Friday, February 6, 2009

Auto Industry Protectionism Could Do More Harm Than Good: Analysts

(The Canadian Press)

Industry watchers say the Canadian Auto Workers union needs to be careful to avoid causing more damage than it corrects by pushing for a national strategy to deal with Asian and European imports.

The CAW said last week it would negotiate with the Detroit Three automakers as they seek cost savings amid a historic drop in vehicle sales, but only if certain conditions are met, including the development of what the union calls a “comprehensive national auto strategy.”

The union has argued for years that manufacturers in South Korea and Japan, among others, have an unfair advantage because they keep out North American competitors while the U.S. and Canadian markets are largely open.

CAW economist Jim Stanford said he would expect any auto strategy to address this “incredible trade imbalance.” “The imports from offshore ... took almost 30% of Canada’s market last year and there’s been a huge surge in imports from Japan, Korea and Europe, soon from China,” Stanford said in an interview.

“We do not export any significant volume of automotive products back to those countries and us trying to help out the companies, whether it’s with government assistance or cost savings from the workers, will do nothing if we allow that imbalance to carry on.”

Stanford said he believes the Canadian industry has three options in this respect: working to open trade so it can export more vehicles overseas, encouraging foreign manufacturers to invest in Canada, or imposing trade restrictions on foreign countries to protect the domestic industry. Read more here.