The Canadian Auto Workers’ proposal this week for a national auto policy, if it were to be adopted, would have consequences far beyond the automobile industry. It would, among other things, reverse Canada’s active role in international trade liberalization. In particular, free-trade negotiations with Asian countries and the European Union would be brought to a sudden end.
In for a penny, in for a pound; protecting the auto industry would likely involve a whole series of interventions. Thus, the CAW’s report, Rethinking Canada’s Auto Industry: A Policy Vision to Escape the Race to the Bottom, favours the raising of barriers to, for example, automobiles and auto parts imported from South Korea. To that end, it would reject a bilateral trade treaty with South Korea that would deal with a full range of goods and services, not just cars and trucks.
The CAW is right to be anxious about the present and future of Canada’s exports, because the Canadian auto industry exports to the U.S. Earlier this month, Mark Carney, the Governor of the Bank of Canada, gave a speech in which he presented a well-rounded, balanced analysis of the comparative weakness of Canada’s exports of manufactured goods. He concluded that the problem was not so much the strength of the Canadian dollar – on which the CAW wants intervention to lower the exchange rate – or high relative labour costs – on which the CAW is quite naturally defensive – but rather on Canadian business’s failure to do enough to market Canadian goods to the fast-growing emerging economies, including those in East Asia and South Asia.
The CAW may be right that Canada is unlikely to ship many completed automobiles across the Pacific Ocean, but its dismissal of current and future free-trade negotiations is an unjust disregard for the potential of Canadian exports in Asia – not to mention Europe and other regions of the world – and that potential could well include high-value-added automotive components.
It is curious that, when the NDP is edging toward the centre with the election of Thomas Mulcair as its leader, the Canadian Auto Workers are advancing drastic, retrograde policies that are now unlikely to find favour with any of Canada’s political parties.
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