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No Korean auto pact: Ontario

Toronto Star

No Korean auto pact: Ontario

Leave sector out of talks, Ottawa told

Deal said to harm beleaguered industry

Tony Van Alphen, Business Reporter

8 September 2006

The Ontario government is demanding that Ottawa exclude the auto sector from free trade talks with Korea because of potential harm to the industry.

Joe Cordiano, Ontario minister of economic development and trade, revealed yesterday he has asked the federal government for the exclusion because the sector is experiencing serious competitive challenges and doesn’t want a deal with Korea to worsen conditions.

"We’re not mincing words on this," Cordiano said in an interview. "We want to be very clear about our position that we want to set aside the auto sector in the negotiations. The industry has screamed loud and hard that it will be detrimental to them if we don’t get it excluded."

Bob Klager, director of communications for International Trade Minister David Emerson, said it was unclear whether he had received a letter outlining the request from Cordiano. Emerson would reply to Cordiano before responding publicly, Klager added.

The federal government has been negotiating with Korea for more than a year for a comprehensive free trade deal.

But some Canadian auto makers and parts producers fear they won’t receive the same access to Korea as companies from that country will get in Canada.

Earlier this year, Steven Landry, chairman of DaimlerChrysler Canada Inc., expressed fears that federal trade negotiators were ignoring industry concerns and racing to a deal.

Cordiano said the Ontario government agrees about the need to avoid any possible negative fallout for the industry. All of Canada’s 11 assembly plants and most of the parts sector are concentrated in southern Ontario.

Cordiano said a Korean free trade deal could trigger a flood of Korean auto imports, which would only exacerbate the Canadian industry’s problems.

General Motors and Ford are in the middle of major restructurings in North America which include their Canadian operations because they have too much production capacity amid falling demand. Many auto-parts companies are also struggling because of price pressures from customers and higher material costs.

Korea is Canada’s seventh largest trading partner. Bilateral merchandise trade climbed to $8.1 billion last year and the federal government says a deal would enhance access and open doors in neighbouring China and Japan.

Meanwhile, Cordiano said he met with officials of Ford Motor Co. in Detroit earlier this week to emphasize that his government and other stakeholders are ready to work with the company to ensure the future of plants in St. Thomas and Windsor.

Ford expects to announce more plant and job cuts in North America during the next few months and the St. Thomas assembly operation is seen as a possible candidate for closing.