Automotive News Canada - February 2020 - v2 - 3

SECOND FRONT

02.20

USMCA update puts Canada in the role
of labour watchdog for Mexico
Mexico agrees to a U.S.
condition for oversight
because it thinks
Canadians are likely to
be fairer than Americans
By JOHN IRWIN
TORONTO BUREAU

LATE CHANGES MADE TO THE
new North American trade pact place
Canada into the role of an "honest broker" to assess whether Mexico's manufacturing operations comply with new
labour standards, a trade expert says.
In late 2019,
Democratic legislators in the United
States sought new
provisions that
would make it easier to enforce higher labour standards in Mexico
as part of the new
United StatesMexico-Canada
Eric Miller:
Agreement,
Mexicans didn't
which is set to
trust the Trump
replace the North
administration
American Free
Trade Agreement. to be fair.
PHOTO VIA
After balking
ERIC MILLER
at the proposal to
allow for increased oversight, Mexico
signed on after being assured that
Canada would assist to sort out remedies for Mexican auto facilities deemed
out of compliance with the USMCA.
"What the Mexicans really feared
was that, because they didn't trust the
Trump administration to, in essence,
not put their thumb on the scale and
use what they would see as spurious grounds to justify imposing tariffs or other measures against certain facilities," said Eric Miller, president of the Washington-based Rideau
Potomac Strategy Group and a fellow
at the Woodrow Wilson Center Canada
Institute.
"They wanted to have mechanisms
that were rules-based, and they wanted Canada to come and look at the situation as need be," said Miller, who
sits on the Canadian deputy minister of
trade's external advisory committee on

international trade policy.
The USMCA boosts labour standards and oversight at Mexican plants
and requires 40 per cent to 45 per cent
of a vehicle's parts to be made with
labour making at least US $16 an hour.
While the United States and Mexico
have ratified the USMCA, that process
is just beginning in Canada.

RILED OVER LABOUR RULE
As part of the deal, Mexico will overhaul its labour code. Its legislature has
followed suit, voting, for instance, to
allow workers the right to secret-ballot votes on labour contracts and union
representation.
House Democrats in the U.S.
Congress, in turn, sought additional oversight to make sure the reforms
were enacted at Mexican plants. A provision also was added to USMCA legislation in the United States that allows
the country to designate labour attaches to Mexico to do just that.
This briefly led to a dispute in
December, when Mexico signaled it
had issues with the move, seeing it as
an unnecessary infringement on its
sovereignty.
The dispute was resolved days later
when Robert Lighthizer, the U.S. trade
representative, clarified in a letter
to his Mexican counterpart that the
attaches would not act unilaterally, and
an independent panel would look over

Canada and Mexico have had
their differences over time, but
fundamentally, Mexicans feel that
within the Canadian DNA is an
orientation toward living by the
rules. So Canada isn't going to go
up and say that facility violates
rules unless it violates rules.
ERIC MILLER

President of the Washington-based
Rideau Potomac Strategy Group

TRANS-CANADA NEWS

PHOTO: OPENROAD AUTO GROUP

FILE PHOTO

any labour violations found.
The attaches would "work with
their Mexican counterparts, workers
and civil society groups on implementation of the Mexican labour reform,
including by providing technical assistance and disbursing capacity-building funds, and provide assistance to
the new U.S. government interagency
labour committee," Lighthizer's Dec. 16
letter reads.
"These personnel will not be labour
'inspectors' and will abide by all relevant Mexican laws."

EASING MEXICO'S WORRY
Miller, who has been involved in the
development of six international trade
pacts and has advised 40 countries
on trade and economic policy, said
Mexico likely felt comfortable resolving that dispute in part because it had
agreed to separate "facility-specific,
rapid-response labour mechanisms"
with Canada and the United States. In
essence, that means Mexico agreed to
two bilateral deals outlining the process for dealing with automotive facilities, including factories, found to not
be in compliance with the USMCA's
labour standards, he said.
Separating Canada and the United
States on this issue was crucial to
Mexico, Miller said.
"Canada, in some ways, is being
brought in as a bit of an honest broker.
Canada and Mexico have had their differences over time, but fundamentally,
Mexicans feel that within the Canadian
DNA is an orientation toward living by

After Mexico resisted labour
oversight, Robert Lighthizer clarified
that attaches would be supplemented
by an independent panel to examine
any labour violations.
PHOTO: BLOOMBERG

5,000 KILOMETRES OF STORIES

OpenRoad acquisition means
perks for Subaru customers

OpenRoad Subaru brings to 22
the number of brands represented
by OpenRoad Auto Group. From
left: Brad Beckett, OpenRoad Auto
Group; Christian Chia, OpenRoad
CEO; Don Durst and Tod Sullivan,
Subaru Canada.

The APMA's Flavio Volpe says that
Canada's integrity has prevailed
during the USMCA process.

the rules. So Canada isn't going to go
up and say that facility violates rules
unless it violates rules."
Having attaches in Mexico will likely lead to more compliance, Miller said,
though he cautioned that surprises
"inevitably pop up" when enacting new
rules.
"It's kind of like when you post a
police officer by the side of the highway. Everybody slows down," he said.
"The idea of being able to do it, at least
for a while, is likely to push people to
ensure that they are being more careful
than they might have been about how
these things will play out."
Canada's reputation as a country
that can "broker peace rather than
imposing it" proved to be crucial to getting the USMCA passed, said Flavio
Volpe, president of the Automotive
Parts Manufacturers' Association
(APMA).
"Canada's brand and reputation
has not suffered through this process,"
Volpe said.
Miller said the deal will increase
manufacturing in Canada and the
United States, with the APMA estimating up to $8 billion in new annual parts
orders in Canada.
"There is actually truth behind the
claim that this deal succeeds in delivering more purchases for manufacturing," he said. "You're looking at a significant increase in purchases [of auto
parts] in Canada, and it increases purchases in the United States." - ANC

VANCOUVER - WOLFE SUBARU
on Boundary is now part of the
OpenRoad Auto Group and has been
renamed OpenRoad Subaru
- Boundary.
The acquisition brings the
OpenRoad brand count in British
Columbia to 22, with vehicles sold
at 33 full-service locations. Most of
the Wolfe Subaru staff will remain
employed by OpenRoad under the
new leadership of Danny Xi, general
manager, and Brad Beckett, area general manager.

All OpenRoad Subaru - Boundary
customers will get automatic access
to the Club OpenRoad loyalty program that offers a range of perks and
rewards, including point redemption
up to $2,500 off a new-vehicle purchase. - Joe Knycha

COO moves up to take
over as Dealer-FX leader

MARKHAM, ONT. - GARY KALK,
founder of Dealer-FX, has moved out
of the CEO's chair.
Kalk became executive chairman
of the board while Bill Lucchini, who
has served as COO since joining last

Dealer-FX founder and former CEO
Gary Kalk, left, and new CEO Bill
Lucchini. P H O T O S : D E A L E R - F X

July, became CEO. The company provides digital customer-experience
tools to dealership service departments.
"Dealer-FX is at a natural

SEE TRANS-CANADA PAGE 19

Automotive News Canada - February 2020 - v2

Table of Contents for the Digital Edition of Automotive News Canada - February 2020 - v2