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Largest Auto Trade Deficit For Canada Expected
The Canadian auto sector is about to receive a big blow this year according to the Canadian Auto Workers union. The union headed by Buzz Hargrove recently reported that Canada is on its way to recording its largest automotive trade deficit in history by the end of this year.

In connection with that, the Canadian Auto Workers union is urging Ottawa to help the auto industry in redirecting its economic and trade policies.

The Canadian Press reported that last Monday, CAW economist Jim Stanford said that the deficit will reach $8 billion for this year. According to him, this is the largest single year drop rate. With Canada importing more auto parts and vehicles than they sell to other countries, the deficit continues to grow.

"Not only is Canada's automotive trade performance now the worst-ever; it is still deteriorating at a record rate," said Stanford in a report entitled "Canada's Deteriorating Automotive Trade Performance". According to the Canadian Press, the report uses Statistics Canada reported on an Industry Canada website which provides pertinent information just like a repair manual Canada. The report cited that by year end, the Canadian auto sector will have a surplus in finished vehicle trade of less than $14 billion. In contrast, the deficit is computed to be near $22 billion by the end of the year.

The report also cited that the largest deficit so far in the books for the Canadian auto sector is at $3 billion incurred in 1979. That deficit according to Stanford came during the height of the post-OPEC surge in sales of small imported vehicles. During that time, import has surge because of the demand for smaller and more fuel efficient vehicles. The demand increased after prices of gasoline skyrocketed as a result of the Iranian revolution. In contrast, 1999 was the best year for the Canadian auto industry as it finished the year with a trade surplus of nearly $15 billion.

The 1999 year-end trade surplus shows that Canada can export more auto parts and vehicles to other countries with the best of them. This is what Stanford is pointing out to Ottawa. "Instead of being a net supplier of high-quality automotive products to the global economy, Canada is now a major net importer of automotive products," said the economist. "This trade deficit inevitably translates into a loss of jobs in domestic automotive production (since fewer jobs are supported by exports, and more jobs are displaced by imports)," added Stanford according to the Canadian Press.

The report published by the economist is part of the CAW's lobbying for trade policies which will not put the Canadian auto industry in a compromising position. The union is asking the Canadian government to break down trade barriers which limit the country from exporting vehicles and auto parts to Asian and European markets.

The union is calling for immediate action especially that the United States' Big Three continues to lose ground in the global auto market to Japanese and European automakers. General Motors, Ford, and Chrysler are in the middle of their restructuring plans to bring them back to profitability. The union is calling out for help and the government still has to react to their calls.


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