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February 14, 2000
While an appeal by the Canadian Government will delay adoption
of the final report, it appears that the WTO dispute settlement
panel has found that changes are necessary to bring Canadian automotive
tariff policies into line with international trade rules.
In practical terms, JAMA Canada continues to urge the Government
of Canada to adopt trade policies that are open, transparent and
non-discriminatory, with measures that ensure equal treatment for
all automakers in Canada. More specifically, Most Favoured Nation
(MFN) tariffs applied to finished vehicles should be eliminated
as soon as possible. Tariffs are no longer necessary to protect
the auto industry in Canada, and only add non-manufacturing costs
that are a burden for both automakers and consumers.
Since the FTA in 1989, auto tariff policy in Canada created a fragmented
two-tiered industry that treated some automakers more favourably
than others. Among other things, this current policy undermines
Canada’s ability to attract future automotive investment.
JAMA Canada would have preferred that this issue had been resolved
domestically at the time of the Federal Government’s Automotive
Competitiveness Review in 1998. However, with this WTO report the
Canadian Government has another opportunity to address the discriminatory
aspects of the current policy. Moreover, the recent collapse of
the WTO talks in Seattle, aimed at setting the agenda for the start
of the next round of multilateral trade negotiations, makes resolution
of this matter more urgent. In the event that the so-called ‘Millennium
Round’ gets underway later this year, we urge the Government of
Canada to eliminate tariffs on all automotive products, to reflect
the 0% tariff on vehicles and parts in Japan.
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Today the auto industry in Canada is generally healthy, competitive
and profitable. At the same time, it is also highly dependent on
trade and foreign investment. What’s more, around the world, the
auto industry is constantly being challenged by consumers, by technology
and by governments to provide reliable, affordable products that
are designed for both safety and preservation of the environment.
It is no surprise that policy changes are also needed in Canada
to reflect higher levels of international competition and cooperation,
as well as to reaffirm a strong commitment to the rules-based trade
system entering the 21st century.
The WTO Final Panel Report is available at www.wto.org
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