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North American Auto Industry Knows No Borders

North American Auto Industry Knows No Borders

The recent U.S. election has brought to a head discussions on revisiting NAFTA.  The APMA has been active in publicly advocating for the importance of the trade agreement (both prior to the election and ongoing), emphasizing the interdependence of the North American automotive supply chains in anticipation of any potential trade agreement discussions.

APMA members should be aware that we are on the forefront of all issues relating to trade and matters that may impact the Canadian automotive supply chain.  While you may hear varying reports in the media concerning NAFTA and other trade agreements, APMA wishes to advise its members that we are actively working on your behalf and that your voice is being heard.

Below is a round-up of important NAFTA article summaries over the last few months, emphasizing the need for free trade-partners in an increasingly global industry.  Please click on “READ MORE HERE” or “WATCH HERE” to access articles and videos in full.

U.S. EYES CHANGES TO NAFTA’S RULE OF ORIGIN, POTENTIAL DISRUPTOR FOR AUTO SECTOR

The Trump administration says it wants to strengthen rules of origin in NAFTA, a move that didn’t come as a surprise to the auto industry but some experts say could potentially disrupt the industry’s supply chain.

By: Alicja Siekierska, Financial Post

July 18, 2017

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The Trump administration is using “careful language” when it comes to its desire to strengthen the rules of origin in the North American Free Trade Agreement, industry experts say, something that could bode well for any potential impact on the automotive supply chain.

In the document released Monday outlining the United States’ objectives when it comes to NAFTA renegotiations, the U.S. trade representative said it wants to “update and strengthen the rules of origin, as necessary, to ensure that the benefits of NAFTA go to products genuinely made in the United States and North America.”

The U.S. also wants to ensure rules of origin “incentivize the sourcing of goods and materials from the United States and North America” and establish procedures that streamline rules of origin certification and promote strong enforcement.

NAFTA’s rules of origin currently stipulate that vehicle must have at least 62.5-per-cent North American content in order to gain duty-free access to all three member countries.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said the list of objectives did not contain any surprises to the auto parts industry.
“We’re seeing careful language around rules of origin as the administration and the industry south of the border has substantive conversations about how regulatory change would affect the industry,” he said.

“I think they have a very good understanding of how intertwined the three countries interests are in this sector and, very specifically, how deeply the American interest flows across both borders.”

While the objectives do not point to any specific changes that could potentially be made to rules of origin, U.S. Commerce Secretary Wilbur Ross has previously said the rules were “far too lenient.”

“Rules of origin are a loophole that allows material from outside to come in and yet be counted as though it was NAFTA-produced,” Ross said in a CNBC interview in March.

OBSOLETE PROVISIONS

“One of the many problems with the rules of origin in NAFTA as presently drafted is that in the case of say autos, it went specifically part by part…. Many of those parts are no longer even used in cars…. It’s an obsolete provision, and it’s essentially a back door way for a non-NAFTA good to take advantage of NAFTA.”

Potential changes to the rules of origin could mean raising the North American content level past the 62.5 per cent threshold, said international trade lawyer Mark Warner.

“The sense of it is that Trump probably wants to raise it higher than the 62.5 per cent, and that could mean raising it substantially to 80 per cent or playing around with the way it’s calculated so that, in effect, it’s closer to the 62.5 per cent,” Warner said.

“Another question is, based on the wording (in the document), whether you could have a second rule of origin that is U.S.-specific and would exist alongside that North American rule. It’s not clear that’s something they would want, but clearly it’s an indication that they want to move the content number up.”

Eric Miller, the president of Rideau Potomac Strategy Group who was an advisor during the 2009 auto bailout, said while he doesn’t anticipate specific country-by-country rules of origin to be implemented, changes to content levels and enforcement policy could disrupt the auto manufacturing industry.

SUPPLY CHAIN

“When you scramble those rules by either raising the overall North American content level, or tightening some of the accounting requirements that are out there, that will inevitably create impacts on the supply chain which, in my view, would likely mean potentially greater economic activity in North America but potentially higher cost for vehicles,” he said.

Volpe, however, said he is less concerned about renegotiations affecting the auto industry’s supply chain.

“Americans do well to have Mexican and Canadian supply when we compete against other major jurisdictions around the world,” he said.

“I’m not that concerned that anybody is going to shoot themselves in the foot when it comes to the automotive industry.”

THE NAFTA FIGHT: HOW CANADA CAN WIN

As U.S. President Donald Trump threatens to tear up the key trade agreement, Greg Keenan travels to the industrial heartland of North Carolina and discovers Canada’s secret weapon.

GREG KEENAN
ARDEN, N.C.
THE GLOBE AND MAIL
LAST UPDATED: SATURDAY, JUL. 08, 2017 9:39AM EDT

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The engine blocks creeping along the line at the Linamar Corp. plant in Arden, N.C., provide a cast-iron example of how the North American free-trade agreement has created an integrated economic ecosystem.

Blocks weighing 317 kilograms arrive by truck from Mexico at the factory in southwestern North Carolina, where the thump and hum of 13 machining and drilling processes prepare them for shipment to Hagerstown, Md., for installation in heavy-duty trucks made by Sweden-based AB Volvo.

“We get the blocks from Mexico because of NAFTA,” plant manager Thomas Grein says.

Engine block LNC 1300694, which bears the signature of former U.S. president Barack Obama, did not make the final leg of the journey along the continental assembly line.

Instead, it sits on the floor of the Canadian-owned factory – a memento of Mr. Obama’s visit to Linamar North Carolina in 2013 and a symbol of an outward-looking United States that was seeking to expand global trade.

That signed engine block is also a potent reminder that current U.S. President Donald Trump rejects the idea of expanding global trade. Mr. Trump has turned the country inward by pulling the United States out of the Trans-Pacific Partnership and has promised on several occasions to retrench even further by tearing up NAFTA.

Those threats have energized the federal government and provincial premiers, leading to a flood of Canadian politicians to Washington and state capitals.

But there’s a secret weapon – Canada Inc., the country’s manufacturing and resources giants and other companies that are significant employers in a multitude of U.S. congressional districts in more than one-third of the 50 states. Many of them are the largest private-sector employers in their districts or dominate a local economy.

Their investments give these members of corporate Canada the influence and opportunity to echo the argument federal and provincial politicians are making in Washington and state capitals – that significant changes to NAFTA could affect U.S. jobs in cities and towns from Georgia to Michigan to Alaska.

If those arguments can convince enough state politicians that their own interests will be harmed, Canada could emerge from the NAFTA renegotiations relatively unscathed.

The politics and the economics of NAFTA converge in this corner of the Carolinas, which is dominated by the Great Smoky Mountains and is the site of a Canadian manufacturing insurgency whose health depends on a smoothly functioning trade system.

In the 11th congressional district of North Carolina, Linamar and two other Canadian multinationals are large employers and, in the case of Linamar, growing. Across the state line, bordering on the North Carolina 11th, the third district of South Carolina is home to a Magna International Inc. plant with 1,200 employees.

