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Speaking Notes for Yoshio Nakatani - JAMA Canada Reception

Westin Prince Hotel, Monday, October 23, 2000

Good evening, ladies and gentlemen. As Chairman of JAMA Canada, I would like to welcome you and to thank you for taking time from your busy schedules to be with us here today.

Our main purpose in holding this reception is to introduce the President & Vice Chairman of JAMA in Tokyo, who is here in Canada on his first official visit. But before we ask Mr Suzuki to say a few words, I wanted to make some observations about the state of the industry in Canada.

This is certainly an auspicious time for the Canadian auto industry. At the same time, we are participants in a rapidly changing global industry that, daunting as it may seem, creates a host of new challenges and opportunities for automakers, suppliers, governments, workers and consumers.

Take for example: the impact of information technology (IT), wireless communications and the internet; traffic congestion in urban centres and the promise of ITS (intelligent transportation systems); globalization and international harmonization of standards and regulations; environmental issues including global warming, rising oil prices, and alternative fuel technologies, to name a few of the complex issues that we face.

As I think everyone here is aware, the auto sector is a key driver of the Canadian economy in terms of jobs, investment, trade and technology. Production, exports, sales, and employment are as high as they have ever been.

Altogether, Canada accounts for about 18% of North American output, while we consume less than 10% of annual North American sales. No wonder Canada’s auto trade surplus stands at more than $8 billion in the first half of 2000.

Companies continue to invest and plants are expanding. Honda in Alliston officially began producing the Acura MDX earlier this month, and TMMC in Cambridge will be the first plant outside of Japan to build the Lexus RX300 in 2003.

At the same time, Canadian auto parts companies like The Woodbridge Group and ABC Group have established plants in Japan. In fact, Woodbridge recently opened its third plant in Japan with its partner Inoac.

And more Japanese auto parts investments are coming to Canada. In August, Ube Manufacturing Canada became the 40th Japanese affiliated parts plant to be established here. And just last week, Toyoda Gosei broke ground for its new plant in Palmerston, Ontario.

With growing auto investments in North America, all JAMA Canada members are sourcing more locally. Currently about 3 of every 5 vehicles sold are built within NAFTA. Annual production capacity in Canada is 750,000 units, more than twice our sales last year. Altogether about 50,000 Canadians are employed manufacturing, selling, servicing, exporting and importing vehicles and parts.

The strength of the sector in Canada depends to a great extent on a well-educated and dedicated workforce, positive economic factors including low inflation, low interest rates, balanced budgets and reduced government debt, as well as the strong confidence of the Canadian consumer.

Open trade and access to other markets is also critical to sustain the level of production and export of parts and vehicles. While the majority of Canadian-built vehicles are shipped to the US, almost 6,300 Odyssey minivans have been exported from Ontario to Japan over the past 12 months.

Finally, a word about tariffs and trade. A few weeks ago, the Canadian Government accepted the decision of the WTO to finally end the Auto Pact by February 19, 2001. This change will establish equal treatment and open competition for all automakers in Canada. At the same time, we agree with Simon Reisman, the Canadian trade negotiator of the Auto Pact and the FTA, that the 6.1% MFN tariff should be eliminated on all vehicle imports. While there is a good case for unilateral reduction, we would also support tariff cuts in the next round of multilateral trade negotiations.

In short, it is astonishing how much the industry has changed and grown over the last twenty years. Of particular note is how much the relationship between the auto industries in our two countries has deepened and matured. It’s hard to say what will happen over the next 20 years, but I expect the trend toward closer international cooperation and integration will continue even as global competition gets tougher. I thank you again for being with us today.


 

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