Japanese Currency Devaluation Must Be G-7 Summit Issue, Hargrove Says

    TORONTO, Feb. 7 /CNW/ - CAW President Buzz Hargrove says a federal
government decision not to make currency manipulation an issue at the upcoming
G-7 Finance Ministers' meeting is a mistake.
    Hargrove urges federal Finance Minister Jim Flaherty to reconsider the
issue on behalf of Canada's manufacturing workforce, which has been hard hit
by under-valued currencies such as the Japanese yen.
    Hargrove, in a February 7 letter to Flaherty, outlined concerns over
Canada following the U.S. lead on the issue. Here is the text of Hargrove's
letter:

    "Dear Minister Flaherty,

    I read in the Financial Post about your government's decision not to make
an issue of the problems of currency manipulation at the upcoming G7 Finance
Ministers meeting. I urge you to reconsider.
    For some time now the Japanese government has engaged in massive
interventions in currency markets to ensure that the Yen remains undervalued.
For example, when the Yen rose in 2004, the government of Japan intervened
heavily in the currency market and bought large quantities of U.S. bonds. It
is now widely recognized that the low Yen has created huge subsidies to
Japanese exporters in general and to auto producers in particular. In the case
of autos the currency-based subsidy ranges from about $2,700 U.S. at the low
end of the market to in excess of $8,000 U.S. in luxury sedans. Japanese auto
producers readily acknowledge that a large share of their profits is solely
due to exchange rate differences.
    I understand some of the political reasons - such as the important role
of Japan in financing the U.S. deficit - that would lead the U.S. to ignore
the impact of a low yen on that country's economy. What I can't understand is
why Canada would simply follow the U.S. lead on this issue. Many other
countries consider the issue of currency exchange, to be a legitimate topic
for discussion at the upcoming G7 Finance Ministers meeting - so should
Canada. All major industrial currencies, including Canada's, have appreciated
against the U.S. dollar, the exception is the Japanese Yen.
    The economy in Canada is slowing down. The manufacturing sector is
already in a recession. In the last 4 years we have lost over 300,000 jobs in
manufacturing. Canadian workers are increasingly caught in a currency vice
grip. On the one hand an artificially high Canadian dollar has led to a wave
of layoffs, plant closings and thousands of jobs lost in the auto industry. On
the other hand, your tacit support of undervalued foreign currencies has led
to more Canadian production being replaced by imports.
    The combination of the high Canadian dollar and the unfettered access to
our markets by foreign auto producers, who have the unfair, added advantage of
closed markets and under valued currencies, paints a bleak future for Canadian
workers.
    I urge you on behalf of Canada's manufacturing workforce to make this a
priority at the upcoming G7 Finance Ministers meeting."

For further information: CAW Communications Director Jim Paré, cell
[phone] or CAW communications representative John McClyment, (416)
315-3202.