The future of NAFTA will be meted out at the negotiating table beginning late this summer now that Mr. Trump has officially notified Canada and Mexico that he wants a new deal. He has publicly excoriated companies for shifting jobs to Mexico and appears to believe that renegotiating the trade deal and imposing a border tax will repatriate those jobs.

But Canadian companies such as Linamar in the suburbs of Asheville; recreational vehicle maker BRP Inc. in the mountain town of Spruce Pine; and textiles giant Gildan Activewear Inc. along the Interstate 40 corridor; are located in the United States largely because of NAFTA. That presence gives the companies the clout to urge Representative Mark Meadows and North Carolina’s senators to vote against substantial changes to the agreement.

“The government of Canada has been leaning on industries to do more,” says Laura Dawson, director of the Canada Institute of the Woodrow Wilson International Center for Scholars in Washington.

“We really need to see Canadian businesses in particular going into Gary, Ind., into Buffalo, to Seattle, all the border communities, and reminding folks in their home districts that Canadian trade is important – the Canadian economic relationship is vital to your livelihood,” Ms. Dawson told a NAFTA discussion panel presented by The Globe and Mail last month.

Some of the companies are lobbying local members of the House of Representatives and the Senate to make sure changes to NAFTA don’t disrupt their operations or supply chains, or indeed, the U.S. economy on a scale similar to the turmoil blamed on the original 1993 agreement.

Linda Hasenfratz, chief executive officer of Guelph, Ont.-based Linamar, has started at the top, making the pro-NAFTA case directly to Mr. Trump at a meeting at the White House in February. Ms. Hasenfratz sat across the table from the President as Canada and the United States established a joint council for the advancement of female entrepreneurs and business leaders.

The question of NAFTA’s future arose during the discussion, she says, including how Canadian innovation is benefiting consumers in all three countries and why it’s vital to preserve seamless collaboration in the continent’s auto sector. One of her fears is that a renegotiation of NAFTA will lead to added cost that will make North America uncompetitive against Europe and Asia.

Increased costs on a North American vehicle “will follow the consumer and the consumer stops buying and we make less cars and that’s a hell of a lot less jobs across the board,” she says. “That doesn’t help anybody.”
The North Carolina 11th occupies a picturesque, waterfall-sprinkled corner of the Tar Heel State, with Tennessee on its western and northern borders and Georgia and South Carolina to the south.

It’s bisected by the Blue Ridge Parkway, which bills itself as “America’s Favorite Drive” and lives up to that reputation with stunning mountain vistas before the Depression-era make-work project terminates near Great Smoky Mountains National Park in the northwest corner of the district.

Linamar’s Mr. Grein finds the southern climate and lifestyle much more appealing than in New York, where he spent his student days at New York State University in Oswego, N.Y., which was pounded with snow every winter while he was earning his industrial science degree.

“If I were to be interviewing someone to move from Detroit to here, I could probably do that a lot easier than flipping it,” he says.

Thomas Grein, plant manager at the Linamar factory in Arden, N.C.

The largely rural district delivered an overwhelming plurality to Mr. Trump in the 2016 election. He won every county except Buncombe, which includes many of the suburbs of the traditional Democratic bastion of Asheville, the heart of which was gerrymandered out of the district, making it one of the safest Republican congressional seats in the country.

In rural Graham County, perched in the mountains up against the Tennessee border, Mr. Trump captured 80 per cent of the vote. In the extreme southwest corner of the district, he won 77 per cent of the vote in Cherokee County. The margins of victory in all the counties he won far exceeded his 3.8-per-cent statewide defeat of Hillary Clinton.

Some of that support came as a result of Mr. Trump’s stated position that NAFTA is one of the worst trade deals ever made and that it bears the blame for declines in the textile and furniture industries that dominated the economy of this part of North Carolina – and elsewhere in the state – for generations.

“You have a community that can point and say, ‘Here’s a big negative cost that we’re bearing. Okay, why?’” says Sean Mulholland, an economics professor at Western Carolina University, located in the 11th district.

“They scan the place and say, ‘There’s a big shock that happened, NAFTA,’” Professor Mulholland says over lunch on the university campus in Cullowhee, a winding, leafy, one-hour drive west of Asheville that takes travellers past Old Grouch’s Real Military Surplus and billboards extolling the virtues of Hazelwood Gun & Tactical.

But there were also huge productivity gains in manufacturing that coincided with the first few years of NAFTA, adds Edward Lopez, another Western Carolina economics professor.

That makes it hard to determine to what degree the trade deal can be blamed for local job losses.

It’s also important to note, Prof. Lopez adds, that trade was vital to the creation of the local manufacturing sector in the first place.

“We wouldn’t be the economy we are without international trade – moving from agricultural to manufacturing – and the same is true as we transition from manufacturing to more service and knowledge-based jobs,” he said.

Data from Mexico’s Economic Secretariat underline that statement. North Carolina’s largest and second-largest export markets in 2016 were Canada and Mexico, which soaked up 31.2 per cent of the state’s total exports.

Compared with other congressional districts across the country, the North Carolina 11th fared relatively well in terms of job losses caused by the U.S. trade deficit with Mexico, according to a study by the Economic Policy Institute, a Washington-based think tank that examines the impact of economic trends on working Americans.

The district ranked 256th out of 437 in jobs displaced, the study showed. Ten Michigan congressional districts were in the top 20 in terms of numbers of jobs lost. Four of those Michigan districts voted for Mr. Trump, making a strong contribution to his pivotal win in that traditionally Democratic stronghold.

But plant closings are amplified in the small towns that dominate the North Carolina 11th. Many of those were typically home to a single large manufacturer.

Whether the closings were caused by NAFTA, increased productivity, automation, the rise of China or the other global forces that transformed the U.S. economy in the 1990s and 2000s, the trade agreement gets the blame.

In Andrews, population 1,762 in 2014, the shutdown of the VF Jeanswear plant in 2002 – caused by a shift in jobs to Mexico – vaporized about 500 jobs at the biggest employer in the town and in Cherokee County.

“It was terrible,” recalls Joe Gibson, who started work at the maker of Lee and GWG jeans in 1979 and was plant manager when it closed.

“We drew people from three counties. It took a toll on all the small towns,” Mr. Gibson said.

He recalls his father-in-law telling a story about how the plant that became VF Jeanswear was lured to Andrews in the first place in the 1950s. Employed people throughout the area donated 25 cents (U.S.) from every paycheque to help the town buy 50 acres of land that were offered to a company that built a hosiery factory.

There is still manufacturing in some of the small towns of the 11th district, including Spruce Pine, where BRP, maker of Ski-Doos, Sea-Doos, all-terrain vehicles and motorcyles, operates a foundry that employs 150 people making parts that go in Evinrude boat engines.
Any trade moves that reduce jobs “would be a negative, that’s for sure,” says Darla Harding, mayor of the town, which has a population of 2,123.

“We’re a rural area with a population of about 2,000, so the job aspect of that [plant] is very important to this area,” Ms. Harding said.

