Canada Follows the U.S. Terms for GM/Chrysler; Harper Still Worrying About the “Eased” ‘Buy-American’ Clause in Stimulus Package

~~By InsightAnalytical-GRL

About a month ago we posted on the subject of how GM and Chrysler were begging from bailout money from the Canadian government. (See: The SCANNER–International/Political Edition, 2/24/09 (Which Deficit is Obama “Halving”?; Canada Rubs U.S. Nose into Its Stable Banking System; GM/Chrysler Beg for Bailout Help in Canada, Too; Half of Foreign Criminals in Canada Are Fleeing to the U.S. [???]).

Here’s the relevant excerpt:

GM, Chrysler ask for billions in Canadian aid

General Motors has outlined a restructuring plan that would cut its Canadian workforce to 7,000 and seek as much as $7 billion from the federal and Ontario governments, while Chrysler is requesting around $2.8 billion in aid.

GM didn’t specify how much it will ask for, but Reuters quoted federal Industry Minister Tony Clement as saying the company is asking for between $6 and $7 billion.

The Canadian government doesn’t seem to want to bailout CAW pensions…time will tell.

MORE

Here’s an update on what’s going on now…right in tandem with what the Obama Administration is doing:

GM, Chrysler scolded but given more time to restructure

Canada, Ontario provide $4 billion in loans to troubled manufacturers

Political leaders on both sides of the Canada-U.S. border are giving General Motors and Chrysler extensions on deadlines to come up with viable restructuring plans, saying the auto manufacturers fell short in their first attempts.

(SNIP)

Disappointment in Canada

Canadian politicians also expressed regret that GM and Chrysler could not come up with viable plans.

Federal Industry Minister Tony Clement, along with Finance Minister Jim Flaherty and Ontario Economic Development Minister Michael Bryant, said GM has 60 days to come up with a plan for its Canadian division, while Chrysler has 30 days to reach a deal with the Canadian Auto Workers union and with Fiat.

At the same time, Clement said the first of the $4 billion in interim loans to the two companies is going out. Chrysler will get $250 million on Monday of the $1 billion allocated, while the first of $3 billion in funds for GM will begin to flow in early April.

“We are making this strategic investment to support an orderly restructuring of a critical industry with [the] goal of ensuring that Canada maintains its 20 per cent production share in the future,” Clement said.

(SNIP)

Canadian Auto Workers president Ken Lewenza said the union won’t reopen its collective agreement with GM Canada despite pressure from politicians that more cost restructuring is needed.

“We did it once 10 months ago and we did it again less than a month ago,” he said. “Opening up bargaining won’t resolve this problem.”

Lewenza said the union is still trying to work out a new collective agreement with Chrysler in advance of a March 31 deadline.

The email newsletter I receive from Radio Canada International sums it all up this way:

OTTAWA: GOVERNMENT OFFERS INTERIM HELP TO AUTOMAKERS

Two struggling Canadian automakers, Chrysler and General Motors, were offered help on Monday by the federal government and the government of Ontario. The two companies will receive bridge loans totalling CDN$4 billion to help them to survive. Chrysler would receive CDN$1 billion and General Motors would get $CDN$3 billion. Further government loans will depend on whether the two companies can present acceptable restructuring plans. Tony Clement, Canada’s industry minister, has rejected plans that were submitted earlier, saying that they fail to ensure the companies’ long-term survival. General Motors has until the end of May to present its new plan. Chrysler has until the end of April. Chrysler’s plan must include the company’s merger with the Italian carmaker, Fiat, that was announced on Monday. The plans will depend in large measure on negotiations with the company’s unionized workers. The Canadian Autoworkers Union welcomed the Chrysler/Fiat merger as long as it preserves the Canadian auto industry. CAW’s negotiations with Chrysler will continue, but the CAW refused to renegotiate a deal with General Motors that was arranged within the past month. The CAW also welcomed the government’s insistence that the two American-based companies commit to maintaining 20 per cent of their North American production in Canada. The government offer also requires that company executives agree to limits on their compensation.

Now, here’s another rather ironic bit from the same newsletter, considering how tightly bound together Canada and U.S. are.  (See: What’s Going On North of the Border: The Canadian Economy and Stimulus Plan & THE PROPOSED NORTH AMERICAN COMMUNITY/NORTH AMERICAN UNION: 2010 Is Just Around the Corner)

WASHINGTON: PRIME MINISTER EXPRESSES CONCERN OVER GLOBAL PROTECTIONISM

Prime Minister Stephen Harper says the danger of protectionism is one of his major concerns in the global economic crisis. He’s worried that if protectionism becomes a global option, the world could face a depression similar to the one in the 1930s when countries introduced trade barriers to save homegrown industries. The measures only accelerated and deepened the global economic downturn. Mr. Harper is concerned that the United States stimulus plan includes Buy-American clauses for recipients of government bailout money. Such a plan could hurt Canadian exports to the United States. Mr. Harper made his comments as he prepares to attend a Group of 20 summit in London this week.

In early February, the Senate “eased” the Buy-American” clause as Obama proclaimed he didn’t want a “trade war”…The EU, Canada, and Japan had protested; only the UK hadn’t complained at that point.

US Senate eases “Buy-American Provision in Stimulus Package”

(SNIP)

The measure had sparked fears of retaliatory measures by US trading partners and a possible spiral of protectionism in an already reeling global economy.

The requirement to favour US-made supplies to be used in infrastructure projects, included in a nearly 900-billion-dollar package being considered by the Senate, was softened to allow for exceptions as required by US trade agreements, broadcaster MSNBC reported.

Apparently, Harper isn’t completely satisfied with the changes to the clause. Maybe he doesn’t trust Obama or the U.S. Senate…probably a wise stance to take.