Canada isn’t the problem with the North American Free Trade Agreement and lower wages in Mexico aren't a bad thing, says the automotive adviser to the Canadian and Ontario governments.
Ray Tanguay made it clear while speaking to reporters at the North American International Auto Show in Detroit that he is not involved in NAFTA talks, but he certainly didn’t mince words when discuss the trade pact between Canada, Mexico and the United States.
“I am about investment. My role as auto advisor is how do I place Ontario and how do I place Canada as a good place to invest,” he said. “It’s about developing the talent, it’s about developing infrastructure. If I get distracted by trade agreements, that’s short-term thinking. But, long-term, [Canada and the United States] have do have to work together as a region. If there’s a problem with some other part of NAFTA, that has to be dealt with.
“I’m confident the U.S. and Canada will come up with some other arrangement because we’re not the problem in their trade deficit.”
Tanguay called U.S. demands that all vehicles built in North American have at least 50 per cent American-made content “unheard of” and “pretty hard for a government to say that’s a good thing.”
“If we want to strengthen the industry in the United States, they better work with us,” Tanguay warned U.S. negotiators.
Tanguay even defended Mexico’s low wages.
“Every region of the world has low-cost jurisdictions — and that’s not a bad thing,” he said. “The worst thing for us is having cars coming from other low-cost regions of the world, because then we can’t compete.”
He’s worried if Mexico’s wages rise, automakers would see Asia as a more attractive place to build vehicles and simply import them to the North American market.
Canada’s Federal Minister of Innovation, Science and Economic Development Navdeep Bains, who also spoke at the auto show, says the United States, Canada and Mexico need NAFTA to keep the auto sector growing.
"We have a lot of momentum in the automotive sector," Bains said in an interview with Reuters on Jan. 15, ahead of an appearance at the Detroit auto show. “In order to maintain that momentum, we need to continue to support NAFTA.”
Bains spoke after announcing $49 million in Canadian government funding to support an expansion plan for parts maker Linamar Corp.
"The investments that we make in the automotive sector are also good for the U.S. as well — it speaks to our integrated supply chains," he said.
Linamar CEO Linda Hasenfratz also has been a big supporter of NAFTA.
The next round of North American Free Trade Agreement talks is set to begin Jan. 23 in Montreal. One of the core disputes is that U.S. proposal to raise the percentage of a car that must be built within the three countries, as well as to add a U.S.-specific content requirement. Canada and Mexico have largely rejected the proposals, though the Canadian government says it has "new ideas" to share on the topic.
A panel discussion about NAFTA will take place at 3:30 p.m. on Jan. 17 at the Automotive News World Congress in Detroit.
Reuters contributed to this report.