The U.S. auto industry, in the midst of an offensive against Japanese auto imports, will be facing another foreign challenge this week.
The Canadian government, expressing concern over its $3.1 billion deficit in auto and parts trade with the United States, has initiated an unprecedented day of talks on the subject with Carter administration officials. The talks, scheduled here for Friday, will discuss ways to improve the trade imbalance and get what Canada considers its fair share of the North American auto market.
Focal point of discussion will be first-time consultations on provisions of a 15-year-old U.S.-Canadian auto pact that is blamed, in part, for the trade problems. The pact created an integrated North American automotive market by removing trade duties between the two countries in certain motor vehicles and original equipment automotive parts.
A Canadian official said his government may want to adjust the pact to improve Canada's auto trade imbalance, an issue that figured in its heated national elections.
"The Canadians have a political need to do this," a U.S. government official said. "Whether they want to make a show of it or they really want something to happen I don't know."
The talks between U.S. Trade Representative Rubin Askew and Herb Gray, Canada's minister of industry, trade and commerce, have been characterized as "very important" by both Canadian and U.S. officials. The auto industry in Canada, this country's largest trading partner, consists mainly of affiliates of the "Big Four" U.S. automakers.
The meeting's agenda is being kept secret and even officials of Askew's office say they are not sure precisely what the Canadians want to discuss. Because of that, it is unclear what effect the talks will have on the already battered U.S. auto industry, U.S. and Canadian officials said.
"If the Canadians asked us to renegotiate (the auto agreement) to improve their balance of trade, we'd tell them to go fly a kite," one U.S. government official said.
But a Canadian representative said in a telephone interview that they are not interested in renegotiating the whole auto agreement, but possibly adding to or subtracting from it. The official said he wouldn't reveal any specific proposals that the Canadians have prepared unitl the talks on Friday.
In addition to the government-level talks, the Canadians are planning to have discussions with American Motors Corp. and General Motors officials tomorrow. They already have discussed their situation with Ford Motor Co. executives and have continued discussions with Chrysler Corp. officials as part of their bail-out loan agreement with them, the Canadian official said.
The official said he could not reveal the exact nature of the discussions with the automakers, but said it would concern "investment patterns, the deficit in auto parts exports and making sure Canada is getting its fair share of the auto trade."
Canadian trade officials are planning to travel to Japan in late July or early August to discuss with Japanese automakers the import car problem, the official said. t
The Canadians say they have become particularly concerned because they are suffering from the trade deficit and have 30,000 autoworkers without jobs -- a figure they say is relatively comparable to the 300,000 auto layoffs here.
In addition, they say the Canadian affiliates of the Big Four have been equipped to produce mostly large cars for which demand is declining. In the past 10 years, the Canadians have had auto trade surpluses only in 1970, 1971 and 1972, according to Canadian government figures.
"We always felt we rarely get to build the very popular selling cars," a Canadian official said.
The Canadians also are concerned that their parent companies are not investing enough in facilities there or allowing them to engage in more research and development. The U.S. official said that on the average the U.S. companies give about 12 percent of investment funds to the Canadians who supply 8 percent of the automobiles driven here. That should be enough, he said.
"We're not going to ask them to put decrees down," the Canadian official said."We just want to ensure there are no government actions to discourage" research in Canada such as federal grants for U.S. firms for research and development or "pressure from congressmen and senators to keep (R&D) facilities in their areas."
In addition, the Canadians said they are interested in some concerted North American effort to combat the Japanese import threat.
"We want to decide what is going to be our North American strategy on offshore imports," the Canadian official said. "There are calls in Canada for import control which we haven't done anything about."