OTTAWA (Reuters) - Canada is studying whether to extend accounts receivable insurance to cover noncreditworthy business involving auto parts suppliers after similar action in the United States, Canadian officials said on Monday.
“What we’re going to do is look at the U.S. plan and see how it’s covering noncreditworthy suppliers and to see whether it’s appropriate to extend our plan in that direction,” a senior government official said.
The federal government, through Export Development Canada (EDC), provides insurance coverage for Canadian suppliers that are owed money from automakers and other parts makers.
But Canada’s Automotive Parts Manufacturers’ Association said this month that EDC would not provide accounts receivables insurance on future orders from Lear Corp, ArvinMeritor and Chrysler LLC.
The U.S. government announced a new $5 billion aid plan for U.S. auto parts suppliers on March 19 to provide accounts receivables insurance to U.S. suppliers, including coverage on receivables from Chrysler, Lear and ArvinMeritor.
At first the Canadian government said it already had its own program for guaranteeing receivables but the remarks by the Canadian officials on Monday indicated they were looking to see whether it needed expansion.
Reporting by Randall Palmer, Louise Egan and John McCrank; editing by Peter Galloway