THE BLOG
12/24/2013 10:33 EST | Updated 02/23/2014 05:59 EST

Don't Make a Deal that Will Hurt Ontario Auto Manufacturers

A number of Ontario-based vehicle manufacturers have expressed concern with Canada's potential trade deal with South Korea. They believe that the deal may lead to an uneven playing field; one where Korean manufacturers will be able to gain better access to the Canadian market while enjoying protection from competition at home.

Ontario is a North American leader in the automotive sector. Our government is proud of that position and of the investments we've made to keep the sector strong.

Currently, the federal government is negotiating a free trade agreement with South Korea, with a deal anticipated soon. Ontario supports the negotiations, but we maintain that trade agreements should be grounded in solid economic objectives. Most importantly, they must be fair and they need to benefit the hardworking people of Ontario.

A number of Ontario-based vehicle manufacturers have expressed concern with Canada's potential trade deal with South Korea. They believe that the deal may lead to an uneven playing field; one where Korean manufacturers will be able to gain better access to the Canadian market while enjoying protection from competition at home.

The South Korean market has a number of non-tariff barriers that make it difficult for North American automakers to sell cars there and without adequate provisions in the agreement; Ontario is concerned this situation will not change.

The auto sector is an important part of Ontario's economy, contributing billions to our GDP and employing tens of thousands of people. We continue to see strong growth in production, shipments and exports, and we need to ensure this growth remains strong. That's why we're calling on the federal government to negotiate a deal on autos with South Korea that would keep the sector competitive and continue to create jobs and opportunities in communities across Ontario.

The United States recognized the barriers facing their auto exports when negotiating their deal with South Korea in 2011, and successfully secured a side agreement to ensure American vehicles would have stronger and fairer access to the South Korean market. Given the integrated nature of the North American auto industry, Canada should settle for nothing less.

The Canadian agreement should have a phase-out period for auto tariffs that, at a minimum, is consistent with other trade agreements that we have negotiated, or which are currently in negotiation. This will allow Canadian automakers time to adjust to any increase in South Korean vehicle imports while also giving them time to prepare to enter the South Korean market. If we were to see a sudden influx of South Korean-made cars, Canada should be able to seek remedies, such as re-applying tariffs.

Access for Ontario auto manufacturers to the South Korean market should be guaranteed through the inclusion of a "snap back" provision. This provision would allow Canada to fully reinstate its auto tariffs if South Korea failed to remove non-tariff barriers such as taxes and standards, or created new barriers that would prevent Canadian cars from competing in the South Korean market.

Finally, a Canadian deal should ensure these measures are in place for at least 10 years after we eliminate our tariffs on South Korean-made cars.

We know that the federal government understands the importance of the auto sector to Ontario's - and Canada's - economy. We are hopeful that they will fight for these much-needed provisions which will go a long way to ensuring this deal is positive for our economy, our auto sector and our communities.

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