Aug 20, 2007

Canadian automakers call for full market access in potential South Korea trade agreement

Windsor, Ontario – The Canadian Vehicle Manufacturers’ Association (CVMA) held a round table with members of the Liberal Party of Canada earlier this month, including discussions regarding access to South Korea’s market in a potential trade agreement between the two countries.

“South Korea’s auto market is one of the most significant in the world,” says Mark Nantais, President of CVMA. “However, due to the pervasive use of tariff and non-tariff barriers by the Korean government, automotive manufacturers from around the world have been shut out of their market.”

The CVMA says that fewer than five per cent of the one million vehicles sold annually in Korea are built in foreign countries, while over 25 per cent of the 1.5 million vehicles sold annually in Canada are built outside the NAFTA region, and a further 60 per cent are imported from the U.S. and Mexico. Despite “extensive efforts by industry,” the CVMA says that only several hundred Canadian-built vehicles and several thousand North American-built vehicles are sold in Korea annually, and that Korea’s closed market has resulted in a massive trade deficit in finished vehicles with most major auto-producing nations, including an annual $1.6 billion auto deficit with Canada.

“Given the history of the use of market distorting and protective NTBs (non-tariff barriers) in Korea, the CVMA has been calling on the federal government to negotiate an FTA (free trade agreement) that includes an immediate tariff snap-back when new Korean NTBs emerge,” Nantais says. “This important mechanism will help to permanently eliminate these market barriers. This mechanism will create a fair trading environment for Canadian manufacturers and place the burden squarely on Korean government to open its closed market. If Korea refuses to remove its existing NTBs and continues its historical practice of restricting market access, then Canada should not offer preferential market access to the Canadian automotive market.”

The CVMA is a national association whose membership includes DaimlerChrysler Canada Inc., Ford Motor Company of Canada Ltd., General Motors of Canada Ltd. and International Truck & Engine Corporation Canada.

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