Automotive News Canada - September 2016 - V2 - 14



Could the United States
decide to leave NAFTA?

Dias won't 'allow'
GM's Oshawa plant
to close



screaming in the room that we'd
finally seen the end of him and his
horrendous politics," says Dias,
president of Canada's largest private-sector union.
"Can you imagine? He was the
prime minister of the country and
he didn't like Canadians."
It was the final morning of
Unifor's second national convention, and it helped mark a turning
point for Dias
and the union.
Prime Minister
Justin Trudeau
spoke to the
convention two
days earlier
and repeated
his promise to repeal anti-union
legislation through the passing of
Bill C-4.
"I spent two years trying to
get a meeting and finally got a
15-minute meeting with Harper
and one of his advisers," says
Buzz Hargrove, recalling his time
as head of the Canadian Auto
Workers union.
"Today, Jerry can pick up the
phone and within an hour he can
have the Prime Minister on the
line. It's a huge change."
Such co-operation is just in
time for Dias's current challenge:
bargaining for new contracts with
the Detroit Three automakers,
which are under way now.
"We are not going to allow
GM's Oshawa complex to close,
under any circumstance," says

"The same thing holds true
with Ford, with our Windsor

Former head of
the Canadian Auto
Workers Union
Buzz Hargrove,
mince words
about trying to
deal with the
Harper government. Hargove
was succeeded
by Ken Lewenza,
engine plant - we need a longterm solution there as well - and
candidly, at the Fiat Chrysler
plant in Brampton, where we
need to make sure they lock in the
existing product portfolio."
Dias has a firebrand approach
to leadership, but his style is less
incendiary than many of those
who came before him.
"Machismo doesn't work like
it did in my day," says Hargrove.
The 310,000-member union is
also far more diverse, after being
created three years ago by a
merger of the Canadian Auto
Workers union (CAW) and the
Communications, Energy and
Paperworkers Union of Canada

Jerry Dias finds
himself in a different political climate
where Prime Minister
Justin Trudeau seems
to have a higher regard
for the auto industry than
his predecessor.
Dias, 57, is Unifor's first president and comes from a tradeunion family. His father was the
head of the United Auto Workers
Local 112 at De Havilland's
Downsview plant. Dias wanted to
be a physical education teacher
and enrolled at York University
but in his first summer, in 1978,
he went to work at De Havilland
to help earn money for his education.
He started out handling parts
deliveries and never went back.

It might all have ended differently, but in 1982 he was laid off
from De Havilland. He went to
work at the Metropolitan Toronto


Wait period cancels out dollar difference for Canadian cars

try retracts," he says - the new procedures are turning
away potential buyers.
"Since the U.S. has implemented this new process,
we can feel the air coming out of the balloon a little
bit," he says. "It has
cost money and time,
and taken away that
immediate requirement
for a vehicle that an
American might have.
Anybody who buys a
vehicle doesn't really want to have [it] delivered in 60
or 90 days. They usually have a need for it more immediately."
Timm has his own theory regarding the reasons for
the recent enforcement of regulations.

"My take is that the U.S. manufacturers were more
prepared for this (currency fluctuation) and put up a
lobby to the government officials that regulate these
sorts of things and have intentionally made it more difficult to import vehicles from anywhere outside the
United States; not just Canada but [also] Europe and
South America," he says. "The U.S. would tell you that
they have not changed any regulations, but they have
done what government bureaucracies do and very keenly enforce things now that they didn't used to enforce.
"They don't want a flood of vehicles knowing that
the U.S. dollar is in some cases quite a bit stronger than
other currencies."

Requests for comment from United States Customs
and Border Protection were not returned.
Despite increased enforcement, importers based in
the United States who are willing to wade through the
procedures are still enjoying an influx of product to process.

"It's probably doubled," says Josie Haddon, co-owner of American Vehicle Importers based in Port Huron,
Mich., of her increase in business in recent months.
"The business has always been here, but you see an
increase any time . . . the Canadian dollar decreases."
The importation process is less complicated for
individuals purchasing a NAFTA-eligible vehicle that
already complies with U.S. EPA regulations, and the
plethora of online shopping tools now available to consumers is bolstering an increase in importations to the
United States.
According to DesRosiers Automotive Consultants,
nearly 200,000 used vehicles were imported into the
United States from Canada in 2015, the highest number
since the Canadian dollar most recently dipped below a
70-cent average conversion rate back in 2002.

These data coincide with a 50 per cent increase
in searches originating from the United States on
Canadian vehicles as reported by used-vehicle-sales
search engine The proliferation of
online classified sites is making cross-border shopping
much easier during this Canadian dollar low tide than
it has been in the past. - ANC

ders, the integrated economies of three nations
would slam to a halt.
But can a U.S. president unilaterally withdraw from an international pact? Experts
are divided on whether
NAFTA's wording would
give Trump such power.
Michael Hart, a former senior trade policy
adviser to the Canadian
government, is among
those who believe
re-opening the agreement would require an
act of Congress, and with
Canada being the biggest
market for the exports of
35 states, "wiser heads
will prevail."
Yet even if the United
States. did quit NAFTA
-and the Americans
haven't bailed on a trade
pact since 1866 - Hart is
convinced that Canada
and its southern neighbour would simply revert
to the previous Free
Trade Agreement signed
in 1988.
That might sound
good to the Canadian
auto industry, which
thrived under the FTA -
as it did under the earlier Auto Pact agreement
- before losing ground
as investment turned to
Mexico under the continental deal.

