OTTAWA (AP) — The North American auto industry will have to adapt to foreign competition by broadening its approach in order to appeal to foreign markets, Canada's trade minister said Wednesday.
David Emerson made the remarks in response to calls for an auto pact guaranteeing reciprocity in trade and production with Japan and South Korea.
Canadian Auto Workers president Buzz Hargrove told Prime Minister Stephen Harper in a private meeting on Tuesday that such a trade agreement is needed to save the North American auto industry.
''I said to the prime minister that it wouldn't surprise me if, within a decade, General Motors (Corp.) and Ford (Motor Co.) both would declare bankruptcy in North America,'' he said to reporters after the meeting.
Chrysler LLC may be able to survive as a niche auto maker, he said.
The CAW, which is Canada's largest private-sector labor union, has thousands of members at subsidiaries of the Detroit-based automakers but has been unable to make inroads at the Canadian assembly plants owned by Japan's Toyota and Honda.
Emerson, in essence, gave the government's response to the list of demands Hargrove presented Harper, generally agreeing with the union's leader's analysis of the problem but disagreeing about solutions.
The trade minister called an auto pact similar to the one signed between Canada and the U.S. in 1965 a halfway measure toward free trade, but said the world had moved beyond such agreements.
And Emerson dismissed Hargrove's demand that Canada break off trade talks with South Korea because it is an unfair trader. Hargrove said while South Korea shipped 130,000 vehicles to Canada last year, only about 500 Canadian vehicles went the other way.
''The Canadian automotive industry essentially exports outside of North America about one-third of one percent of their production, so it's not just a Korean issue,'' Emerson said.
''We talk about how we would like to be exporting into Korea and we can certainly negotiate reductions in those barriers, but the reality is the industry is not focused on non-North American markets,'' he said.
The trade minister said the industry had better start focusing on foreign markets.
''The industry has done very well in North America, but the world is changing,'' Emerson said. ''Globalization is coming at us hard and fast and everybody is going to have to reshape their strategies and approach.''
Hargrove's meeting with Harper came after GM announced it is offering buyouts to all of its 74,000 employees in the U.S. after posting $38.7-billion loss for 2007, the largest annual loss ever for an automotive company.
Emerson's comments also came amid reports that the World Trade Organization has sided with Canada, the United States and the European Union in an auto parts dispute with China.
The WTO found that China is breaking trade rules by taxing imports of auto parts at the same rate as foreign-made finished cars, according to a copy of the ruling's conclusions obtained Wednesday by The Associated Press.