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Ontario worried about impact of South Korean free trade deal on auto sector

TORONTO - Ontario is worried about "the potential for serious negative impacts" from Canada's new free trade deal with South Korea on the province's automakers, Economic Development and Trade Minister Eric Hoskins said Tuesday.

Two years isn't enough time for domestic automakers to adjust to the removal of Canada's 6.1 per cent tariff on imports of Korean cars, Hoskins said in reaction to the deal announced in Seoul by Prime Minister Stephen Harper.

"Our government remains very concerned regarding the potential for serious negative impacts this agreement could have on Ontario's auto sector," he said.

"The province and the auto sector have repeatedly expressed that without sufficient safeguards, this agreements creates an unequal playing field between South Korean and Canadian car manufacturers."

Ontario told the federal government during the free trade negotiations that it needed the longest-possible phase-out period for the tariff, up to seven years if possible. The U.S. negotiated a five-year tariff phase-out period in its trade deal with South Korea.

Hoskins complained that Canada's deal also doesn't include a provision that would have allowed Ottawa to re-impose tariffs if South Korea imposes non-tariff barriers to restrict sales of Canadian cars in their market.

"I am also disappointed that the federal government, despite our repeated requests, was unable to secure the same snap-back provisions that the U.S. negotiated through its deal with South Korea," said Hoskins.

He called for a task force consisting of the federal and Ontario governments and Canadian automakers that would report monthly on the level of Kia and Hyundai vehicles imported from Korea.

"To protect the hundreds of thousands of families that directly and indirectly depend on auto sector jobs for their livelihoods, the province is calling for the establishment of a task force to monitor the implementation of this agreement," said Hoskins.

Hoskins did acknowledge that the new trade pact would benefit other sectors of Ontario's economy, saying it contains "positive measures that will open new markets to a variety of industries, particularly the agriculture and food processing sectors."

Ontario's Progressive Conservatives welcomed the free trade deal with South Korea negotiated by their federal cousins.

"Anything that assists in growing jobs and the flow of goods is a good thing," said PC critic Lisa Thompson. "I have every confidence in our federal government that we are going to benefit from this."

While the New Democrats said the Korean free trade deal would open up new markets for Ontario ice wines and pork, they warned it was "a blow" to the province's auto sector.

"It is starting to seem like Ottawa and Ontario are prepared to kill off good auto jobs in this province," said NDP economic development critic Catherine Fife. "Our auto sector has been sold out by Ottawa for a trade deal with South Korea."

Meanwhile, Ford Canada said South Korea will remain "one of the most closed automotive markets in the world," and noted free trade deals with the U.S. and European Union "failed to reverse this one-sided automotive trade flow."

"No Canadian manufacturer can compete with a market controlled by non-tariff barriers and currency manipulation," said Ford president and CEO Dianne Craig.

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