Article Date: 10/01/2015
As Trans-Pacific Partnership negotiations potentially come to a close, are Canadian automotive part makers going to “bear the brunt of pain?” This has yet to be determined as official details have yet to be released. However, this article from The Canadian Press goes into depth about how TPP could impact Canada’s auto manufacturing sector.
It’s difficult to say exactly what the economic impact will be for Canada’s automotive market but here is a rough idea:
Economic Impact — Automotive manufacturing accounts for $20 billion dollars of Canada’s GDP and employs 120,000 people according to a 2014 report.
NAFTA — Under NAFTA, a vehicle needed to have 62.5 percent North American-made content in order to remain duty free while each specific auto part needed to be 60 percent North American.
TPP — Japan is hoping for tariff-free movement of cars and auto parts with as low as 30 percent content from TPP participating countries. This could potentially cause Canada to lose business.
Jobs — Auto part manufacturers in Canada employ over 81,000 people and per an auto industry expert, TPP could cause 10,000 jobs to be lost.
Challenges — Labor costs are cheaper in Mexico and in the southern United States. Consequently, automotive manufacturing has been shifted to those locations. That said, facilities are closing and layoffs are increasing. General Motors has already announced a layoff of 1,000 employees from their Canadian Oshawa plant with more expected to come.
Trade — Canada once exported more automotive goods than what was being imported; however, this has changed significanty since 2007. There is already a deficit with more expected to come from TPP if details go awry.
To read this article from CTV News, please click the following link: http://www.ctvnews.ca/business/how-the-tpp-could-affect-canada-s-auto-industry-1.2589784