Unions denounce South Korea free trade deal

Unifor, USW cite growing trade deficit as a potential threat to Canadian auto sector, jobs.

TORONTO – Free trade with South Korea is an unneeded challenge for Canada’s auto sector just as it is getting back on solid footing, Canada’s largest private sector union, Unifor, says.

“We cannot stand by a deal that allows Korean car makers to flood Canada, while doing little or nothing to get our cars into Korea,” Unifor president Jerry Dias said before details of the deal were released.

“If Korean companies want to sell more in Canada, they should be required to make those cars here.”

The union says expanded trade with Korea needs to be fair and mutually beneficial, and the deal would do so by tying reductions in tariffs to measurable targets in reducing trade imbalances in key industries, including automotive, as well as requiring Korean companies to invest and create jobs in Canada as a condition of tariff-free access.

Ensuring the federal government keeps necessary powers to intervene directly to remedy trade imbalances is also crucial, the group says.

Dias pointed to the US, where a free trade deal with South Korea has only worsened the trade imbalance, as an indication of what Canada might expect.

“Two years after the US signed a similar deal, none of the benefits and all of the downsides came true,” Dias said. “The situation has only gotten worse for Americans.”

Canada sold $3.7 billion worth of goods to Korea in 2012, but imported $6.4 billion. The result was a trade deficit of almost $3 billion, and the numbers for 2013 look even worse. Based on preliminary data, the deficit swelled to almost $4 billion last year as exports fell and imports grew, thanks in large part to a powerful alliance between government and corporations in Korea to boost its manufacturing sector.

“That alliance, with its subsidies and preferential policies, has been good for Korea,” Dias said, adding that research from Unifor shows 33,000 manufacturing jobs could be lost in a trade deal with Korea.

Canada’s main exports to South Korea include raw materials such as coal, copper, aluminum and wood pulp. They send us back cars, phones and electronics. Almost 100,000 cars were imported to Canada last year, compared with fewer than 100 Canadian-made cars going to Korea.

“The survival of our middle class depends on stable jobs, not exporting our riches to be manufactured in another country,” Dias said.

The United Steelworkers (USW) have also denounced the deal, echoing Unifor concerns related to an increased trade deficit that it believes will causes Canadian job losses.

“The Conservative government has promoted its deal as benefiting most sectors even if it hurts Canada’s auto industry,” said Ken Neumann, national director of USW. “In addition to hurting the auto sector, it poses a much broader threat to Canadian manufacturing.”

The current imbalance is particularly lopsided in the steel industry, USW notes. Last year, South Korea sold $330 million of steel to Canada but bought only $50 million of steel from Canada.

“Does Korea have a natural advantage in producing steel or has it made better use of industrial policy to support its steel industry?” asked Neumann. “Canada should not sign away the right to use industrial policies like procurement preferences to develop our economy.”

Beyond any effects on trade flows, the deal is expected to include an investor-state dispute settlement process that would give Korean companies special privileges to directly challenge Canadian laws and regulations before secret tribunals.

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