If any Canadian manufacturer has an interest in making sure that the status quo remains in place it’s BRP, the company now manufacturing a product invented by Quebec entrepreneur Joseph-Armand Bombardier and still controlled by his descendants.

BRP, which is based in Valcourt, Que., operates two assembly plants in Chihuahua, Mexico and an engine and transmission facility in Queretaro.

“The big dark cloud above our heads is everything related to NAFTA,” chief financial officer Sebastien Martel said on the company’s third-quarter financial results conference call in December, shortly after Mr. Trump was elected.

On the same call, however, Mr. Martel noted that the financial impact of slapping tariffs on products built in Mexico would be slight – between $20-million (Canadian) and $25-million on $1-billion worth of transactions. Making plants more efficient, passing on costs to suppliers and increasing prices would be ways of addressing those added costs, he said.

On the company’s fiscal year-end results call in March, CEO Jose Boisjoli said the company is optimistic that economic measures Mr. Trump is considering are designed to create economic growth, which would help BRP.

On June 1, BRP underlined its confidence that NAFTA will not be dismembered by saying it will invest $25-million in its Mexican operations to reduce bottlenecks.

The company did not respond to requests for comment on what lobbying efforts it is undertaking in regard to NAFTA.

In Hildebran, on the eastern edge of the 11th district, 205 people owe their jobs at Peds Legwear to Montreal-based Richelieu Group, which bought assets from a struggling textile company and won a contract to sell socks to Wal-Mart. It’s now part of the Gildan global manufacturing footprint, after Montreal-based Gildan took over Peds Legwear in 2016.

Senior executives of Gildan say they think the company’s presence in several low-cost countries and trade agreements between Canada and those countries will insulate the Montreal-based company from any major changes that might happen to NAFTA.

“One day they’re renegotiating, one day they’re tweaking,” CEO Glenn Charmandy said of the Trump administration’s public broadsides about NAFTA. “At the end of the day, it’s a little bit out of our control.”

Gildan is not hiring lobbyists in Washington because it’s not worried about the outcome of the negotiations, Mr. Charmandy added.

Gears at the Linamar factory in Arden, N.C.

Linamar’s Ms. Hasenfratz says her position as chair of the Business Council of Canada gives her access to members of Mr. Trump’s cabinet, while auto industry organizations such as the Motor and Equipment Manufacturers Association lobby members of the House and Senate.

She and other members of the Council met with U.S. Commerce Secretary Wilbur Ross earlier this month in Washington.

While Linamar lobbies, it’s also doubling down in the 11th district. The engine-block plant and an adjoining factory that makes gears and other engine and transmission parts employ 215 people and are hiring more.

The company is also building a new plant just southwest of Asheville in Mills River. The Canadian company and joint venture partner Georg Fischer AG of Switzerland are spending $200-million (U.S.) to build an aluminum casting plant that will eventually employ 350 people.

Aurora, Ont.-based Magna, which is Canada’s largest auto parts maker, operates in 11 states and also has 30 plants and 28,000 employees in Mexico. The company is working hard to make sure U.S. governors and state representatives are well aware of its sprawling presence.

Misti Rice, Magna’s director of government affairs, says her No. 1 priority is to educate politicians in those states about the company’s activities.

Ms. Rice has met with all but two of the 11 governors – all of whom are Republican – and has invited 51 members of the House and Senate to tour Magna facilities located in their districts and states. She has visited South Carolina, where Governor Henry McMaster was one of the first U.S. politicians to endorse Mr. Trump’s candidacy for the presidency, five times in four months.

“There’s a very tight relationship there and South Carolina is very important to us,” Ms. Rice says.

Magna has three factories in South Carolina and is constructing a fourth in the state to supply BMW of North America Inc., whose Spartanburg, S.C., assembly plant is less than an hour’s drive from the southern edge of the North Carolina 11th.

A plant operated by Magna’s Cosma metal forming division is located in Piedmont, which is in South Carolina’s 3rd congressional district, represented in the House of Representatives by Republican Jeff Duncan, whom Ms. Rice met with in May.

When she has finished what she calls the education phase of her meetings with politicians, she will turn to an advocacy campaign.

At some U.S. plants, she notes, Magna has added several hundred jobs because of NAFTA.

“Any kind of radical changes [to NAFTA] are inevitably going to change how we do business, which could negatively impact how we operate,” she says.

“We’re a very nimble company and adjust to any changes, but there could be a cost to that.”

North Carolina was not on the list of states being visited by federal cabinet ministers as part of Canada’s lobbying blitz, even though annual two-way trade between the state and Canada totals more than $10-billion (Canadian).

But given the investment by Canadian companies in the 11th district and elsewhere in the state – and local politics – it would be a good place to make the case for NAFTA, says Chris Cooper, who heads the faculty of political science and public affairs at Western Carolina University.

Prof. Cooper points to Mr. Meadows, who has represented the 11th since first being elected in November, 2012, and is now the head of the Republican Party’s Freedom Caucus in the House.

“From a Canadian lobbying perspective, I think it is a smart move,” Prof. Cooper says.

“In a way, he is the perfect person to make this argument to. If he’s in a competitive district where people are anti-NAFTA, he doesn’t have any room to move, but he’s in an overwhelmingly Republican district where if something catastrophic doesn’t happen, he’ll be re-elected.”

Mr. Meadows has already engaged in a public battle with Mr. Trump over health care and Prof. Cooper notes that he has much better access to the President than a third-term congressman from a mainly rural district in North Carolina would normally be expected to have.

The Congressman told The Globe that he has not heard from the Canadian companies with big operations in his district.

“But I’ve talked to the Canadian ambassador at length, had a great conversation with the Canadian ambassador about our mutual interests and I believe that we’ll find some common ground.”

Back at the Linamar plant, Jeff Brower takes a moment from working on a gear assembly line to recall Mr. Obama’s visit and the opportunity he had to speak with the former president on the importance of education.

Nonetheless, Mr. Brower cast his vote for Mr. Trump last November in Leicester, just northwest of Asheville.

He’s well aware of the trade links that are vital to the future of the Linamar facility, but believes that Mr. Trump’s most extreme comments on the deal don’t represent the path U.S. negotiators will take.

“It’s kind of hard to stomp on all that,” he says, adding a thought that seems to be driving much of the thinking on the issue in corporate Canada: “I know he’s made a lot of promises he’s not going to uphold.”

With files from Nicolas Van Praet in Montreal, Adrian Morrow in Washington and Josh O’Kane in Toronto.

 

CANADA’S TRUMP STRATEGY: GO AROUND HIM

By MAX FISHER JUNE 22, 2017
New York Times

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TORONTO — As President Trump disrupts alliances across the map, nearly every level of government in Canada has taken on new duties in a quietly audacious campaign to cajole, contain and if necessary coerce the Americans.

Prime Minister Justin Trudeau’s strategy for managing Mr. Trump is unlike anything tried by another ally. And he has largely succeeded where even experienced leaders like Angela Merkel of Germany have fallen short.

