NDP Leader Thomas Mulcair is wading into a growing debate about the threat to Canadian auto-sector jobs in a proposed Pacific Rim trade deal, pledging an NDP government would fight for stronger rules in the Trans-Pacific Partnership accord to protect homegrown manufacturing.
"Canada not only needs a champion for the auto industry at home but a champion on the world stage," Mr. Mulcair, whose party is currently leading in the polls, said during a campaign stop in Niagara Falls, Ont.
The Conservative government is coming under increasing pressure to extract a better deal for Canadian auto workers in the Trans-Pacific Partnership talks, and negotiations are under way in Washington this week to resolve a deadlock between Canada, Japan and Mexico over how a deal would treat vehicle imports. This matter has driven a wedge between North American Free Trade Agreement partners and stalled the huge trade accord.
Under existing NAFTA rules, a car can be sold in Canada, the United States or Mexico without facing tariffs as long as 62.5 per cent of it originates in one or more of these three countries.
Japan has proposed – and the United States has provisionally agreed – that the rule for Trans-Pacific partner countries in a proposed TPP trade zone should be that a car with as little as 45-per-cent domestic content can be sold without tariffs. This same side deal between Washington and Tokyo would allow the duty-free importation of auto parts with as little as 30-per-cent domestic content.
The NDP is saying that's not good enough, vowing in a statement that a "Mulcair government will further protect Canadian auto jobs by defending existing regional content rules in trade negotiations."
Mr. Mulcair's campaign staff later explained that a New Democrat government would seek to preserve the 60-per-cent-plus NAFTA content rules for autos.
"Unlike Stephen Harper, an NDP government will protect Canadian automotive assembly and parts jobs in trade negotiations," the NDP Leader said Wednesday in Niagara Falls.
But auto parts makers from Canada, the United States and Mexico are calling for TPP auto content rules of 50-per-cent domestic content.
The Conservative government has not divulged its bargaining position, but International Trade Minister Ed Fast, in a letter to auto parts makers this week, suggested he shares their position. He told the auto parts makers that a letter they sent him calling for 50-per-cent rules aligns "with my own views on the topic."
Jerry Dias, president of Unifor, Canada's largest private-sector union, praised Mr. Mulcair's trade negotiation pledge, saying Trans-Pacific talks threaten to give Japanese auto makers "another leg up" in North America. "If you move down to 40 per cent [of domestic content], the Canadian auto-parts sector is in deep, deep trouble."
He argues the last couple of major trade deals Canada has signed – with South Korea and the European Union – either threaten to hurt, or have already hurt, the Canadian auto sector.
"We finally have a party that is saying enough," Mr. Dias said of the NDP. "Mulcair's stand on [domestic] content is incredibly important."
One danger stemming from the potential reduction in North American content to 45 per cent from the current 62.5-per-cent level is that Japanese auto makers will decide to assemble fewer vehicles in Canada, which will ultimately affect parts makers, said one industry source.
If Canada signs on to the 30-per-cent tariff on parts and the 45-per-cent tariff on finished vehicles in the U.S.-Japan agreement, Japan-based companies may decide to export more vehicles made in Japan to the North American market, the source said, as a means of maintaining production at plants in their home country.
Associations representing auto makers in Canada, the U.S. and Mexico joined together early in the TPP negotiations to urge the NAFTA governments to fight for a higher content standard than has been agreed to in the U.S.-Japan deal.
They recommended an initial content level of 35 per cent, which would rise to 50 per cent over 10 years.
The Canadian Vehicle Manufacturers Association – which represents the Canadian units of the Detroit Three auto makers – stands by that 50-per-cent figure, but "in no circumstances" should content rules be higher than that, association president Mark Nantais said Wednesday.
"We are actually in the process of reinforcing our position with the government," Mr. Nantais said. "We're an integrated industry, we're an aligned industry and we need aligned outcomes in terms of trade agreements."