Statement by Hendrik von Kuenheim, President and CEO of BMW Canada Inc.:
“The WTO’s appellate decision provides Canada with an opportunity to re-think its automotive tariff policies at the beginning of this new millennium.
The automotive industry has changed dramatically since the Auto Pact was established in 1965. Because of mergers and acquisitions in recent years, outdated automotive tariff policies must be re-assessed and amended to ensure that Canada remains a fair and competitive partner in the global economy.
In respect to this automotive tariff review, BMW Canada advocates options that benefit all stakeholders while complying with the WTO decision. One option that meets this objective is a compromise solution whereby the existing 6.1% duty would be reduced (but applied to all non-NAFTA imports), rather than being eliminated or imposed on all non-NAFTA imports.
This option would allow Canada to tackle both the implementation of the WTO findings and the 6.1% duty in a way that results in a “win-win” situation for the Big Three, labour interests, non-Autopact importers, the Canadian consumer, and the federal government:
– Economic analyses support a reduced duty, in terms of job creation,
preserving government revenue (e.g., consider the net effect of a 2.5%
tariff on all non-NAFTA imports versus 6.1% tariff on a minority of non-NAFTA imports), and increased consumer surplus;
– Reducing the duty is consistent with the Government of Canada’s stance on “trade-liberalization” but without sacrificing domestic interests;
– In practical terms, Canadian consumers bear the burden of a 6.1% duty that protects U.S. vehicle production, not Canadian production. Each year, there are 2.9 million vehicles produced in Canada, 90% of which are exported. With an annual Canadian market of about 1.5 million vehicles, 75% of which are imported, there is clearly no need for protection of Canadian based production; and
– A reduction of Canada’s import duty would increase competitiveness
within the industry and ultimately benefit the consumer (e.g. increased value-added, increased research and development, faster turnover, savings to consumers, etc.).
Canada must have an up-to-date and comprehensive automotive tariff policy that meets the interests of all Canadians rather than just those of a select few U.S.-based corporations. Also,Canadian consumers have a right to an understandable, fair and logical rationale for these issues.”