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TPP could change Canadian automotive industry

Queen's prof says Oshawa, country's auto workers would suffer under trade deal; Oshawa MP says labour groups are wrong and that Canada needs to ratify pact


According to Dr. John Holmes, a professor at Queen’s University and the author of a recent report by the Canadian Centre for Policy Alternatives, the automotive industry could be in deep trouble if the Trans-Pacific Partnership, a free trade deal signed but not yet ratified by Canada, comes into effect. Oshawa MP Colin Carrie, however, says that the free trade deal would be a boon to Oshawa and the Canadian automotive industry.

By Graeme McNaughton/The Oshawa Express

If Canada ratifies the Trans-Pacific Partnership, it could be a disaster for Oshawa and other parts of the country with auto manufacturing.

That is according to Dr. John Holmes, a professor from Kingston’s Queens University and one of the authors of The Devil is in the Details: The TPP’s Impact on the Canadian Automotive Industry, a recent report on the subject by the Canadian Centre for Policy Alternatives.

In the report, written alongside Jeffrey Carey, a PhD candidate at Queen’s, Holmes lays out what could happen to the Canadian auto industry as a result of the TPP. In particular, Canadian manufacturers could be hard hit by the lowered level of domestic content in vehicles sold in this country – meaning automakers could use more parts from other countries where they are cheaper.

Holmes says that while the trade pact could have a big impact here in Oshawa, it would not be as large as that seen by other parts of the country that rely more on automotive parts production, as opposed to the automobiles themselves.

“Our sense is that the biggest impact would be on the automotive components sector, and from other research that we’ve been doing, these days there isn’t a lot of automotive parts production on the eastside of the GTA. A lot of it is north and out to the west,” he says.

“One of my colleagues who works at the Automotive Policy Research Centre at McMaster University…has been putting together a dataset of plant closings over the last 10 years or so, and it’s really quite striking that the area to the east of the GTA has already lost a lot in comparison to the areas to the west and closer to the Cambridge, Waterloo, Guelph area.”

Holmes adds that automotive production in Oshawa faces plenty of hurdles as it is, such as the increased congestion along the GTA’s highways, and that adding the TPP on top of that would only make things worse.

Holmes adds that another thing to look at is not just the effect the potential downturn in Canadian part producers would have on the Canadian auto industry, but the ripple effect from the across the border.

“A point that we make in the report is not just the effects of the direct impacts it would have on Canada, but the indirect impacts for Canada that would come from the impacts the TPP would have on the U.S. A very significant proportion of the parts produced in Canada go to the U.S., particularly in the Great Lakes states for assembly there, just as we import parts for assembly here,” he says.

“The indirect impacts on the U.S. will have some significant impacts on Canada.”

To date, 12 countries have signed on to the trade agreement, but none have ratified it. The pact will go into effect if all 12 ratify it before February 2018. If that does not happen, it will go into force if it is ratified by at least six nations representing more than 85 per cent of the signatories’ GDP.

This report by the Canadian Centre for Policy Alternatives is one of several that the left-leaning think tank has released in regards to the TPP, all of which have said it is a bad deal for Canadians.

Oshawa MP Colin Carrie, however, says that this group, along with many others in the labour community, are letting their biases get in the way of seeing the TPP is a good deal.

“The organization that puts this out, you can’t say that they’re unbiased. They’re fairly entrenched with the major unions – they basically opposed every free trade agreement that Canada has been party to,” he says.

“For the auto sector to have our major trading partners, the U.S. And Mexico, sign on to the TPP without us being involved would be a disaster. By expanding our trade opportunities, we’ve got the opportunity to grow our economy without spending billions of dollars in stimulus that we don’t have.”

Carrie says that he is surprised to see unions come out against the trade deal, as part of the TPP dictates labour conditions for workers in other countries, bringing them closer to the level seen in Canada.

“Workers, even though they don’t have the same protection as Canadian workers, but the TPP would expand similar rights to them, including the right for these unions in these countries to organize and bargain collectively,” the Oshawa MP says.

“They have to explain why they would be opposed to the rights of workers in these developing nations and why they wouldn’t be sending their union leaders over. They pretend that they’re supporting workers in those countries, but they could be sending union leaders to help organize these early organizations on the ground in those countries.”

Carrie says that, moving forward, Canada needs to ratify the TPP so that it does not get left behind in the global market.

“This agreement is setting the rules for trade within North America and Asian for generations to come. Ratifying the TPP would ensure that we’re in step with our major trading partners,” he says.

“We had Barack Obama and the Mexican president, (Enrique Peña) Nieto (in Ottawa in late June), they were promoting ratification of the TPP in their respective countries…and it would be great if our industries knew that Canada made a decision and companies could get ready for it. If our two major trading partners are on board with the agreement and we’re outside, it gives us great problems moving forward.”