Canada’s newest tradeagreement, the Comprehensive Economic and Trade Agreement (CETA), is all but finalized.
Pending ratification, the European market will be open for Canadian business.
Is that good or bad for Canada’s auto industry? It depends on who you ask.
The Canadian Vehicle Manufacturers’ Association (CVMA) has always supported the deal.
CVMA President Mark Nantais told me the multinational companies he represents “clearly have plans to send product to 100 countries around the world.”
“Why wouldn’t we do that from Canada, if we can?”
Why not, indeed.
Meanwhile, Honda, which builds its popular CR-V in Alliston, Ont., couldn’t wait for a signed CETA.
It “was a catalyst for our decision to export CR-Vs” to Europe, Honda Canada CEO Jerry Chenkin said in a statement nearly three years ago.
Now, North American sales of the CR-V have been so good, it doesn’t need the European market, so Alliston will focus on the North American market instead. But it must certainly be nice to have an ace in the hole in the form of duty-free exports to Europe if desired.
CETA also puts Canada ahead of the United States when it comes to overseas access, long before the Americans even start negotiating a deal.
Nantais said CETA “anticipates there will be a similar agreement between the U.S. and the EU.”
“When you’re first at the table, you’re first to gain the benefits,” he said.
CETA also benefits Canadian luxury-car dealers and automakers because the 6.1 per cent tax that used to be applied to imported European cars is being eliminated.
Auto analyst Dennis DesRosiers told Automotive News Canada that a high percentage of vehicles imported from the EU are luxury cars.
“It’s Mercedes-Benz, BMW, Volkswagen and Volvo, to a degree, that would be the biggest beneficiaries,” DesRosiers said. “They are looking forward to easier entry.”
But what about the people who build the cars? The 23,500 Unifor union members who assemble cars and engines in Ontario don’t like the deal.
“There are no requirements in these deals that trade actually occurs (to a greater extent than it does already) or that nations will benefit from cross-border investment,” Angelo DiCaro, Unifor’s national representative in its research department said.
That’s the rub with free trade: it’s not usually an entire country that wins or loses in these deals. It’s sectors, industries and people.
Perhaps DesRosiers summed it up best when he spoke with me years ago when I was at the CBC.
“The [Canadian] industry also peaked in the year 2000 and has been struggling since, and indeed, just finished one of its worse decades in history,” he said in 2013. “Was this the long-term result of FTA and NAFTA? We don’t know but it could be.”
Now, it might be another 20 years before know who really won CETA.