Canada at the weekend said it would follow the neighbouring United States by providing C$4bn (US$3.3bn) in emergency loans to the Canadian units of General Motors and Chrysler to keep them operating while they restructure.

Prime minister Stephen Harper and Ontario province premier Dalton McGuinty made the announcement a day after the Bush administration offered US$17.4bn in emergency aid to Detroit.

According to Reuters, Harper also announced two new federal measures to support the overall industry - one to benefit automotive suppliers and a second to help consumers get credit to buy cars.

The federal government will provide C$2.7bn in short-term loans and Ontario C$1.3bn, the report said, with GM of Canada eligible for up to $C3bn and Chrysler Canada for up to C$1bn. As in the US, the Canadian arm of Ford has not asked for immediate assistance.

Harper reportedly said the governments were attempting to attach some liens and secure some assets of the car companies "but I will not fool you - there is obviously some money at risk here."

He said the aid reflected Canada's 20% share of North American production capacity but Reuters said the package was actually one-sixth, or 16%, of the $20.7bn in North American aid announced over the past two days.

Harper also said Canada would not allow a restructuring of the industry on US terms in a way that might cause the relocation of Canadian facilities to the United States.

Meanwhile, aid to automotive suppliers would come in the form of additional accounts-receivable insurance coverage through the federal Export Development Corporation.

The federal government also would create a new facility to support access to credit for consumers but details of that programme were not immediately available.

"We don't want a package that simply helps the Detroit Three and therefore has the effect of ... subsidising those who are struggling while penalising those who have made good business decisions," Harper told Reuters as he explained why the package included help for suppliers and consumers.

McGuinty, premier of Ontario province where automakers are based, said Asian automakers [Honda and Toyota], which have facilities in Canada, backed the aid package because, if one of the Detroit Three fail, the entire industry, including the Asian-based companies, would suffer because of the integration of the North American industry.

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