Trans-Pacific Deal Factor in Canadian Auto Talks

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By Peter Menyasz

Aug. 15 — A 12-nation Pacific Rim trade pact is on the table in contract talks between North American automakers and their Canadian employees, even though both sides oppose the controversial trade deal.

The “Detroit 3” automakers—General Motors of Canada Ltd., Ford Motor Co. of Canada Ltd. and FCA Canada Inc. (Fiat Chrysler)—and Unifor, which represents their more than 23,000 workers in Canada, agree the Trans-Pacific Partnership's (TPP) auto provisions put Canada at a competitive disadvantage compared to the U.S. and Mexico.

But while the companies see the possibility that the trade deal will be ratified as a reason to delay decisions on whether to make new investments in their Canadian plants, the union says it won't agree to new contracts that don't include firm commitments for investments to provide its members with long-term job security.

“There's going to be an agreement to invest or there's not going to be an agreement,” Unifor President Jerry Dias said Aug. 12. The union kicked off its latest round of contract talks with Ford and Fiat Chrysler on Aug. 11, a day after launching talks with General Motors (GM).

The TPP, formally signed in February, includes Canada, Japan, the U.S. and nine other countries.

Contract, Investment Issues

The union said it understands the trade deal is just one of many factors in how the companies approach contract talks, and that the automakers need to be careful in committing to investments that could be threatened if the deal is put into effect, Dias told Bloomberg BNA.

However, the companies are much more profitable than they were in 2012, when they were still recovering from the 2009 recession, so these contract talks are the union's best chance to solidify long-term work for its members, he said.

“We were there when they needed us. We're going to keep reminding them of that,” he said.

GM is equally adamant it won't make investment decisions until a number of factors are clarified. The company has consistently said for the past two years that it won't commit to new investments in Canada until after a new labor agreement is in place, David Paterson, its vice president of corporate and environmental affairs, said Aug. 11.

Canada ‘Foolish.'

The auto industry is concerned that what Canada negotiated on autos in the trade talks is not as good as what the U.S. secured, which puts pressure on the companies to be more competitive through other means, including labor costs, Paterson told Bloomberg BNA.

“It makes it harder, but it's only one of a range of factors,” he said. “No disrespect [to the union], but we need to make a business decision on a large investment.”

Both the U.S. and Canada agreed in the deal to drop their tariffs on imports of Japanese cars and light trucks, but while U.S. tariffs will be phased out over 25 years, Canada was “foolish” and agreed to a five-year phaseout, Dias said. “We couldn't bargain ourselves out of a wet paper bag,” he said.

Paterson stressed that GM has been “quite encouraged” with its “very constructive” talks with Prime Minister Justin Trudeau's government on the TPP and the auto sector's future in Canada.

The other automakers were reluctant to discuss the trans-Pacific trade deal's potential impact on the contract talks, given the union's strong stance on the need for investment commitments.

A Fiat Chrysler spokeswoman declined Aug. 11 to comment on the issue, and a Ford Canada spokeswoman referred Aug. 12 only to the company's consistent emphasis on “competitive labor costs, government incentives and fair trade agreements” as factors in auto investment decisions.

‘Target' Company

The Ford spokeswoman also pointed to the company's comments earlier this year to a parliamentary committee studying the trade deal that its auto provisions fail the test for trade agreements—opening new markets and leveling the playing field. The deal also lacks enforceable rules to prevent currency manipulation, which harms auto trade, Ford Canada President Dianne Craig told the committee.

The automakers' current collective agreements expire at midnight on Sept. 17, 2016. The union does not yet have a strike mandate from its members, but will seek it at meetings scheduled on Aug. 28.

Preliminary contract talks will continue through Aug. 31, and the union will announce on Sept. 6 the company it will set as a “target” for final negotiations to reach a pattern settlement that would apply to all three companies.

To contact the reporter on this story: Peter Menyasz in Ottawa at

To contact the editor responsible for this story: Jerome Ashton at

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