But few apart from
Trump think the abandonment of NAFTA
is possible. North
American auto trade has
more moving parts than
an eight-speed automatic
transmission, and would
be even harder to dismantle.
"Once an agreement
has been place for 10,
15, and in the case of the
FTA, now 28 years, you
can't just undo that by
condemning the agreement. All that does is create uncertainty in the
investment area," says
Hart, recently retired as
Simon Reisman Chair in
Trade Policy at Carleton
University in Ottawa.
"Companies are not
going to say, 'Oh gosh,
now we're going to go
back to the 1980s.'
"You can't unscramble that egg."
Even rearranging it
on the plate would be
A Clinton presidency trying to exact better terms in a retooled
NAFTA would face two
partners with their own
objectives - Mexico seeking protection for its
hard-hit agricultural
sector, for example, and
Canada certainly looking to reverse the steady
decline in auto plants
and jobs.

But for players such
as the Automotive
Parts Manufacturers'

Association of Canada
(APMA) and Unifor,
the union representing
employees at the Detroit
Three plants in Ontario,
a more pressing target
is the 12-nation TransPacific Partnership
that would supercede
NAFTA. Again, both
Clinton and Trump
oppose the still-unratified pact but again, what
they would actually do
once elected is unclear.
Canadian parts makers, particularly smaller
producers without offshore factories, fear that
the TPP's reduced regional content requirements
- as low as 25 per cent
in certain cases - would
allow carmakers and
parts producers to substitute parts from lowcost nations and still be
eligible for tariff exemptions. Under NAFTA, the
regional content thresholds are a far steeper 62.5
per cent for finished cars,
light trucks, engines and
transmissions, and 60 per
cent for other parts.
Longer phase-in periods in the United States
than Canada for tariff
reductions on Japanese
imports are another concern.
Looking for a clearer picture of the impact
on Canada, APMA
officials are to travel to Washington in
September in search of
details on how the United
States would implement
the TPP.
"The chief objective is
to get as smooth a transition into a post-TPP
world as we can, so it
really lives and dies with
the Americans," says
APMA president Flavio
Unifor calls the TPP a
"fundamentally flawed"
treaty for its reductions
in regional value thresholds and failure to protect against large trade
imbalances or the manipulation of exchange
rates. (It voiced similar
objections to NAFTA and
the Canada-Korea trade
treaty negotiated in 2014.)

For the union, as for
the parts manufacturers,
what the U.S. does with
the agreement is key.
Given the statements
coming from the presidential candidates, that
could mean abandoning
the deal or demanding a
return to the bargaining
Unifor research director Bill Murnighan
believes Canada's only
course is to be cautious.
"Our views to the federal government have
been, 'Do not get ahead of
our major trading partner and ratify something
that has every chance
of either not being concluded, or being amended on pressure from the
Americans." - ANC

Table of Contents for the Digital Edition of Automotive News Canada - September 2016 - V2

Automotive News Canada - September 2016 - V2 - Intro
Automotive News Canada - September 2016 - V2 - 1
Automotive News Canada - September 2016 - V2 - 2
Automotive News Canada - September 2016 - V2 - 3
Automotive News Canada - September 2016 - V2 - 4
Automotive News Canada - September 2016 - V2 - 5
Automotive News Canada - September 2016 - V2 - 6
Automotive News Canada - September 2016 - V2 - 7
Automotive News Canada - September 2016 - V2 - 8
Automotive News Canada - September 2016 - V2 - 9
Automotive News Canada - September 2016 - V2 - 10
Automotive News Canada - September 2016 - V2 - 11
Automotive News Canada - September 2016 - V2 - 12
Automotive News Canada - September 2016 - V2 - 13
Automotive News Canada - September 2016 - V2 - 14
Automotive News Canada - September 2016 - V2 - 15
Automotive News Canada - September 2016 - V2 - 16
Automotive News Canada - September 2016 - V2 - 17
Automotive News Canada - September 2016 - V2 - 18
Automotive News Canada - September 2016 - V2 - 19
Automotive News Canada - September 2016 - V2 - 20
Automotive News Canada - September 2016 - V2 - 21
Automotive News Canada - September 2016 - V2 - 22
Automotive News Canada - September 2016 - V2 - 23
Automotive News Canada - September 2016 - V2 - 24
Automotive News Canada - September 2016 - V2 - 25
Automotive News Canada - September 2016 - V2 - 26
Automotive News Canada - September 2016 - V2 - 27
Automotive News Canada - September 2016 - V2 - 28