Canadian Manufacturing

Canadian auto sector’s concerns over South Korea trade deal ‘misplaced’

Firms should approach agreement as strategic opening to Asian market rather than one-sided deal, paper argues

CALGARY—Canadian auto industry stakeholders should take a glass-half-full approach to Canada’s free trade agreement with South Korea and view it as a foot in the door to the Asian market, according to a new paper.

Published by the School of Public Policy at the University of Calgary, the paper argues that industry players—including Ford Motor Co. of Canada, which came forward to say it “cannot support” the deal—should approach the agreement as a strategic opening to the lucrative Asian market rather than a one-sided deal that will see more Korean cars enter the Canadian market.

“Automakers may find that whatever increased competition comes from cheaper Korean car imports are offset by the opportunity to more easily sell Canadian-made vehicles in the much larger Asian marketplace,” author Eugene Beaulieu wrote in the paper.

Arguing against fears trotted out by the Ontario government that automakers like Hyundai Motor Co. and Kia Motors Corp. will dump tariff-free vehicles in the Canadian market, Beaulieu’s paper said the deal includes safeguard provisions that will allow Ottawa to take action against import surges.

What those actions are, however, have not been announced by the federal government, and were not published in the paper.

“Canadian automakers are concerned about competing with South Korea’s Hyundai (and) Kia,” Beaulieu wrote. “But the agreement also offers improved access to the Korean market for Canadian-made automobiles—and, more importantly, provides an opening to the vital and burgeoning wider Asian automobile market.”

Since the United States entered a similar free trade deal with South Korea in 2012, the paper notes, its auto exports to the country doubled, though were still relatively low at just 24,000 vehicles in 2013.

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