More than perhaps any other country, Canada relies on the United States, which accounts for 70 percent of its trade. Its sizable manufacturing industry is tightly integrated with American production, meaning even a slight hardening of the border or prolonged trade negotiations could put its economy at risk.

Laid in the first days after Mr. Trump’s election win, the plan even enlists Brian Mulroney, a former Conservative prime minister and political nemesis of Mr. Trudeau’s father, who had also been prime minister. Mr. Mulroney knows Mr. Trump and his commerce secretary, Wilbur Ross, from social circuits in southern Florida, where all three keep vacation homes.

Mr. Mulroney’s former chief of staff and ambassador to Washington, Derek Burney, said they urged Mr. Trudeau’s government to “cultivate access, but not just within the White House. To work the American system as never before.”

By organizing a grass-roots network of American officials, lawmakers and businesses, Canada is hoping to contain Mr. Trump’s protectionist and nationalist impulses. Though emphasizing the benefits of harmony, the Canadians are not above flexing muscle, with a provincial government at one point quietly threatening trade restrictions against New York State.

“We don’t have the luxury that the Germans have of an ocean between us,” Mr. Burney said. “And we don’t have a Plan B.”

The War Room

In the weeks before Mr. Trump’s inauguration, Mr. Trudeau reorganized his government to focus on his now uncertain ally.

His new foreign minister, Chrystia Freeland, a former journalist with long experience in the United States and an unapologetic champion of the global liberal order, is seen as able to coax the Americans when possible and defy them when necessary.

Ms. Freeland’s team of America-whisperers includes Andrew Leslie, a former lieutenant general and Afghanistan veteran who knows many of the American generals filling out Mr. Trump’s administration.

Mr. Trudeau established a “war room” dedicated to the United States, headed by Brian Clow, an operative with the governing party who had worked on some of its most important election victories.

The new office sought to cultivate the people around Mr. Trump. During a February visit to the White House, Mr. Trudeau and Mr. Trump’s daughter Ivanka led a panel on women in business. The two later attended “Come From Away,” a Broadway play about Canada sheltering travelers whose flights were diverted after the Sept. 11 terrorist attacks.

The efforts initially paid off. Mr. Trump’s February address to Congress mentioned only one foreign leader: Mr. Trudeau, whom he praised for his panel with Ms. Trump.

A few days later, the White House exempted the Keystone XL pipeline, overseen by the Canadian firm TransCanada, from Mr. Trump’s executive order requiring pipelines in the United States to be built with American steel.

But the honeymoon did not last. Mr. Trump accused Canada of unfair trade practices and threatened to exit the North American Free Trade Agreement, which would devastate Canada’s economy. Though he agreed to renegotiate instead, officials here fear the uncertainty could scare off investors or prompt factories to relocate.

Other foreign leaders found their administration allies similarly unable to temper Mr. Trump. Many shifted from absorbing his attacks to returning them. The Canadians felt they could not afford such a downturn.
Catherine McKenna, Canada’s environment minister. The Canadian federal government is working directly with American states and cities on climate change. CreditMax Rossi/Reuters
The Doughnut Strategy

So Canada turned to courting every other level of government, forming something like a doughnut around a White House-shaped hole.

Canadian officials have fanned out across the United States, meeting with mayors, governors, members of Congress and business leaders on matters from trade to the environment.

Ministers’ schedules resemble those of rock bands on summer tours. They travel armed with data on the precise dollar amount and number of jobs supported by Canadian firms and trade in that area.

“They’re going to great lengths, going into parts of America that few cabinet ministers from Canada have gone to,” Mr. Burney said.

Hints of this network emerged when Mr. Trump announced that the United States would leave the Paris climate agreement. Canadian officials said they would instead seek climate deals with American states, many of which were already in progress.

“Something snapped in the last few weeks,” said Roland Paris, a former foreign policy adviser to Mr. Trudeau. With trade threats looming, Mr. Trump’s break on climate convinced Canadian leaders of the need for drastic steps.

Since then, Mr. Paris said, “the approach has been to maintain cordial relations with the White House while going to extraordinary lengths to activate American decision makers at all levels of the political system.”

Mr. Trudeau hinted at the shift in a tweet, writing, “We are deeply disappointed that the United States federal government has decided to withdraw from the Paris Agreement.”

The phrase “federal government” was intended to signal Mr. Trudeau’s plan to cut his losses with Mr. Trump and focus instead on state and local governments, according to a Canadian official close to policy decisions toward the United States, who asked to remain anonymous because of the sensitivity of relations between the two countries.

The official said Canadian leaders plan to individually contact every lawmaker in Congress.

An early test came in New York, where Gov. Andrew M. Cuomo introduced a “buy American” budget provision on all state contracts worth over $100,000.

Officials here, sensitive to Mr. Trump’s influence on politics, feared the measure could inspire more protectionist policies. But they also saw an opportunity to demonstrate Canada’s growing muscle.

Provincial governments in Ontario and Quebec, which border New York, sent high-level delegations to Albany, where they hired the lobbying firm Bolton-St. Johns. New York-based business leaders were urged to intervene.

Premier Kathleen Wynne of Ontario, the province’s equivalent of governor, said she led with positives, like the benefits of cross-border manufacturing, under which plants from both countries collaborate on a single product.

But as Mr. Cuomo pressed forward, Ms. Wynne issued a quiet warning: If the measure passed, Ontario would reciprocate, imposing similar restrictions on trade with New York.

It was a powerful threat. New York’s annual exports to Ontario are worth $10 billion. Plants in Buffalo, near the border, are already struggling. New York firms would probably have been shut out of Ontario’s planned infrastructure investments, budgeted at $160 billion.

“If this was going to go ahead, we had to be prepared to protect our industry,” Ms. Wynne said in an interview. “Nobody wants a trade war, but we also have to be clear on what we will and won’t stand.”

The gambit paid off, with state lawmakers stripping the provision hours before passing the budget. Mr. Cuomo’s spokesman acknowledged Canadian lobbying had played a major role. Mr. Cuomo this week persuaded lawmakers to adopt a far more limited “buy American” measure. It is largely symbolic, underscoring how far Ms. Wynne was able to push the third-richest American state so as to protect Canadian interests.

Ms. Wynne is working against another “buy American” measure, in Texas, and proactively building ties. Last week, she spoke with Gov. Roy Cooper of North Carolina, the 13th governor she has been in touch with since the inauguration. She will meet the rest in July, when she attends the National Governors Association meeting in Rhode Island.

Other provincial governments are doing the same, as is the federal government, chiefly to recruit allies for the big one: Nafta renegotiations.

Should Mr. Trump seek to withdraw from or significantly weaken the trade deal, American governors, mayors and members of Congress can expect a call or in-person visit from their Canadian counterparts, asking them to pressure Mr. Trump to keep the deal in place.

Canada’s secret weapons appear to be proximity and language.

Allies of the United States typically work with the White House and federal agencies. Those have proved less reliable under Mr. Trump, leaving many adrift. Only the Canadians enjoy such easy access to mayors and governors.

