-starter with auto sector

Canada-South Korea free trade talks a non-starter with auto sector

Julian Beltrame
Canadian Press

Wednesday, April 18, 2007

OTTAWA (CP) — Wary North American automakers and their unions are warning the Canadian government not to be tempted by a recently concluded South Korea-U.S. free trade pact into a similar deal.

With free trade negotiations resuming in Seoul next week, critics say any deal along the lines of the new U.S.-South Korean agreement would cost thousands of jobs in Canada’s manufacturing sector.

Canadian trade officials have high expectations of the week-long talks that begin Monday, believing the conditions are right to piggy-back on the just completed deal between South Korea and the United States.

And Trade Minister David Emerson, who is in Pakistan and could not be reached for comment, has made no secret of his frustration with Canada’s failure to sign a comprehensive free trade agreement with any nation in six years.

"Virtually all of Canada’s major competitors are aggressively pursuing free trade agreements," said department officials in response to written questions. "To remain internationally competitive, Canada must level the playing field and ensure that its exporters and investors have competitive terms of access."

But NDP trade critic Peter Julian said the government is fast-tracking the process without sufficient study and consultations and may actually be trying to beat the U.S. deal, which still requires Congressional approval, to the starting line.

"This government is reckless as we saw in the softwood lumber sellout," he said. "We predicted what would happen and we’ve seen it, 5,000 jobs lost."

The NDP is asking the federal government to release impact studies on job repercussions of a free trade agreement with South Korea, saying the only credible assessment done by the Canadian Auto Workers predicts between 14,000 and 33,000 jobs are at stake.

Another sector in peril is eastern Canada’s shipbuilding industry, and the NDP has asked Emerson to demand that South Korea agree to a "carve out" of the sector similar to the one granted the U.S.

Canadian trade officials would not discuss the particulars of the negotiations, but acknowledged they are anxious to examine the U.S.-South Korea pact once the text is released to determine what concessions U.S. negotiators were able to gain, particularly in the critical auto sector.

Few expect South Korea, which has a population of 48 million, will overnight become a lucrative new market for North American autos even if it drops the eight per cent tariff on foreign vehicles. The reasons vary from the buy-domestic mentality prevalent in South Korea, an array of non-tariff barriers that a free trade pact may not be able to influence, and the product mix offered by the three big Detroit-based automakers.

Last year, less than 5,000 of the 40,500 foreign cars sold in South Korea came from North America, and less than 500 from Canada.

The Automotive Trade Policy Council, which represents the Big Three automakers, said it has not changed from the initial assessment of the U.S.-South Korea pact that it "does not appear to meet our expectations." Ford and Chrysler issued separate statements opposing the deal.

Significantly, when Canadian government officials were asked to list the benefits to be realized by Canada in a deal with South Korea responded that reduction of tariff and non-tariff barriers will create opportunities for Canadian export in agriculture, electronics, high-tech and financial services. They made no mention auto exports.

But Julian doubted there would be significant gains even in these areas. "A lot of our bilateral trade agreements have led to stagnation or actual decline of exports," he said. "It’s not the inking of a pact, it’s a whole host of other factors, such as building up the Canadian profile and Canadian brand in other countries that will make the real difference."

 source: Edmonton Journal