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Canada facing largest automotive trade deficit in history
9/10/2007 10:13

Canada will record the largest automotive trade deficit in its history this year, with the deficit possibly reaching 8 billion Canadians dollars (US$8 billion), according to a report from the Canadian Auto Workers (CAW) union released yesterday.

Canada will register a year-end surplus in finished vehicle trade of under 14 billion Canadian dollars, offset by a deficit in parts of close to 22 billion Canadian dollars, said CAW economist Jim Stanford in the report.

"Not only is Canada's automotive trade performance now the worst-ever, it is still deteriorating at a record rate," Stanford warned in the report entitled Canada's Deteriorating Automotive Trade Performance.

The previous largest automotive trade deficit was 3 billion Canadian incurred in 1979, Stanford said, adding 1999 was the best year for Canada's auto sector, with a trade surplus of almost 15 billion Canadian dollars.

Stanford said nearly 90 percent of the deficit is due to five large bilateral deficits with Japan, Mexico, Germany, South Korea and China.

While Canada's automotive trade deficit with Japan is the largest, exceeding 6 billion Canadian dollars, the most unbalanced relationship is with South Korea. Canada buys 183 times as much automotive value as it sells in South Korea, says the report.

"This trade deficit inevitably translates into a loss of jobs in domestic automotive production", says the report, while calling on the government to implement more aggressive auto trade policy so as to get more Canadian-made vehicles and parts into Asian and European markets.