Auto Industry Auto Parts Automotive Market Intelligence NAFTA USMCA

Liberal minority government means new North American trade deal closer to reality

Greg Layson, Automotive News Canada
October 22, 2019

A new Liberal government, even though it’s a minority one, all but ensures that the North American free trade deal will be ratified in Ottawa, auto insiders say.

While the election results aren’t official, the Liberals are expected to win 156 seats, 14 shy of a majority. But, there is likely enough support for the United States-Mexico-Canada Agreement sprinkled throughout the new House of Commons to get the deal passed.

“I think the result, while a minority, does ensure we’ll see ratification of the USMCA in Canada,” Canadian Automotive Parts Manufacturers’ Association President Flavio Volpe said. “I’m not sure anybody is willing to defeat the government in the first vote of the new session, which is when this is likely to end up happening. The ratification of the new USMCA, at this point, is a foregone conclusion.”

Every matter to be voted on in the House of Commons has the potential to become a vote of confidence, meaning just about anything could topple the Liberals, especially with the Conservatives, who are expected to win 122, having won the popular vote.

Prime Minister-elect Justin Trudeau campaigned on the merits of a renegotiated North American Free Trade Agreement.

Under the new deal, 40 per cent of a vehicle must be made in a plant where workers make at least US$16 an hour – a fivefold increase to the average Mexican autoworker’s hourly rate of about US$3.

But the deal hasn’t been ratified by governments in Canada or the United States. And without a majority mandate, the Liberals will have to garner enough votes from the opposition to finally bring the legislation into force.

Trudeau spent the last week of the campaign depicting the late-charging New Democrats and their leader Jagmeet Singh as opponents of the new North American trade pact who would scrap it outright if given the chance.

Singh accused Trudeau of lying about his stance on the new NAFTA. He said he does not want to scrap the deal but, rather, work with Democrats in Congress to strengthen the labour and environmental standards in the pact to make them enforceable.

Canadian auto suppliers are eagerly awaiting the deal’s ratification, which could result in up to an additional $8 billion in annual parts orders, according to an Automotive Parts Manufacturers’ Association internal estimate.

“Our sector is expected to see major gains under the new rules. On that piece, which probably was the most important consideration for us, I’m satisfied,” Volpe said.

The head of the Canadian Vehicles Manufacturers’ Association (CVMA), which represents the interests of the Detroit Three in Canada, also expects the new trade deal to pass.

“You’ve got continuity with the government. The former Liberal government with the new Liberal government, even though it’s minority, they supported the USMCA. They want it passed. We want it passed. That’s what we’ll work with them on as we move forward, as well as with our colleagues in the United States,” Mark Nantais said.

He described the election results as neither “good, bad or indifferent.”

“The election results are what they are and our task is to work with the government of the day. Hopefully we work on policies that are going to support auto manufacturing in Canada and new production mandates as well as international trade agreements,” Nantais said.

Continuity also means any issues the CVMA brought to the former Liberal government remain on its radar.

“Our issues are still front centres and certainly…carbon pricing is one of the issues,” Nantais said. “The government made it very clear on where they stand on carbon pricing. We’ll be working with them on what works for the auto industry and manufacturing in Canada.”

Nantais said any funds raised through carbon pricing need to be returned to companies for reinvestment and innovation in order to maintain competitive.

The Canadian Press contributed to this report.

Click here for original article.

Leave a Reply

Your email address will not be published. Required fields are marked *