American news and entertainment are ubiquitous in Canada, giving officials a nuanced understanding of political and cultural issues.

Whereas flights from Europe or Asia take a full day, forcing allies to visit selectively, Canadian leaders can be in Washington for breakfast and home by lunch.

Domestic politics have also helped. Mr. Trump polls poorly in nearly every allied country. Leaders, particularly those up for re-election, feel pressure to respond to slights. Mr. Trudeau, who is popular at home and faces little organized opposition, is freer to politely ignore Mr. Trump’s outbursts.

Still, Ms. Wynne acknowledged that little could solve for Mr. Trump’s unpredictability.

“I’m anxious about how all this could change if there’s a decision that puts up an insurmountable barrier,” she said, adding, “There’s a lot of uncertainty, and I will say quite candidly, our businesses here in Ontario are very nervous.”

 

RENEGOTIATING NAFTA COULD IMPROVE TRADE RELATIONS FOR PROVINCE, PROPONENTS SAY

Sarah Sacheli, Windsor Star
Published on: May 19, 2017 | Last Updated: May 19, 2017 7:57 PM EDT

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Premier Kathleen Wynne says a renegotiation of the North American Free Trade Agreement is an opportunity to improve trade relations for Ontario, and players in the province’s auto industry agree.

The United States officially served notice Thursday of its intention to renegotiate the agreement, triggering a 90-day consultation window before starting talks late this summer with Canada and Mexico.

Unifor president Jerry Dias said Friday he has already met with Wilbur Ross, U.S. Secretary of Commerce. “There’s a real recognition that Canada is not the problem in the trade agreement,” Dias said of his discussions with Ross. Rather there’s a need to change labour standards in Mexico to even the playing field.

The average wage in a Mexican assembly plant is $6 a hour, Dias said. In parts plants, it’s $3 an hour.

“They can’t even afford the cars they are making,” he said, calling NAFTA, in its current form, “a colossal disaster.”

The president of the Automotive Parts Manufacturers’ Association of Canada, said NAFTA works for the auto industry, but there is room for improvement.

“NAFTA works for us right now,” Flavio Volpe said. But when the agreement was negotiated 25 years ago, it couldn’t contemplate technological advances in the industry.

NAFTA’s “rules of origin” don’t include may of the components that exist in automobiles today — GPS and advanced driver-assistance systems such as lane sensors, Volpe said. Not including those components skews the percentage of components coming from a particular country.

Renegotiating NAFTA could also improve mobility for specialists working for a particular company. This is Canada’s chance to reopen categories of specialists who can get special H1 visas to work in the United States without needing a green card.

“We see this as a great opportunity,” Volpe said.

Wynne noted that Ontario is the main customer of 20 U.S. states and the second largest of eight more.

She said nearly nine million U.S. jobs depend on trade and investment with Canada.

The premier said the government is working in Washington and in state capitals across the U.S. to address issues that could affect Ontario-U.S. trade and ensure the province’s interests are represented.

Wynne also said the province has retained legal experts and trade advisers to support ongoing efforts to improve trade with the U.S.

“We are not satisfied to take a wait-and-see approach when it comes to any renegotiation of NAFTA,” Wynne said Thursday in a statement. “We see this decision as an opportunity to look at how NAFTA could potentially be improved to make the agreement even more effective for the people of Ontario, our workers and businesses.”

Wynne said she will continue to travel to the U.S. to meet with governors, legislators and businesses in states that have strong trading partnerships with Ontario.

— With files from The Canadian Press

ssacheli@postmedia.com

Twitter.com/WinStarSacheli

 

TRUMP TRIGGERS NAFTA RENEGOTIATIONS

May 18, 2017

APMA President Flavio Volpe talks to CBC about the upcoming NAFTA talks.

TRUMP READY TO RENEGOTIATE NAFTA AFTER CALLS FROM PENA NIETO, TRUDEAU

READ MORE HERE

ADRIAN MORROW, STEVEN CHASE AND GREG KEENAN
WASHINGTON, OTTAWA and TORONTO — The Globe and Mail

Published Apr. 27, 2017

Donald Trump says he was ready to “terminate” the North American free-trade agreement by the end of this week until Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto talked him out of it in a pair of emergency telephone calls.

Now, the U.S. President is ready to “give renegotiation a good, strong shot” and is confident of reaching agreement. But he warned he would still shred the agreement if he cannot get a “fair deal.”

The President said on Thursday that he had been prepared to take a hard line the previous day, when White House officials had anonymously told U.S. media that Mr. Trump was considering an executive order to start the process of U.S. withdrawal from NAFTA.

Explainer: NAFTA, dairy and softwood: What’s going on with Trump? A guide to the trade file

“Well, I was going to terminate NAFTA as of two or three days from now. The President of Mexico, who I have a very, very good relationship, called me, and also the Prime Minister of Canada, who I have a very good relationship with, and I like both of these gentlemen very much, and they said: ‘Rather than terminating NAFTA, could you please renegotiate,’” the President said during an unrelated Oval Office photo opportunity. “I said: ‘I will hold on the termination. Let’s see if we can make it a fair deal.’”

He acknowledged that pulling out of NAFTA unilaterally would be “a shock to the system,” but said the option is still on the table if negotiations fail.

Mr. Trump’s new-found collegiality was the latest development in a week of NAFTA whiplash, in which the President suddenly launched a barrage of attacks on Canada’s trade practices, considered unilaterally pulling out of the deal, then abruptly backed down and declared himself ready to start talks.

It remained unclear whether the world’s most powerful leader really reversed himself on a major file based purely on persuasive conversations with two other leaders or if the entire thing had been a high-stakes bluff all along.

It also showcased the power of an emerging alignment between Canada and Mexico, which both want to preserve as much of NAFTA’s open market as possible.

Canadian government sources said Ottawa viewed Mr. Trump’s prospective executive order as pure posturing. They also understood the move to be a way to put pressure on the U.S. Congress, which has held up the confirmation of Mr. Trump’s trade czar, Robert Lighthizer, delaying the start of NAFTA talks. Still, Canada took the threat seriously enough to have Mr. Trudeau call the President.

Mr. Trudeau said on Thursday that Mr. Trump told him he “was seriously considering withdrawing from” NAFTA. But Mr. Trudeau said he warned Mr. Trump that pulling out would cause “a great deal of suffering” on both sides of the Canada-U.S. border.

Pulling out of the trade deal would result in tariffs on goods entering Canada and Mexico from the United States, leading to a drop in U.S. exports and increasing production costs for manufacturers and other companies with supply chains that cross international borders, such as the automotive industry.

“For now, we’re trying to keep this on a positive and co-operative level, and in fact the President himself said that he wanted the same thing, in our discussion,” Mr. Trudeau told reporters during a visit to Saskatchewan.

Mr. Trudeau said he sought common ground with Mr. Trump during the conversation, noting that “he, like me, got elected on a platform of helping people, helping the middle class, growing the economy in ways that bring along people who don’t always feel like they’ve had a fair shake.”

