Canada's Auto Trade Deficit Goes from Bad to Worse

    TORONTO, June 23 /CNW/ - Official government data confirm that Canada's
automotive trade balance is deteriorating dramatically in 2008 - coincident
with continuing lay-offs and plant closure announcements in Canada's
hard-pressed auto industry.
    During the first four months of the year (January through April),
Canada's auto trade deficit almost doubled - to $3.7 billion, compared to
$1.9 billion during the same period of 2007.
    This reflects a sharp decline in Canada's automotive exports to the U.S.,
combined with a continuing increase in automotive imports from outside of the
NAFTA region (mostly from Japan, Korea, and Europe).
    The findings are contained in a CAW analysis of recent trade data from
Statistics Canada and Industry Canada. Automotive trade considered includes
finished vehicles, automotive parts, and miscellaneous automotive products
(such as truck and bus bodies).
    Canada's exports of finished vehicles have declined so far this year by
over 25 per cent, coincident with the downsizing of production at several
Canadian vehicle assembly plants. (Close to 90 per cent of Canada's vehicle
output is exported, almost all of that to the U.S.) As a result, Canada's
traditional trade surplus in finished vehicles has been cut more than in half
this year, to just $2.5 billion over the first four months.
    Canada's total automotive exports to the NAFTA region (including parts)
are also down by 25 per cent. Canada's imports of automotive parts from within
NAFTA have also declined (those parts are imported in order to be installed
into vehicles in Canadian assembly plants, hence reduced Canadian assembly
output implies reduced imports of parts). Canada's overall automotive trade
surplus within NAFTA has fallen this year by 57 per cent.
    Meanwhile, Canada's automotive trade deficit with non-NAFTA countries
grew another six per cent during the first four months of 2008 (compared to
like-period 2007), reaching almost $5 billion. That non-NAFTA deficit reached
$13 billion for 2007 - a record which will almost certainly be broken in 2008.
Imports from outside of NAFTA grew by 2.3 per cent from like-period 2007.
Canada's already-insignificant automotive exports outside of NAFTA fell 27 per
cent (due in part to the overvalued Canadian dollar), to just $0.4 billion.
    Canada traditionally experiences a surplus in automotive trade within
NAFTA, and a surplus in trade in finished vehicles. These surpluses
traditionally offset automotive trade deficits incurred with countries outside
of the NAFTA region, and trade in automotive parts. Beginning in 2006,
however, Canada's overall automotive trade balance slipped into deficit, and
that deficit reached a record $7 billion in 2007. Based on current trends, the
CAW projects that Canada's automotive trade deficit will exceed $10 billion
for 2008 as a whole - by far the worst automotive trade performance on record.
    "Canada can no longer rely on the U.S. market to bail out our chronic and
growing automotive trade deficit outside of NAFTA," said Jim Stanford, CAW
economist, who prepared the report. "The downturn in the U.S. market combined
with the erosion of the market share of North American manufacturers both in
the U.S. and here in Canada, mean that Canada's automotive trade balance is
going from bad to worse."
    "The widening automotive trade deficit, and the loss of tens of thousands
of well-paying automotive jobs are two sides of the same coin," said Buzz
Hargrove, CAW president. The Canadian auto industry (considering both assembly
and parts) has lost a net total of almost 30,000 jobs since peaking in 2001
(and this includes those companies which have added new staff during this
    Hargrove and the CAW have called for the federal government to
reinstitute the principles of the former Canada-U.S. Auto Pact, which required
companies to produce one vehicle in Canada for each vehicle they sold here.
"Without an active effort by our government to control this huge and growing
trade imbalance," Hargrove concluded, "there is little hope for saving
Canadian auto jobs."
    "The fact that Canada's national GDP is now declining, and our overall
trade balance is rapidly crumbling, proves that the federal government cannot
continue to ignore this sector, which is so vital to our overall economic
    Full details of the analysis of automotive trade data over the first four
months of 2008 are contained in the following table.

    For a full copy of Jim Stanford's 2008 Canadian auto industry trade
performance data table, email

For further information:

For further information: Angelo DiCaro, CAW communications, (cell) (416)
606-6311 or John McClyment, CAW communications, (cell) (416) 315-3202 or Jim
Stanford, CAW economist, (cell) (416) 230-2046

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Canadian Auto Workers Union (CAW)

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