Topic: Canada-South Korea Free Trade Deal "Not Good For Canadians"

[Autos_Editor]

Domestic automakers lobbying hard to kill deal

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[dkaz]

Maybe Canada should build cars Koreans want? The Koreans and Japanese have figured out they need to build  cars to suit North American tastes, that's why cars like Corolla and Accord shared nothing in common with their world counterparts for two decades now.

[Concerned Commuter]

I couldn't support the Canadian Auto Makers more.  Having been in business in a small town, you see the need to support local.  If another local business owner doesn't buy or support your business, you return the favour and not support them.  Local businesses fail, unemployment goes up, burden on taxpayers goes up - its not rocket science. 

I really find it ironic that the majority of people who own import brands are also the first and loudest to complain when their own industry gets affected by imports....  just saying. 

[JohnM]

The concept of free trade is a tragedy.  Supporters of free trade use terms like "efficiency' and "competitiveness" and imply that there is some sort of level playing field.  There isn't.

Aside from the regularly mentioned table tilting effects of non-comparable environmental and labour standards, there is the much bigger factor of exchange rates.   Exchange rate distortions make a farce out of any kind of discussion of "competitiveness".  The Canadian dollar is at 65 cents US and we are competitive.  It is at $1.10 and we're not.  China pegs its yuan to the US $ and we're competitive if the US has a massive trade imbalance.  If the US turns a surplus or has high interest rates, we aren't competitive. 

If we build oil pipelines for export of 10 million bbl per day and fill them, the Canadian dollar goes through the roof and any manufacturing in the country automatically becomes "uncompetitive".  All this without one single change in operational efficiency.

If we (being the real goods producers as opposed to the money mongers) want to benefit from "free trade" then Canada needs to have agreements only with nations with a similar or higher standard of living and similar or higher environmental and labour standards using a stable currency.

Cheers,
John M.

[normancw]

I couldn't support the Canadian Auto Makers more.  Having been in business in a small town, you see the need to support local.  If another local business owner doesn't buy or support your business, you return the favour and not support them.  Local businesses fail, unemployment goes up, burden on taxpayers goes up - its not rocket science. 

I really find it ironic that the majority of people who own import brands are also the first and loudest to complain when their own industry gets affected by imports....  just saying.

Much like Walmart shoppers.

http://walmart1percent.org/issues/top-reasons-the-walton-family-and-walmart-are-not-job-creators/

Fact: Walmart is a job killer.

Walmart store openings destroy almost three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter.
Walmart cost America an estimated 196,000 jobs – mainly manufacturing jobs – between 2001 and 2006 as a result of the company’s imports from China.

Fact: Walmart jobs are poverty jobs.

Walmart workers average just $8.81 hour. This translates to annual pay of $15,576, based on Walmart’s definition of full-time. This is less than two-thirds of the poverty line for a family of four, and well below what most families actually need to get by.

According to the company, most workers make less than $25,000 a year. In a September 2013 presentation, Walmart US CEO Bill Simon included the fact that out of all Walmart associates in the country, only 475,000 make more than $25,000 a year.

Walmart pays less than other retail firms. A 2005 study found that Walmart workers earn an estimated 12.4% less than retail workers as a whole and 14.5% less than workers in large retail in general. A 2007 study which compared Walmart to other general merchandising employers found a wage gap of 17.4%.

Last year, Walmart slashed already meager health benefits again, dropping health insurance for new hires working less than 30 hours a week and leaving more workers uninsured.

[PJ]

Umm, there are no Canadian auto makers.  Thanks to large tax breaks there are auto makers that assemble cars which gives some people jobs here at the expensive of others but they are all import cars. 

[carcrazed]

Umm, there are no Canadian auto makers.  Thanks to large tax breaks there are auto makers that assemble cars which gives some people jobs here at the expensive of others but they are all import cars.

I believe the automobiles built in Canada and exported to foreign countries are counted as exports for Canada. 
Even though there are a number of nice cars built in Canada, South Korean buying public started purchasing import brands in masses just a short while ago.
Having said that, Koreans are more attracted to the German brands (mostly not built in NA) if they're able to afford more than their domestic models.

If anyone has been to Korea recently, its streets are full of Sonatas (THE go-to car for working middle class) and BMWs(THE go-to show-off car for working middle class).

[Northernridge]

I'll grant that free trade can be a double-edged sword but it's a sad day when Canadians let automakers decide what's good for us. Think a moment about  the one and only thing that is driving their interests... These are the same PR people that spin the story about why they're moving more manufacturing to Mexico.

How can the big-business haters even contemplate automakers influencing Canadian policy? I get Harper's politics are not for everyone but issues of public policy (trade) are the domain of our elected officials (and bureaucrats), while business lobbies in their own interests. Most days Harper gets slammed for pandering to big business.

