Canada Headed for Largest Auto Trade Deficit in Its History

TORONTO, Oct. 8 /CNW/ - Canada's automotive trade balance has deteriorated dramatically this year, with the country on track to record its largest automotive trade deficit in history, according to a new study released today by the Canadian Auto Workers union.

The report, Canada's Deteriorating Automotive Trade Performance, provides statistical evidence of the erosion of the country's once-impressive record in auto trade, and was authored by CAW Economist Jim Stanford.

Data covering auto exports and imports for the first seven months of this year indicate that Canada imported $4.3 billion of auto products (both finished vehicles and parts) more than it exported for that period. This year's automotive trade deficit could reach $8 billion.

That would represent by far the largest automotive trade deficit in Canada's history.

Canada's largest automotive trade deficit is with Japan (exceeding $6 billion), while Canada's most unbalanced automotive trade relationship is with Korea - from whom we purchase 183 times as much automotive value as we sell there. The fastest-growing automotive imports have been from China (up by over 1200% in 10 years) and Korea (up by almost 600%).

The CAW report calls attention to the potential damage more free trade agreements will do to the auto sector. In particular, the union urges the federal government to stop its free trade negotiations with Korea. (The latest round of Canada-Korea negotiations is occurring in Ottawa this week.)

"Canada's auto industry is already facing unprecedented challenges, mostly as a result of one-way trade deficits with Asia and Europe," said CAW President Buzz Hargrove. "Korea has been one of the main culprits. Why on earth our own government would now reward Korea with even easier access to our markets is utterly beyond me."

"A free trade deal with Korea will take a bad situation and make it worse," Hargrove added. "The government should cancel these talks, and turn its attention to developing the well-rounded auto policy that we need."

Source:: CAW

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