Japan and South Korea trade cheating

Extrait de: Japan and South Korea trade cheating, Diane Francis, Financial Post, March 5, 2011

China's auto jackpot open to Detroit's Big Three

Investment reciprocity should determine which foreign entities should be allowed to invest in Canada.

If, as in China or Abu Dhabi, Canadians cannot buy resources then these foreigners should not be allowed to buy resource here.

This has been my mission for several years.

But there is another issue:

Opportunity reciprocity.

Canada’s trade officials should only allow foreign entities to sell goods to our country if we are allowed to sell goods without interference to their country.

Right now, tariffs are used to measure this but that totally misses the mark. There are a raft of tricks and non-tariff barriers deployed by China, Japan and South Korea which are designed to block entry of our stuff into their markets.

Japan and South Korea are worse than China in some respects and have remained below the radar, due to the focus on China. But they have attacked, and continue to seriously damage, North America’s industrial cornerstone, the auto sector.

Interestingly, China has a level playing field and last year General Motors, through various joint ventures, became the biggest carmaker and car seller in China.

But Japan and South Korea sandbag attempts by the Big Three to crack their markets and, at the same time, they unfairly subsidize their exports here. By the way, this is not because their cars are superior. GM and Ford make cars that the Chinese lap up. This is about cheating.

Japan and Korea have been trying to negotiate special trade deals with Canada and the US. Frankly, any deals should include guarantees to remove subsidies and non-tariff barriers and to import dramatically higher numbers of vehicles.

Here are some numbers:


·         In 2010, Canada imported $2 billion worth of automotive products from Korea (85% vehicles and 15% parts). Canada sold only $10 million worth of automotive products to Korea, according to Industry Canada.

·         The Big Three sold less than 8,000 vehicles in 2009 in Korea or 0.5% of its market.

·         Korea’s Hyundai-Kia sold 150,000 vehicles in Canada alone, 30,000 of which were made in the US.

·         In 2009, Koreans bought 1.5 million new vehicles and only 60,000 came from outside that country or 4%, wrote Ward’s Automotive.

·         Canada’s auto trade deficit with South Korea has increased every year since 1997 when trade with South Korea was balanced or mutually beneficial. But Canada’s modest auto exports to Korea, in fact, declined by 92% during those 13 years while Korea’s exports of autos to Canada grew by 725%, pointed out the Canadian Auto Workers union.

·         Some 30% of vehicle sales in the US and Canada came from outside NAFTA.

·         Korea’s unfair trading games include: Impediments to foreign dealerships, involving zoning and regulations that limit imports. Vehicle taxes are skewed in favor of homegrown cars. Environmental certification is biased too.

Japan plays many of the same games.

·         Japan’s market is also virtually closed to imports. In 2009, there were 4.6 million vehicles sold there and only 178,527 were imports, or 3.8%, according to Ward’s Automotive.

·         In 2010, Canada imported from Japan $5.8 billion in automotive products (one-third parts, rest vehicles). Canada sold $39.5 million the other way, said Industry Canada.

·         Japan, like China, keeps the Yen artificially low for trade cheating purposes, provides Toyota and others cheap capital from its government development bank and provides free access and use of port and trade infrastructure.

·         Japan also prevents dealerships through land and zoning games, imposes bans against certain foreign vehicles and deploys other non-tariff barriers.

The Canadian Auto Workers Union has been opposing new trade deals with Japan and South Korea and it’s pretty obvious why. But so should Canadian and American taxpayers who bailed out two of the Big Three and, in Canada’s case, are still major shareholders in GM and Chrysler.

Proposed free trade deals miss the market by concentrating in lowering or removing tariffs.

Korea’s deal has been iced but Japan’s
is very much alive and should not be.

Both countries must immediately remove non-tariff barriers, subsidies and commit to dramatic increases in imported vehicles and parts from Canada and the US.