Canada’s auto-parts makers say Ottawa should ask Beijing for clear pledges to set up auto assembly in this country as a precursor to any trade deal.Jeff Kowalsky/Bloomberg
Canada's auto-parts makers are urging the Trudeau government to extract guarantees from Beijing that would protect this country's vehicle manufacturing sector before embarking on free-trade talks with China.
Canadian auto jobs risk being sideswiped under the pivotal free-trade agreement that Prime Minister Justin Trudeau is seeking with Beijing – one that would very likely allow Chinese state-owned auto firms to make major inroads into this country's domestic market for cars and vehicle parts.
China has already gone public with conditions it expects from Canada to negotiate a trade deal, including the removal of a ban on Chinese state-owned firms investing in the oil sands that was put in place by former prime minister Stephen Harper.
Canada's Auto Parts Manufacturers' Association has written International Trade Minister Chrystia Freeland saying Ottawa should likewise lay down its own conditions and ask Beijing for clear pledges to set up auto assembly in this country as a precursor to a deal.
"Canada must make sure to acquire its fair share of [Chinese auto-manufacturing work] as a comparable benefit for granting access to Canada's natural wealth," Flavio Volpe, president of the Auto Parts Manufacturers' Association, wrote to Ms. Freeland in a letter obtained by The Globe and Mail. "Canada should clearly target new, advanced automobile manufacturing commitments by Chinese auto makers in Ontario and Quebec."
More than 115,000 direct jobs in Canada are tied to the Canadian auto industry, with the largest single component, or 81,000, coming from the auto-parts makers who supply American-owned and Japanese-owned vehicle assemblers in this country.
Another recently completed trade deal, the Trans-Pacific Partnership accord, already threatens Canadian auto jobs because it would eliminate Canadian tariffs on Japanese vehicles and make it easier for manufacturers to use offshore parts in cars.
Auto analysts believe it's only a matter of time before Chinese auto makers try to break into the North American market. The danger for Canada, which has seen its share of global auto investment decline, is that Beijing auto makers build plants in Mexico and the United States rather than here.
Ottawa is being urged to tread carefully in any negotiations with the authoritarian Chinese government, which plays a massive role in its economy and has annual economic output that is six times larger than Canada's.
"In spite of the long-standing respectful and meaningful relationship Canada enjoys with China, this would not be a negotiation among equals," Mr. Volpe writes.
Earlier this month, Han Jun, China's Vice-Minister of Financial and Economic Affairs, visited Ottawa to discuss the prospect of free-trade negotiations with Canada, and said Beijing wants Canadian concessions on investment restrictions in the oil sands and a commitment to build an energy pipeline to the coast.
Mr. Volpe said the Chinese desire for guaranteed access to Canadian energy and resources offers this country an opportunity to demand a quid pro quo. Unlike free-market economies where, say, Japan couldn't make investment commitments on behalf of a private firm such as Toyota, China is in a position to make auto-plant pledges to Canada, he said.
"The same Chinese government that directs capital investment into resource acquisition and [related] infrastructure also directs the world's largest auto manufacturing sector," Mr. Volpe said. "The opportunity to position Canada as the beachhead for the landing of Chinese auto investment is the single most impactful industrial benefit the government could seek in exchange for what China has signalled it is seeking."
Ms. Freeland was travelling and could not be reached for comment. The Department of Global Affairs said it could not answer for her on what would be the "biggest trade deal in history."
Steven Chase