UAW, Parts Makers, Michigan Turn Thumbs Down On Free-Trade Pact
Mar. 01, 1988
WASHINGTON (AP) _ A proposed free-trade agreement between the United States and Canada will leave the U.S. auto industry at a competitive disadvantage, the United Auto Workers union told a House subcommittee Tuesday.
''Thousands of American auto workers' jobs would be at risk under the agrement's terms,'' said Steve Beckman, international economist for the UAW, in testimony before the trade subcommittee of the House Ways and Means Committee.
Witnesses at the hearing, including a representative of auto parts makers and the state of Michigan, center of the U.S. auto manufacturing, gave a mostly negative evaluation of the treaty's effect on the auto industry.
The only witness who gave unqualified praise to the treaty was Thomas Hanna, president of the Motor Vehicle Manufacturers Association.
''The agreement takes on and resolves most of the trouble spots which were developing in the bilateral auto trade,'' he said.
Criticism of the pact, which seeks to eliminate nearly all tariff barriers between the U.S. and Canada, centered on the failure of the treaty to eliminate present areas of discontent on the U.S. side.
''Our current bilateral auto trade is skewed, to Canada's benefit, by a number of trade-distorting practices,'' said Rep. Sander Levin, D-Mich., resulting in part from Canada's domestic-content requirements and duty rebates on some auto parts.
Beckman said that by retaining Canadian production incentives for Honda, Toyota and Hyundai, the treaty provides ''a subsidy of Canadian production, much of which will be sold in the U.S.''
Hanna, however, downplayed the union's worry, saying the North American auto industry already has excess manufacturing capacity.
''Canada's duty remissions programs ... are eliminated or phased out (in the agreement),'' he said. ''It makes no sense for the Canadian government to lure more foreign auto investment, especially when much of the production would be headed for the U.S. market.''
Lee Kadrich, director of governmental affairs and international trade with the Automotive Parts and Accessories Association, said the treaty was ''a lopsided agreement that sanctions long-standing Canadian protectionism.''
Marc Santucci, trade adviser to Michigan Gov. James Blanchard, told the subcommittee the free-trade agreement would benefit the state in some areas, such as access to Canadian electrical power and services resulting from increased trade.
''While important, these benefits cannot compare to the magnitude of trade in automotive products,'' Santucci said.
''It is my view that the Reagan administration sacrificed a critical opportunity to make significant changes in the terms of automotive trade to its imperative of getting an agreement,'' he said.
For example, he said, Canada's duty remissions program on auto parts, designed to foster Canadian production, have been declared illegal under international trade agreements, yet the incentives will continue through 1997 for exports to third countries, allowing inroads by Japanese and Korean manufacturers.