Canadian Legislative News

A recent report highlights the vital importance of the North American Free Trade Agreement (NAFTA) to the continental auto sector in Canada, the U.S., and Mexico. Scotiabank’s latest Global Auto Report provides highly relevant insight into the competitiveness and success of North American Auto production and NAFTA’s vital role in that success. This comes at a time when negotiations between the three countries continue to ramp up, with recent negotiations taking place in Ottawa. Though most NAFTA provisions impacting the auto sector are of direct concern to manufacturers, NAFA members should take note as downstream consumers.

 

Auto sector exports from the NAFTA zone have gained global market share in recent years, and in the United States, the share of manufacturing represented by the industry is at a record level. North of the border, auto manufacturing output is growing four times as fast as the sector as a whole, and in both the U.S. and Canada, employment in the auto industry has grown quicker than overall job creation, which itself has been impressive. 

 

Increased market share on a global level for North American autos has come largely as a result of NAFTA-driven increases in productivity across the continent, the report says. North America represents 22 percent of worldwide auto industry exports, up three percentage points from just a decade ago. Key to this continent-wide increase in productivity and export prowess has been the integration between the three countries, made possible by the advent of NAFTA. Furthermore, actions taken by the Regulatory Cooperation Council over the past few years have allowed regulations to be harmonized between the U.S. and Canada. 

 

NAFTA is vital to the continued performance of the auto industry in Canada, the U.S., and Mexico. Any efforts currently ongoing to update the decades-old trade pact should hold this reality into account. Hundreds of thousands of high-paying jobs in all three countries rely on the continued free flow of goods and services made possible by NAFTA, not to mention the unquantified yet still massive consumer benefits these productivity gains represent. Issues still need to be ironed out between partner countries, such as the rules of origin clause that the U.S. wants to change to require higher American-made content for duty-free movement of auto vehicles and parts, which Canada and Mexico would like to see stay the same. If the negotiating teams can come to a common ground on issues like this one and others, NAFTA can continue being a win-win-win agreement for the North American auto sector, and fleet managers will continue to see benefits as consumers in one of the world’s most competitive automotive industries.