Ontario may block importation of Korean cars

[Ma Deuce]

Linky

McGuinty threatens to impose Ontario 'barriers' to South Korean cars

TORONTO - Ontario Premier Dalton McGuinty threatened Tuesday to take the unprecedented step of imposing provincial tariffs or other "barriers" to block imports of South Korean automobiles if Canada can't get its own cars to the Asian country's market.

South Korea, which makes the Hyundai and Kia brands, exported 114,000 vehicles to Canada in 2006, but the Koreans allowed fewer than 100 Canadian-made cars into their market during that same year.

McGuinty said he was worried the current free-trade talks between Ottawa and Seoul could produce an agreement that doesn't guarantee access for Canadian-made cars in South Korea.

"We're saying what's good for the goose is good for the gander," McGuinty told listeners to a Toronto open-line radio show.

"If you want to send your cars over here, we need the right to send our cars over there, otherwise we shouldn't sign on to that free-trade agreement."

McGuinty attacked the proposed agreement with South Korea after a caller asked what the government planned to do about cheap automobiles from China entering Canada and possibly harming Ontario's struggling auto sector.

"The best thing we could do is ensure that if we enter into a free-trade agreement with South Korea that it's a fair free-trade agreement, that when it comes to the auto sector in particular, that we have just as much access to their market as they have to ours," he said.

"In the event that the federal government unwisely enters into a free-trade agreement that does not protect the interests of the auto sector here in Ontario and in Canada, then we will have an obligation, I feel, to take a look at what we can do here from a provincial perspective to protect our industry."

The federal government criticized McGuinty on Tuesday for advocating tariffs that could result in possible penalties under international trade agreements.

"The premier's comments are not going to help the economy or the hard-working people in the manufacturing sector - including those who work in the automobile industry," said Francois Jubinville, a spokesman for International Trade Minister David Emerson.

"Any measure by Ontario that specifically discriminates against South Korea would be counter-productive."

Canadian Auto Workers president Buzz Hargrove praised McGuinty for publicly complaining about how Ontario-made cars and trucks are being shut out of key Asian markets.

"You have to establish some rules now while we've still got a shell of an industry left, or you're going to lose it all," Hargrove warned.

"It just angers me that the federal government wouldn't pick up the mantle here and carry it, be the champion of the Canadian industry."

McGuinty said Ontario had "made a strong argument to the federal government" about the need to secure access to the South Korean market for Canadian products, especially cars, but was also looking at its own options for blocking Korean imports just in case.

"I've asked my folks to take a look at what we might do by way of barriers so that we can in fact get some fairness in that regard," he said.

"You've got to protect your people and you've got to protect your jobs. We'll explore all options in order to ensure that we protect the auto sector, in particular in Ontario."

McGuinty said he was also looking at cheap cars being produced in China and warned he could also take action to block their entry into Ontario if Canadian-made cars cannot be sold in the huge Chinese market.

"We're going to do what we need to do to protect Ontario jobs," he said. "What we're saying is, let's be fair about it. Failing that, I've got a responsibility to find new and creative ways to protect our workers and our jobs."

McGuinty said Ontario has already told Tata Motors in India that the province would like the recently unveiled $2,500 Nano car to be manufactured here if the company hopes to sell them in Canada.

"We've asked them if they have any intention at any point in time of producing that car for the North American market," he said.

"If they do, great. Come and produce it in Ontario."

Wait, can individual provinces really do that? This looks more like posturing than anything else, so McGuinty can appear as if he's doing something to protect Ontario's industry. Regardless, this is a poorly conceived idea and won't anything, as there are a billion ways to bypass an import ban made by a specific province, and most of the cars made here are intended for doestic consumption and are probably not suitable for the SOuth Korean market. Even if it is enacted, it will probably get smacked down by the WTO anyway, much like Bill Clinton's proposal to impose a 100% tariff on certain Japanese luxury cars back in the '90s.

[j1j2j3]

It's actually a big myth that SK has a hugh trade block or big tarriffs to "disallow" foriegn made cars into the country.

It's just a flat 7% tax for imports. Sales of BMW's, Audi's, MB's, Lexus's(Lexii?) are booming and are blown way out of proportion to other markets.

North American cars usually just don't sell.

For example a ...

fully loaded Hyundai Azera(big sedan) here : about $39,000
fully loaded Ford Taurus(big sedan) here : about $37,000
fully loaded MB E-Class E350(slightly smaller) here : about $55,000

sales figures for all three

Azera : 1100/mo
Taurus : 8/mo
MB E : 118/mo

You would expect the mainstream Azera to outsell the MB E class by a figure of 10:1 easily, but you wouldn't expect the Taurus to sell so badly.

Nevertheless it's not about tarriffs or prices, it's just the product isn't suited to the market.

You have to fix and tailor the product before complaining about trade factors; just look and Mercedes-Benz.

It seems that North American motor companies try to whine and trade barrier their way into sales rather then developing a competitive product.