Ford warns Ottawa not to sign with South Korea
Globe and Mail, Toronto
Ford warns Ottawa not to sign with South Korea
Auto maker says it might cease investing in Canada if a free-trade agreement is reached with the Asian country
By Greg Keenan, Auto Industry Reporter
23 November 2007
TORONTO — Ford may redirect future investment away from Canada if Ottawa concludes a free-trade deal with South Korea that doesn’t open up that country to auto imports, the company’s top Canadian executive said yesterday.
"We have to evaluate our competitive position in any jurisdiction where we don’t believe we’ve gotten fair and reasonable policies," Bill Osborne, Ford Motor Co. of Canada Ltd., said yesterday following a speech to the Toronto Economic Club.
Mr. Osborne added his voice to a chorus of opposition that includes all the Detroit and Japan-based auto makers operating in Canada and the Canadian Auto Workers union, which represents workers at the Detroit Three manufacturing plants in Canada, pointing out that he’s confident federal negotiators understand the industry’s position and are taking it into account.
Any deal Canada makes should not be similar to the agreement reached between American and South Korean negotiators because that deal fell short of including any measures to open a foreign market that imposes heavy non-tariff restrictions on imported vehicles, Mr. Osborne said.
Canada’s negotiations with South Korea are Ottawa’s top trade talks right now. Many had expected deliberations would accelerate after the U.S. reached a free-trade agreement with the Asian country, but talks have bogged down and a deal is not seen as likely this year.
Canada imposes a 6.1-per-cent tariff on cars imported from South Korea - home to the companies that produce Hyundai and Kia cars - and removing it would open this country to a potential flood of small cars from manufacturers that don’t assemble vehicles in this country, Mr. Osborne said.
Ford operates two assembly plants and one engine plant in Canada.
The company, which says it has invested $10-billion in Canada since 1990, has about 13,000 employees here.
The Ford Canada president took a shot at another federal policy - the feebate scheme introduced in the March federal budget, which slaps a levy of up to $4,000 on some gas-guzzling vehicles and incentives of between $1,000 and $2,000 for Canadians who buy fuel sippers.
"The current federal program is not working," he said, adding that it actually encourages Canadians to hang on to older vehicles that generate more emissions than newer cars and trucks.
His criticism came on the same day that the C.D. Howe Institute issued a study of the plan that described it as flawed.
It suggested, however, the plan can be improved to become a more effective tool to reduce fuel consumption and greenhouse gas emissions.
The program should provide greater incentives for Canadians to switch to more environmentally friendly vehicles, but do so without damaging auto manufacturing in the country, the think tank said in an analysis called Deals on Wheels.
"The feebate structure should apply to more vehicles to ensure that correct incentives are present," it noted.
The institute said the program, which has been excoriated by all auto makers except Toyota Canada Inc., gives rebates on just 10 models from 2006 and 2007. Toyota’s Yaris model is the highest-selling car to benefit, although Toyota officials have insisted they would support the measure even it didn’t provide $1,000 to buyers of the subcompact.
The program should also be expanded to include levies on pickup trucks, which are exempt, the institute said, adding that the lack of a levy might encourage consumers to buy those vehicles so they can avoid the tax that applies to some full-sized sport utility vehicles and other gas guzzlers.
It said the feebate scheme should be part of a coherent plan.
"It is essential to maintain an incentive for people to travel less," the organization’s analysis said, proposing such tools as an increase to the fuel tax or a carbon tax or some kind of mileage-based charge.
"Such taxes would also provide an added incentive for drivers to switch to more fuel-efficient cars."
