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Council warns against free trade with South Korea

Waterloo Record, Canada

Council warns against free trade with South Korea

By Terry Pender, Kitchener

14 June 2006

Kitchener joined a growing list of municipalities worried about the impact a proposed free-trade agreement with South Korea will have on the crucial automotive sector of southwestern Ontario’s economy.

On Monday city councillors voted unanimously to call on Ottawa to cancel free-trade negotiations with South Korea.

"There is no question this issue is within our own purview and jurisdiction, although some would say we should stay out of it," Mayor Carl Zehr said during the meeting of the city’s finance committee that considered the issue.

Zehr is part of the group called the Ontario Mayors for Automotive Investment, which represents cities that employ a total of 138,000 people who produced more than 2.6 million vehicles last year worth about $99 billion. That group says Canada currently imports $150 in auto parts from South Korea for each $1 in automotive parts Canada sells to Korea.

"I think this fits very well with the municipal agenda," Coun. Berry Vrbanovic said.

"It certainly has a significant impact in terms of employment opportunities in our communities," Vrbanovic said.

Future trade agreements should require other countries to buy substantial volumes of finished vehicles or auto parts from North America, say city councillors and the Ontario mayors’ group.

As well, future trade agreements should require other countries to invest in design, parts manufacturing and assembly facilities in Canada as a condition of their continued access to our own automotive market, city councillors and the Ontario mayors’ group say.

"You don’t have to be a rocket scientist to figure this out," Coun. Geoff Lorentz said of the impact of a free-trade agreement with South Korea.

Currently Canada has a $3-billion trade deficit with South Korea. That means Canada buys $3 billion more in goods and services from South Korea than we sell. The overwhelming majority of that trade deficit is auto parts and vehicles.

In passing a motion that calls for the cancellation of free-trade talks with South Korea, city councillors were responding to presentations from two representatives of the Canadian Auto Workers.

"We don’t want a free-trade agreement, we want a fair trade agreement," Jim Woods of CAW Local 1524, said.

"We are asking for an agreement that would allow us to sell as many vehicles in South Korea as they do here," Woods said.

Mike Pigeau, of Local 1524’s executive board, told councillors that auto-parts manufacturing and vehicle assembly account for 12,500 direct jobs in Waterloo Region that pay $9.1 million a day in wages.

Kitchener-Waterloo-Cambridge is the third-largest auto-manufacturing area in Canada, Pigeau said.

"It is not an exaggeration to say that this whole industry could disappear," Woods said.

In 1965, Canada and the United States negotiated the Auto Pact that resulted in the construction of three enormous automotive factories in Canada, two in Ontario and one in Quebec. In short, that agreement required the Big Three automakers to assemble a vehicle in Canada for each vehicle sold here.

In 1988, the free-trade agreement with the U.S. came into effect, and the auto pact was scrapped. But that agreement required each car sold in North America to have at least 50 per cent of the parts made in North America. In the early 1990s the World Trade Organization, which polices trade disputes among member countries, struck down that requirement.

Also in the 1990s the Liberal government of Jean Chrétien expanded the free-trade agreement to include Mexico and created the North American Free Trade Agreement, or NAFTA.

"We can’t compete with $5-an-hour (wages) in Mexico or $5-a-day in China," Woods said.