GHY Tradelines

(AFP)

Trade ministers pledge to protect struggling automakers

European Union trade ministers agreed Thursday to launch negotiations on a mega-sized free trade deal with Japan while pledging to safeguard Europe’s struggling carmakers.

“We now have a clear mandate, confirmed by all the member states,” said Europe’s Trade Commissioner Karel De Gucht after ministers gave the European Commission a green light to open talks on a free trade deal, or FTA, which could take several years to negotiate.

Britain’s Trade Minister Stephen Green immediately welcomed “the first big step towards liberalizing trade between two of the world’s largest economies,” which together account for more than a third of the globe’s output. But he cautioned that the EU was “starting out on a journey that will be long, tedious and painstaking.” Read more here.
 

The Department of Finance is currently reviewing a request for the removal of the customs duties on parts for use in the manufacture of gas tanks and radiators for motor vehicles. These parts are classified as follows in the Customs Tariff:

(1) rubber gaskets, classified under tariff item No. 4016.93.10, dutiable at 6.5% under the Most-Favoured-Nation (MFN) Tariff and the General Preferential Tariff (GPT), and other rubber parts, classified under tariff item No. 4016.99.90, dutiable at 6.5% under the MFN Tariff and at 5% under the GPT;

(2) brackets or clamps, classified under tariff item No. 8302.30.90, dutiable at 6% under the MFN Tariff and the GPT;

(3) other parts of radiators, classified under tariff item No. 8708.91.99, dutiable at 6% under the MFN Tariff and the GPT; and

(4) other parts of gas tanks, classified under tariff item No. 8708.99.99, dutiable at 6% under the MFN Tariff and the GPT.

A claim has been made that tariff relief on these parts would enhance its competitiveness in the domestic and export markets.
 

(Dana Flavelle – Toronto Star)

Within hours of a midnight strike deadline, the Canadian Auto Workers reached a tentative agreement with Ford Canada and extended the strike deadline to keep talks going with General Motors and Chrysler.

Ken Lewenza, national president of the CAW, announced the deadline extension for GM and Chrysler shortly after 9 p.m. Monday, several hours after the news conference announcing the Ford deal.

The CAW said talks with the two automakers will continue as long as the companies bargain in good faith. But if negotiations with either GM or Chrysler stall, the CAW will call a strike on 24-hours notice, Lewenza said. Read more here.
 

(Reuters)

China said it has been made a victim of US electoral politics after Washington launched an international trade case alleging that Beijing has been unfairly subsidising automobile and auto parts exports. [...]

In its first official comment on the complaint, issued on Tuesday evening, the Chinese Ministry of Commerce was unusually blunt in blaming the case on the race for the White House.

“In the midst of an election race, the United States chose to announce this news in Ohio, an automobile production area, showing that the US took this step against China out of considerations of electoral politics,” an unidentified Chinese commerce official said on the ministry’s website.

“We express our opposition to this,” said the official, adding that China would deal with the US request for consultations in keeping with WTO rules. Read more here.
 

(CBC News)

CAW reached tentative deal with Ford ahead of deadline

The Canadian Auto Workers union says it will continue negotiating with GM and Chrysler past the midnight strike deadline, averting a labour walkout for now.

The union, which hours earlier struck a tentative deal with Ford Motor Co., said it will keep talking with the remaining automakers as long as progress is being made. But it also said that if talks stall, it will issue a 24-hour strike notice.

“We have agreed with the CAW to extend the agreement,” LouAnn Gosselin, head of communications for Chrysler Canada, said in an email. “We are currently reviewing the tentative agreement that has been reached with Ford.” Read more here.
 

(Business Standard)

Action for illegally subsidising exports in its auto industries

U.S. President Barack Obama will launch a new enforcement action against China at the WTO for illegally subsidising exports in its auto industries, a move seen as a reply to Republican presidential rival Mitt Romney’s accusations that Obama has been soft towards Beijing.

During his visit to Columbus and Cincinnati in Ohio later today, Obama would announce his move to launch an enforcement action against China at the WTO for illegally subsidising exports in their auto industries, a practice that is putting U.S. auto-parts manufacturers at a competitive disadvantage and that is encouraging the outsourcing of Chinese auto-parts, according to a White House official. Read more here.
 