Oppose the elimination of import tariffs you want, but not because Ford, GM and Chrysler say so.

[tpl]

I noticed that the CAW doesn't care much about the 6% going from Euro cars. I guess they think ( rightly probably) that the proletariat buy cheap Korean cars in competition with the cars they make but not Mercedes.

[CSH]

Free trade is good as long as you are competing equally.

A auto company paying labour anywhere from 12$-35$ per hour cannot compete with someone paying labout 5$/day

Apparently a autoworker in Korea makes more than one in US (according to this: http://qz.com/115107/unions-are-driving-hyundai-and-general-motors-out-of-south-korea/#115107/unions-are-driving-hyundai-and-general-motors-out-of-south-korea/)

So FTA with them is not a bad idea

[JohnM]

"Apparently a autoworker in Korea makes more than one in US"

Meaningless comparison if the exchange rates are rigged on purpose or distorted by some other events.   This is before we get to hidden subsidies.

Cheers,
John M.

[dkaz]

I'm trying to think which Canadian built cars are sold in Korea. Chrysler 300C, maybe the Lexus RX.

[northsparrow]

Without knowing all the basic numbers it is difficult to form an opinion about the benefits of
a new or an old free trade agreement. Has anyone else noticed how much reporting/promoting we see on new
free trade agreements and how little follow up reporting we see on the existing ones?

I suspect our automotive trade deficit with South Korea is as bad as the one with Mexico. If Hyundai goes
ahead with a new plant in Mexico we can start a new category of deficit.

In general, I have very little interest in supporting companies who decline to invest in Canadian manufacturing facilities.

We have more free trade than ever and the largest trade deficit in our history. Might the two be connected?

[aquadorhj]

it's understandable that a lot of us are focusing on "auto" side of the free trade here, but this trade agreement doesn't just pertain to auto manufacturing industry.
we as Canadians, and auto enthusiasts, tend to focus on auto manufacturing industry a lot, but that's not the only industry in Canada.

there are other aspects of this agreement that benefits other industries of Canada as well.

ever since US-korea FTA, Canada lost massive market share in food export to Korea to US. 

Canada-Korea FTA is trying to take some of that back while giving a little in Auto(at the same time, pushing for no-tariff on canadian manufactured cars for korean market as well)
Canada is in trade deficit with Korea (2008 figure of 3.3 billion export vs 5.8 billion import) and this FTA is trying to even that out with Canada's massive food industry's products and natural resources investments(since korea has none to speak of).

Auto manufacturing industry in canada is pretty big, but it's not near as big as all the news articles seem to state.   mining/resources/agriculure is more massive and contributes more to the Canadian economy and those are the industries that stand to gain from this FTA.

each country playing more to its strength.

Not only that, korea is Canada's 8th largest trading partner already, EU's 8th's largest trading partner, one of the richest countries in Asia, with strategic access to eastern asian market.    given that, Canada is right to consider having such strong economic partnership with countries such as Korea to not put all its eggs in one(US) basket.  any semi literate investors can tell you that diversification is good for your portfolio.

but of course, Canada needs to proceed with caution to not give up too much.

[dkaz]

Ok everyone, support Canadian autoworkers, skip the Civic and Corolla and buy a Focus, Dart, or Cruze instead! Oh wait...

I'm trying to figure out which Canadian built cars MIGHT be sold in Korea. I've come up with two, the Chrysler 300C and Lexus RX, but it might make more sense to import the RX straight from Japan.

[canbra]

Free trade is good as long as you are competing equally.

A auto company paying labour anywhere from 12$-35$ per hour cannot compete with someone paying labout 5$/day

Wages are a big contributor to the operating costs, yes, but are far from being the sole one. The cost of doing business is not trivial to assess, especially when comparing two very dissimilar countries. Freight and shipping fees (incl. distance to target market), insurance rates (incl. due to poor infrastructure), complex tax structure and government bureaucracy in general, harder access to financial markets, all are typically higher in developing countries as opposed to developed countries.

And to get back to labour itself, you have to consider that on poorer countries, with poorer school system and less qualified workers, quality losses and employee training costs are considerably higher. So the amount that goes to the pocket of the employees tell just part of the story.

The other day there was an article (Forbes? Economist? Can't remember...) about Brazil losing competitiveness against not only China but even Mexico. The report pointed out that the costs per employee in the Brazilian subsidiaries of foreign companies were closing in with US and Germany, while nobody denies that the Brazilian workers pocket a LOT less than their American or German counterparts...

[johngenx]

Quality costs.  Period.  Toyota and Honda have worked hard to stay price competitive with high tech assembly lines and shared platforms and other techniques.