The country’s auto sector — with as many as 500,000 related jobs in Ontario — has nothing to fear from the re-opening of NAFTA, Unifor National President Jerry Dias predicts.
“The reality is that NAFTA has been a disaster,” Dias said. “So those that are nervous about opening it, I don’t understand their logic… Pre-NAFTA we had a $12 billion trade surplus in manufacturing. Today we have a $120 billion deficit.”
Canada is manufacturing 2.3 million vehicles a year, on its way down to 2 million vehicles a year, while Mexico is on track to produce 4 million vehicles a year, Dias said.
The early promise that free trade would lead to higher wages in Mexico, and ultimately level out the playing field, never materialized, he said.
Dias is not arguing to exclude Mexico from any future deal.
“But the bottom line is any deal on NAFTA has to include free unions in Mexico,” he said. “The unions that they have in Mexico are controlled by the government; there’s no free collective bargaining; so there has to be some minimum standards.”
An Angus Reid Institute poll released in February found fewer than one in four Canadians want NAFTA renegotiated and only one-in-10 believe the country will emerge from the talks better off.
Ontario Economic Development Minister Brad Duguid said the recent meeting between Prime Minister Justin Trudeau and President Donald Trump gives reason to feel relatively positive about the outcome of a renegotiated NAFTA.
”I think we’d be naive to think that there’s still not going to be potential challenges ahead and we need to prepare for that,” Duguid said. “We need to maintain our proactive efforts, both Ontario and Canada, to reach out to our counterparts in the U.S. at every opportunity to promote the importance to the U.S. of an unfettered border between our province and in particular the Great Lakes states.”
Premier Kathleen Wynne did just that this past week, meeting with Michigan Governor Rick Snyder and releasing a joint statement that said the two jurisdictions are “strong partners with deeply integrated economies.”
The auto parts and vehicle manufacturing industries surround the Great Lakes are closely linked — a vehicle manufactured in Ontario or in one of the northern states crosses the border seven times before it’s completed, he said.
Any tariff slapped on by the Trump administration would clog up the whole process, he said.
“And we certainly are going to make every effort we can in reaching out to our counterparts in the U.S. to work with them to ensure that the administration is aware of the negative impact that would have on U.S. jobs, considering there are nine million U.S. jobs that are supported by trade with Canada that could be at risk if there were costs or impediments put in place between Canada-U.S. trade,” he said.
Dias said he believes Canada has the fundamentals in place to remain competitive in vehicle manufacturing, especially if the Wynne government is successful in lowering hydro rates.
The Canadian public health care system alone saves automakers $5 (US) an hour in wages, and the low dollar is another key incentive that remains in place, he said.
“Just within the last couple of weeks auto parts manufacturers… are making major announcements that would have been unheard of even five years ago,” Dias said. “So they’re making the announcements now because they understand that the Canadian industry is stable and is strong. The potential is there for a lot of growth.”