Foreign Affairs Minister Chrystia Freeland also spoke with her Mexican counterpart, Luis Videgaray, to compare notes after the reports of Mr. Trump’s NAFTA withdrawal surfaced on Wednesday, Mr. Videgaray told Radio Formula.

And Mr. Trudeau spoke with Mr. Pena Nieto on Thursday. A summary of their call released by the Prime Minister’s office said the pair “welcomed” Mr. Trump’s decision the previous day to renegotiate NAFTA and “reiterated their respective readiness to do likewise.”

Both Canada and Mexico adopted similar play-it-cool strategies, opting not to escalate the dispute by hitting back publicly at Mr. Trump.

Now, attention will turn to the negotiations themselves. Senate Republicans and Democrats reached a deal earlier this week that will likely mean Mr. Lighthizer can be confirmed within the next two weeks. After that, the White House will formally notify Congress of NAFTA talks, triggering a 90-day countdown to negotiations.

Robert Holleyman, the number two U.S. trade official under president Barack Obama, said the United States cannot realistically pull out of NAFTA because it would be so economically damaging. This means the countries will have to reach an agreement all three can live with.

“Withdrawal is not a viable option,” he said. “Walking away from a deal only works if you don’t need the deal or if you have a different viable option. Neither of these exist with NAFTA. When you have an integrated economy, withdrawing would be painful. The United States does not have another option to make up for the loss of NAFTA.”

Canadian industry leaders and analysts gave high marks to Mr. Trudeau’s strategy for handling Mr. Trump before negotiations. They said the country should ignore the day-to-day rhetorical flourishes coming from the White House while continuing the vigorous lobbying campaign to impress upon U.S. politicians how important NAFTA is to their economy.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association of Canada, likened Canada to a hockey goalie in a shootout. “The shooter’s coming at you. He may have 100 moves, he may have one move. At one point that puck leaves his stick. You’ve got to keep your eye on the puck.”

Patrick Leblond, a professor in the graduate school of public affairs at the University of Ottawa who specializes in trade, said senior Canadian business leaders should join the government’s back-door diplomatic efforts.

“There are a lot of North American companies, American companies, Canadian companies that are big on either side of the border and those companies need to bring that message to Washington and explain that the world has changed,” Prof. Leblond said.

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Follow us on Twitter: Steven Chase @stevenchase, Adrian Morrow @adrianmorrow, Greg Keenan @gregkeenanglobe

 

Ontario premier, auto execs discuss strategy ahead of NAFTA talks

March 23, 2017

READ MORE HERE

TORONTO — Ontario Premier Kathleen Wynne met with Canadian automotive executives and labour leaders in Toronto on Friday to strategize about how best to approach a potential renegotiation of the North American Free Trade Agreement.

The group, which also included Minister of Economic Development and Growth Brad Duguid, discussed the importance of emphasizing the interconnectedness of the North American automotive industry. The approach has emerged as a key tactic in countering trade pressures from the United States government.

While the possibility that the United States may attempt to negotiate separate trade deals with Canada and Mexico has been raised, Volpe said that Canadian stakeholders see the tripartite arrangement of NAFTA as being an important one for the industry at large.

“I think everybody is committed to trilateralism unless the Earth moves, and then we’ll deal with it differently if the need arises,” he said. “But we’re all looking at this as all three countries help to manufacture cost-competitive vehicles in competition with the other major regions in the world. Ideally, we maintain that balance.”

Survey by Canadian parts makers launches NAFTA offensive

Canada invested in U.S. ‘success and in the employment of their citizens,’ APMA says

READ MORE HERE

March 21, 2017

Canada’s auto parts suppliers want U.S. lawmakers to realize how integrated the North American automotive industry is, so it’s currently taking stock of all Canadian companies that have operations in the United States.

The Automotive Parts Manufacturers Association is conducting a survey it calls Measure of Canadian Companies Having a U.S. Manufacturing Footprint.” Its goal is to determine how many facilities Canadian companies operate in the United States, the number of Americans they employ, and in which U.S. electoral districts those plants are located.

“Not only will your submission assist our efforts, but it will also assist your company as we take the aggregate State statistical information to Washington and remind individual congressional representatives that while companies in their jurisdictions may be Canadian owned, the jobs created are American (voters),” the APMA says on its note to members.

The information will help ensure that healthy trade relations between Canada and the United States stay strong.

“As a country, we’re a pretty big international investor,” APMA President Flavio Volpe said. “Canadian parts suppliers are one of the biggest employers, employing Americans and Mexicans. It’s important for us — ‘us’ being the industry at large and the provincial and federal governments, who advocate on our behalf — to understand what Canadian investment across NAFTA looks like.”

 

Chrystia Freeland wins praise from Canada’s auto parts makers

As appeared on BNN, February 27, 2017

WATCH HERE

Automotive Parts Manufacturers’ Association (APMA) hosted a roundtable discussion with Prime Minister Justin Trudeau on Monday.  APMA president Flavio Volpe is impressed with Trudeau’s approach to the auto industry, and how much Foreign Affairs Minister Chrystia Freeland brings to the sector.

APMA hosts Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland

CP24 Coverage, February 27, 2017

WATCH HERE

Trudeau talks trade with auto parts manufacturers

February 28, 2017

READ MORE HERE

Prime Minister Justin Trudeau met with representatives from automotive parts manufacturers on Monday afternoon in Toronto for a roundtable discussion on their industry.

The meeting, held at the Automotive Parts Manufacturers’ Association head office in Toronto, included representatives from companies such as Magna International, Martinrea International, ABC Group and The Woodbridge Group.

Part of the discussions were over President Donald Trump’s campaign pledges to tear up or renegotiate the North American Free Trade Agreement. However, representatives at the meeting say their concerns are lessening.

“I think that the Prime Minister and the President [Trump] had a good first date,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. “We’re not really worried.”

Trudeau meets Canadian suppliers to lay groundwork for NAFTA talks

February 27, 2017

READ MORE HERE

A meeting Feb. 27 between Prime Minister Justin Trudeau and key players in the auto supply industry suggested possible federal-industry collaboration in efforts to shield Canada’s auto industry from disruptions threatened in the United States.

The roundtable discussion with high-ranking officials from the auto parts sector included Automotive Parts Manufacturers Association (APMA) President Flavio Volpe, Martinrea International Executive Chair Rob Wildeboer, Magna International CEO Don Walker and others. Trudeau brought with him Chrystia Freeland, Canada’s point person on NAFTA.

Auto sector praises Ottawa’s NAFTA tact

Published Monday, Feb. 27, 2017 5:47PM EST; Last updated Monday, Feb. 27, 2017 5:47PM EST

READ MORE HERE (SUBSCRIBERS ONLY)

GREG KEENAN – AUTO INDUSTRY REPORTER
TORONTO — The Globe and Mail

The federal government is doing the right things so far as it gears up for negotiations with the United States and Mexico on a new North American free-trade agreement, senior executives of Canada’s automotive-parts makers say.

