Canada's minister of industry, Herbert Gray, will begin talks Thursday with Chrysler Canada Ltd. on possible financial aid for the automaker.
Gray, who took over the post Monday, said he also will hold discussions next week with officials of General Motors of Canada Ltd. and Ford Motor Co. of Canada Ltd. as a first step toward possible revision of the Canada-U.S. auto pact. The agreement, which has been in force since 1965, provides for duty-free shipments of auto parts and finished vehicles between the two countries.
The pact has caused ruffled tempers on both sides of the border. In the early years of its existence Canada enjoyed a trade surplus on auto parts and vehicles which upset some U.S. officials. Lately, however, the United States has had a surplus and Canada a deficit in auto trade. Last year the shortfall was a record $3.1 billion.
Gray is an outspoken economic nationalist. He is expected to extract promises of increased auto-parts research and developments from Chrysler Canada in return for government grants and loan guarantees estimated to range from $300 million to $500 million.
Chrysler wants federal help to finance a $1.2 billion investment for retooling engine and van plants in Windsor.
Gray has been elected to Canada's parliament eight times by the voters of his Windsor West riding, the equivalent of a U.S. congressional district. Gray's chances of success are better with Chrysler Canada than with the other major automakers because Chrylser needs federal help. But his track record indicates that once he has told the Big Three car makers what he wants, the next stop for Canadian trade officials will be Washington. w
The thrust of Gray's arguments in the past has been that too little research and development is done in Canada by branch plants of foreign owners. He feels too much of Canada's secondary industry is foreign controlled and that, instead of creating technology here to produce jobs for Canadians, Canada is used as an assembly plant site without the benefits that would accure from on-site research.
His reappointment to the Cabinet marks a victory for followers of economic nationalism in Canada.
Gray said there is lots of room for revising the existing auto trade agreement without complete renegotiation.
Gray first entered the federal Cabinet in 1970, the first Jew to serve as a Candian Cabinet minister at the federal level. He was dumped from the Cabinet in 1974 and began a one-man economic nationalism campaign which paid off for him in a return to the federal government this week.
While serving as revenue minister, Gray undertook a study of foreign investment in Canada. Its recomendations led to the establishment of the Foreign Investment Review Agency (FIRA), which screens takeovers of Canadian corporation by nonresidents and new investments or business creation in Canada by foreign investors.
The FIRA has been criticized as a toothless beast because it approves about 90 percent of all applications. But Gray says he will move quickly to toughen the FIRA, make its workings more visible to the public and implement periodic reviews to insure that nonresidents keep their promises.