Canada Incurs Record $14 Billion Automotive Trade Deficit in 2008, Now in Deficit within North America, CAW Reports

TORONTO, Feb. 16 /CNW/ - Data newly released from Statistics Canadaconfirms that Canada experienced its worst-ever year in international trade inautomotive products in 2008, according to an analysis from the Canadian AutoWorkers union. Canada's automotive trade deficit more than doubled last year, to almost$14 billion - an all-time record. The 2007 deficit was $6.6 billion. Canada's exports of finished vehicles declined dramatically (by almostone quarter) as a result of the financial crisis and resulting collapse ofU.S. auto sales. Imports of auto parts (which are used in Canadian autofactories) also declined. But imports of finished vehicles from offshore grewagain (for the fifth straight year), despite the economic crisis. The aggregate data reveal several worrying trends. For the first time indecades Canada experienced a net auto trade deficit within North America. Canada's traditional auto trade surplus with the U.S. plunged to just $4billion (barely one-fifth the level of three years ago). That surplus with theU.S. no longer offsets Canada's long-standing auto trade deficit with Mexico(which equaled $4.5 billion last year), leaving a small combined deficit forthe NAFTA region as a whole. Canada's auto trade with offshore (non-NAFTA) producers remains veryunbalanced as well. Canada's automotive exports to countries outside of NAFTAplunged 30 per cent last year (to just over $1 billion). However, despiteslowing auto sales in Canada, auto imports from outside of NAFTA continuedtheir steady growth, reaching a record $15 billion. Those imports have doubledin the past decade. For every dollar of automotive imports that Canada acceptsfrom outside of NAFTA, Canada exports just seven cents back in the otherdirection. Since Canada no longer can rely on a trade surplus within the NorthAmerican market to offset this offshore deficit, Canada's overall tradedeficit has widened dramatically. "This data confirms that Canada's unbalanced trade with Asia and Europeis a major cause of the industrial carnage we see around us today," said CAWPresident Ken Lewenza, reacting to the new data. The collapse of Canada's automotive trade position has contributedsubstantially to the deterioration in Canada's overall merchandise tradebalance. Aggregate statistics released last week confirmed that Canada slippedinto an overall trade deficit in December for the first time since 1976. "For years we tolerated a growing offshore imbalance, because our strongposition in the U.S. market bailed us out," Lewenza said. "But clearly wecan't count on the U.S. market to prop up our trade numbers anymore, whichmakes it all the more essential to address those trade imbalances with therest of the world.""For years we have relied on exports of petroleum and other resources tosubsidize a growing manufacturing trade deficit, but this is no longerpossible either," Lewenza added. "Our collapsing performance in autos andother manufactured goods now translates into a bottom-line trade deficit."Lewenza reiterated the CAW's position that the federal government mustaddress the growing auto trade imbalance as part of a broader national autostrategy. The CAW has made its willingness to engage in contractrenegotiations with the Detroit Three automakers conditional on theimplementation of a national auto strategy. The CAW estimates that the $14 billion automotive trade deficit in 2008corresponds to the loss of 22,500 direct auto jobs (based on the average jobintensity of automotive shipments). "Because of this trade deficit, Canada now has far less than its share ofauto jobs, even within North America. Canadians deserve to have a proportionalshare of good jobs, and implementing a national auto strategy is apre-requisite for stabilizing and rebuilding the industry," said Lewenza source:Economic News