South Korea trade deal draws fire from Canadian auto sector

Tue Mar 11, 2014 10:31pm EDT
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By Susan Taylor

TORONTO (Reuters) - A new free trade agreement with South Korea will throw a wrench into Canada's auto sector recovery, union leaders and an automaker warned on Tuesday, highlighting the pressure on an industry already struggling with competition from Mexico.

The pact, which immediately drew fire from Ford Motor Co (F.N: Quote) of Canada Ltd and Canada's largest private-sector union, underscores problems with the size and cost of cars being produced in the country's industrial heartland, experts said.

"We don't, in Canada, build the type of vehicles that are much in demand in South Korea," said Tony Faria, a University of Windsor professor and auto industry expert. "It's not as if any trade deal we set up with South Korea is necessarily going to result in more vehicles being exported."

Canada and South Korea said earlier on Tuesday they had wrapped up talks on a long-delayed free trade deal, Canada's first in fast-growing Asia. Canada's Conservative government touted the benefits of the deal, which it expects to boost exports by 32 percent, equivalent to C$1.7 billion ($1.53 billion) a year.

But Unifor, a union representing more than 39,000 workers in the country's auto sector, estimates that 33,000 manufacturing jobs in Canada could be lost from the pact, including up to 4,000 auto assembly and parts jobs.

"I wouldn't say it's the death of the industry, but it's another nail (in the coffin)," said Jerry Dias, Unifor's national president.

The federal government pointed to a 2012 study prepared by a University of Toronto professor for the Department of Foreign Affairs, Trade and Development, which concluded the elimination of the tariff on vehicles imported from South Korea would have only a modest impact on domestic production, cutting output by just over 4,000 vehicles.

In 2013, the auto sector employed 117,200 people in Canada, according to Statistics Canada. Some 96,700 of those jobs, or nearly 83 percent, were in Ontario, the most populous province.   Continued...

Canadian Prime Minister Stephen Harper (L) answers questions from reporters as South Korean President Park Geun-hye listens during a joint news conference after their meeting at the presidential Blue House in Seoul, March 11, 2014. REUTERS/Lee Jin-man/Pool