The government – and major players in the industry – are in the midst of gathering facts about the impact a new NAFTA deal, border taxes or tariffs on vehicles would have on the auto sector and that should continue, executives said after a roundtable discussion in Toronto on Monday with Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland.

Discussions on the auto industry will be a critical part of any NAFTA renegotiation – in part because three-way free trade in vehicles and parts underpins the entire industry in North America. Vehicles are assembled in each of the countries and shipped duty-free across borders while U.S., Canadian and Mexican components that go into those vehicles also enter each of the countries without tariff.

The sector also appears to be at the top of U.S. President Donald Trump’s hit list after his tweets earlier this year, and during the election campaign last year, that castigated various auto makers for building assembly plants in Mexico and then planning to ship the vehicles into the U.S. market.

But the relationship between Mr. Trudeau and Mr. Trump seems to have started well with “a good first date,” earlier this month when they met in Washington, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association of Canada (APMA), who played host to the meeting.

The federal government has moved early to make sure Canada’s views are known and “I think the language you hear out of Washington about Canada reflects the fruits of that,” Mr. Volpe said.

Mr. Trudeau told the industry leaders in a brief comment before the one-hour, closed-door meeting began that, because NAFTA matters to the auto industry, it matters to all Canadians.

“The high level of integration between our economies, particularly in the auto sector, needs to be continued and protected and recognized as a tremendous driver of jobs and opportunity on both sides of the border,” he said. He refused to answer questions from the media.

Don Walker, chief executive officer of Magna International Inc., said NAFTA as a region needs to remain competitive when compared with Europe and Asia.

“If you look at NAFTA, Europe and China and the rest of Asia, we shouldn’t be doing anything to damage the competitiveness of NAFTA,” Mr. Walker said.

Both Magna and Martinrea have made significant investments in Mexico – and the United States – reflecting how the industry has grown since NAFTA took effect.

Global auto makers have invested billions of dollars in assembly plants in Mexico in recent years. Mexico’s vehicle production has doubled to about four million units a year since 1994 and is projected to top five million by 2020.

Justin Trudeau meets with auto industry as concerns mount over NAFTA

February 27, 2017

READ MORE HERE

With a possible renegotiation of the North American Free Trade Agreement looming, Prime Minister Justin Trudeau sat down to reassure representatives from the auto industry on Monday.

Trudeau and foreign affairs minister Chrystia Freeland visited the Automotive Parts Manufacturers Association’s Toronto office for a closed-door meeting with business leaders. Earlier this month, the Prime Minister met with U.S. President Donald Trump, who has promised to renegotiate NAFTA on terms more favourable to the U.S.

….

APMA president Flavio Volpe said he was feeling optimistic following Trudeau’s trip to the White House. During the visit, Trump acknowledged he was more concerned about trade with Mexico than with Canada and called it a “wonderful meeting” on Twitter.

“The more we hear from the president’s nominees, the less anxious anybody is,” Volpe said. “They understand the dynamic and I think they understand Canada is a full partner. We’re not really worried.”

Corporate Canada takes comfort after Trump talks of ‘outstanding trade relationship’

Feb 14, 2017

READ MORE HERE

The sigh from the C-Suite was one of relief as Canadian business leaders took comfort Monday in the positive tone on trade struck by Prime Minister Justin Trudeau and President Donald Trump.

From the forestry industry to the automotive sector to the oilpatch, Corporate Canada kept a close eye on the first one-on-one meeting between the two leaders, parsing every word they uttered for clues on the future of trade between the two countries.

Trump, who won the U.S. election campaigning on a promise to renegotiate the North American Free Trade Agreement, beamed about America’s “very outstanding trade relationship with Canada.”

The president of the Automotive Parts Manufacturers’ Association, which represents companies that are acutely integrated across North America, said Trump’s comments were a welcome affirmation of what he’s been quietly hearing from U.S. officials over the last couple of months.

“We were pleasantly surprised that the president would have used as many superlatives when discussing his view on Canada as a trading partner,” Flavio Volpe said.

Volpe said that going forward, he’ll be emphasizing how much America — and American consumers — have benefited from one of the most integrated industries in the world.

“We’re happy to share any and all data and give them a sense of how American interests have been well-served in all three countries.”

Justin Trudeau and Donald Trump Try to Bridge Some Gaps While Avoiding Others

FEBRUARY 13, 2017

READ MORE HERE

WASHINGTON — Despite sharp differences on immigration, refugees, trade and climate change, President Trump and Prime Minister Justin Trudeau of Canada struck a cordial tone on Monday in their first meeting, alternating between attempting to bridge those gaps and steering clear of them ….

Flavio Volpe, the president of the Auto Parts Manufacturers’ Association, a trade group, said that it was important for his members to hear Mr. Trump’s message that he is not planning to dramatically remake the United States’ trade relationship to Canada ….

Trudeau’s meeting with Trump in Washington will set tone for years

Thu., Feb. 9, 2017

READ MORE HERE

Prime Minister Justin Trudeau heads to the White House Monday for his first face-to-face meeting with U.S. President Donald Trump, a high-stakes session that will set the tone for relations between the two nations for years to come.

Personal relationships between leaders matter, says David Wilkins, former U.S. ambassador to Canada.

The upcoming meeting is “immensely important” for the two leaders “to meet and develop a good working relationship,” said Wilkins, past envoy for Republican president George W. Bush in Ottawa. “I think the key is to find middle ground, and there’s plenty of middle ground to find.”…..

Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, one of many stakeholders the Trudeau government has consulted, said in an interview, “You can’t make a car, you can’t do a final assembly in any of the three countries without sourcing parts from the other two.”

“Part of the discussion is to make sure everyone understands that in our business there are no borders. And the American interest exists in all three countries, as well as the Mexican and Canadian interest.”

APMA speaks to “As it Happens” on Trump, NAFTA and the Canadian Auto Sector

“You will harm American interests if you thicken the border between Michigan and Ontario”

January 11, 2017

READ MORE HERE (Begins after shaded transcript)

JD: It’s becoming kind of a familiar pattern: Donald Trump tweets, and the stock market reacts. Today, the President-elect’s call for General Motors to bring Mexican jobs over to the U.S. wobbled the automaker’s share price. In a tweet he threatened the company with a quote, “big border tax for any cars that are made in Mexico and shipped to U.S.” Ford, meanwhile, has dropped its plan for a plant in Mexico. And, of course, Mr. Trump has pledged to renegotiate the North American Free Trade Agreement (NAFTA). In an effort to prevent American jobs from leaving the country and all of this has Canadian auto manufacturers worried. Flavio Volpe is the president of the Canadian Automotive Parts Manufacturers’ Association. We reached him in Toronto.

HM: Mr. Volpe, what are your thoughts today about Donald Trump’s tweets and the reaction we’re seeing from the auto industry?

FLAVIO VOLPE: It’s tactics, certainly the President-elect has made clear what he expects from American automotive manufacturers. And it’s just a tactic that we’re not used to seeing.

Read the full transcript here (Begins after shaded transcript)

Trump administration understands the importance of the U.S.-Canada trade relationship

January 20, 2017:  BNN speaks with Flavio Volpe, president at Automotive Parts Manufacturers’ Association.