(Grace MacAluso – The Windsor Star)

Detroit Three carmakers should build vehicles that cater to Japanese tastes if they hope to benefit from a free-trade deal with Japan, the executive director of the Japanese Automobile Manufacturers Association of Canada said Thursday.

“Our position is the Japanese market is open,” said David Worts. “The reality is 88 per cent of the vehicle market in Japan is small cars.”

Worts was responding to a report showing that allowing Japan entry into Trans-Pacific Partnership trade talks would lead to the U.S. loss of 2,600 direct vehicle assembly jobs. An additional loss of U.S. supplier jobs is estimated at 9,000, spinoff jobs at 14,000 for a total of 26,500 jobs, according to the report by the Center for Automotive Research in Ann Arbor. Read more: here.
 

(Financial Post – Kim Covert)

Ontario will be at the forefront of Canada’s “outstanding” export momentum as manufacturing – particularly in the auto sector – rebounds this year, according to Export Development Canada.

In its semi-annual Global Export Forecast, released Thursday, Canada’s export credit agency said Ontario’s exports will grow by 9.4% in both 2012 and 2013, beating the national average both years.

“Thus far, things are looking good for trade” in Canada, says the EDC report. “Export momentum is outstanding — merchandise exports are already up 5.3% over last year’s levels, and any further growth this year will move the figure higher.” Read more here.
 

(Money News)

Despite a recent rebound in the auto industry, Canada’s auto parts manufacturers have fallen from the ranks of global top 10 exporters because they failed to diversify their markets, an economist said on Wednesday.

Canada’s auto parts sector is losing global market share because it has not found a way to tap into the rapid growth in low-cost geographies, Scotiabank economist Carlos Gomes said in a report. “The inability to make inroads in the fast-growing markets of Asia and Latin America is undermining Canada’s position as a major auto parts producer,” Gomes said.

Until 2007, Canada was the world’s sixth-largest auto parts exporter, but was overtaken by Spain, Korea and China during the economic downturn, the report said. Last year, Canada lost its top 10 exporter spot to the Czech Republic. The United States takes 57% of all parts shipped from Canadian plants, but the U.S. share of global vehicle assemblies has slipped to 10% from about 25% in the mid-1990s, the report said. Read more here.
 

(Mary Gazze — The Canadian Press)

Manufacturing sales in Canada grew in March as the country’s automotive industry became healthier, driven by a resurgence in vehicle sales south of the border, Statistics Canada reported Monday.

The federal agency said auto sales grew 4.1 per cent in March, the eighth advance for the sector in the last 12 months, which helped total manufacturing sales inch closer to levels seen before the economic downturn.

Francis Fong, an economist at TD Economics, said the higher auto sales were due to demand in the United States growing back to pre-recession levels and those vehicles are either built in Canada or their parts are made or assembled north of the border.

About 85 per cent of auto industry products made in Canada are exported to the United States, according to the Canadian Auto Workers union. Read more here.
 

(The Globe and Mail – Roy MacLaren and Jason Langrish)

Roy MacLaren, a former minister of international trade, is chair of the Canada Europe Roundtable for Business; Jason Langrish is executive director.

Earlier this month, a coalition of auto executives called for a halt to free-trade negotiations with South Korea and the European Union. The members of the Canadian Automotive Partnership Council worry about new automotive investments that are flooding into low-cost Mexico, a free-trade partner of Canada under NAFTA, and undermining their ability to compete.

Last month, The Globe and Mail reported that auto-parts maker Magna International is adding to its presence in Mexico by spending $100-million (U.S.) to build a new plant to produce stamped and welded assemblies for several auto makers. The article says Magna is receiving support from the Mexican government, and already has 29 manufacturing plants and 15,900 employees in Mexico. It adds that Mexico is close to the U.S. auto market, making for efficient shipments by rail, while production costs, including labour, are lower than in Canada or the United States.

Yet, Magna was among those at the Feb. 18 meeting with Industry Minister Tony Clement supporting a report that highlights the threat from a “flood of investments into low-cost Mexico.”

When the auto executives are complaining that proposed free-trade agreements with South Korea and the EU will make them uncompetitive, they’re trying to suck and blow at the same time. Read more here.