WATCH HERE

Canada need not worry as long as American interest is addressed.

Volpe says the Trump administration understands the importance of the U.S.-Canada trade relationship and that the latest protectionist rhetoric targeting the auto sector is simply Trump trying to ensure American interests are met.

APMA on making Canada’s auto industry more attractive for investment

November 24, 2016: BNN speaks with Flavio Volpe, president at Automotive Parts Manufacturers’ Association.

WATCH HERE

As Canadian businesses brace for the policies that U.S. President-elect Donald Trump brings in on NAFTA and climate change, BNN speaks with APMA President, Flavio Volpe about how this will affect investment in Canada.

Reuters, “Canada manufacturers put U.S. ahead of Mexico if Trump ends NAFTA”

November 17, 2016

READ MORE HERE

But Canada’s auto sector, which is heavily integrated with both the U.S. and Mexican industries, said only a trilateral deal would work for Canadian automakers and parts suppliers.

“It (the North American auto industry) really only works if there are no borders,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, which represents Canadian independent parts makers.

“A revision of NAFTA for the auto sector – there’s likely zero support for it.”

The Hill Times, “Lobbyists mobilize to remind U.S.: shutting out Canada means hurting Americans”

November 16, 2016

READ MORE HERE (Subscribers only) 

“There isn’t a binary decision that he can make that can solve that problem [of lost jobs],” said Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association.

Many of North America’s biggest manufacturers have supply chains stretching across all three countries, with products crossing borders multiple times before they are ready for sale. Changes to the NAFTA that complicate that flow could cost jobs in the U.S., as well as in Canada and Mexico, said Mr. Volpe.

“You’re going to hurt American interests, at some point, with any move you make. And those auto workers that voted for him, maybe, they work for those companies,” he said. …

The Canadian and U.S. auto industries are “almost completely aligned” on the NAFTA and free trade, said Mr. Volpe. That’s unsurprising, given that the same large automakers operate in both countries.

Mr. Volpe and the companies he represents will be delivering their message to existing allies in Congress, and relying on Canada’s embassy in Washington for introductions to new Representatives and Senators, said Mr. Volpe.

Ottawa Citizen, Windsor Star “Trump victory worries local auto sector”

November 9, 2016

READ MORE HERE or HERE

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said suppliers and tool makers with assets in the U.S. and/or Mexico have spent the last few months trying to determine the impact of a Trump presidency.

“It’s too early to express practical concerns, but we will have to be vigilant in telling the auto industry integration story in Washington,” said Volpe. “The challenge for Ontario and Canada’s auto industry is to make sure the new administration understands that any protectionist measures against imports equally affect the profitability of American companies. We’re so integrated, you can’t supply operations on either side of the border efficiently if that border gets thicker.”

CBC “Why Donald Trump’s presidency could hurt GTA businesses”

November 9, 2016

READ MORE HERE

Flavio Volpe, President of the Automotive Parts Manufacturers’ Association, is also concerned about NAFTA being repealed, and what that would mean for a business that routinely ships parts across the border.”You can’t make a car in Michigan without parts from Ontario and you can’t make a car in Ontario without parts from Michigan, everyone knows that,” Volpe said.

For now, his organization will keep an eye on Trump. If the president-elect does move to repeal NAFTA, Volpe said his group will work with governments on both sides of the border to make sure Ontario’s industry isn’t damaged.

Automotive News “NAFTA could be replaced by Canada-U.S. trade deal, experts suggest”

November 9, 2016

READ MORE HERE

Flavio Volpe, head of the Canadian Automotive Parts Manufacturers’ Association, told Automotive News Canada the elimination of NAFTA, or at least a revised version of the deal, could be good for Ontario. However, the province would need help from Rust Belt states like Michigan, Ohio, Indiana and Pennsylvania, all of which voted for Trump.

“If the Great Lakes states and the Midwest States can explain to Washington that Ontario is essentially a part of that region, then it’s good for Ontario,” Volpe said. “But it will come down to state-to-state, province-to-state co-support and the articulation of how integrated we are.”
For example, 30 per cent of the parts used at the more than 10 auto assembly plants in Michigan come from Ontario, Volpe estimates.

Automotive News Canada “Canadian auto industry was prepping for Trump win

November 9, 2016

READ MORE HERE

As the vote grew closer, the auto industry started planning, APMA President Flavio Volpe said.

“People were starting to model what it would look like if a Trump victory meant a new look at NAFTA,” Volpe told Automotive News Canada, Nov. 9. “I think everyone was prudently saying, ‘If he wins, what does it mean for us?’

“I heard that in Washington, D.C. when we went there [in September] and we met with Congressional leaders and manufacturing leaders. I heard that in Detroit.

“And I certainly heard it up and down Highway 401 on this side of the border.”

That could bode well for Ontario if its partnerships with states like Michigan remain strong, Volpe said.

An estimated 30 per cent of the parts used in Michigan assembly plants alone are Canadian made, Volpe previously told Automotive News Canada.

“You can’t take for granted who may or may not advise the president,” Volpe said, “but certainly Michigan’s Congress representatives and Senate representatives will be able to very quickly state how important it is that the border stays fluid and those [Canadian] relationships don’t get disrupted.

“If we’re successful in doing that, I think Ontario and Canada is in a relatively better position than any number of Mexican states.”

Volpe said “a deep dive and debate on what NAFTA 2.0 looks like” is likely now that Trump won the presidency.

“I imagine there will be some compromises before they crystallize their position on NAFTA,” he said. “If the Republican Congress thinks pulling out of NAFTA is a bad thing, and assuming that’s where he wants to go, they have the ability within their jurisdiction, to put a fence around him.”

Automotive News “NAFTA: Free trade, with uneven effects”

September 18, 2016

READ MORE HERE

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association of Canada, says the auto parts business operates on slim margins: “A 35 percent tariff would be a reckless instrument that would put an immediate chill on anybody’s investment in any of the three countries.”

Industry officials such as Volpe credit NAFTA with allowing North America to be competitive in an increasingly global industry. “The rise of Mexico as a free trading zone in my opinion is one of the catalysts that allow automakers to profitably go to a global product platform,” Volpe says.

Volpe, of the Automotive Parts Manufacturers’ Association of Canada, says Canada and other countries look to the U.S. to set an example. Recklessness on the part of the U.S. would encourage other countries to disregard world trade rules, he says. “Some of the rest of the world does cheat on those obligations,” Volpe says. “But the solution isn’t for the global trading leader to drop its standards in response.

“It’s a tough spot to be in. But you’re there for a reason. It’s like Superman getting into a bar fight. Why?”

Ottawa Citizen, Windsor Star “Trump tells Detroit audience he wants better trade deals”

August 8, 2016

READ MORE HERE

Automotive-related companies, including in Windsor, have adjusted to NAFTA and created “the world’s most integrated supply chain,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. Severing those links, he said, would be “problematic” and could harm the very manufacturing businesses Trump promises his plan would help.

 

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