Thank you very much, Mr. Chairman.
Good afternoon. Thank you for the opportunity to speak to you in support of this important initiative to broaden and deepen our bilateral relationship.
As mentioned, I'm the executive director of the Japan Automobile Manufacturers Association of Canada, or JAMA Canada. We have eight members comprised of the Canadian subsidiaries of Japanese automakers, including Hino Trucks, Honda, Mazda, Mitsubishi, Nissan, Subaru, Suzuki, and Toyota.
Let me say at the outset that we are firmly supporting a comprehensive EPA between our two countries—just as we have supported trade liberalization over the past 28 years—for the economic benefits, jobs, and new opportunities for both Canadian and Japanese businesses.
The history of our organization is a history of liberalized trade. Let me give you a quick snapshot of the impact that trade liberalization has had on our sector in Canada and, in the process, suggest how other sectors could also benefit from the opportunities arising with freer trade.
While JAMA Canada was established in 1984 to promote greater understanding on trade and economic issues, Japanese automakers first came to Canada in the 1960s. Back then, the markets in North America and Japan were very different, and some early business initiatives were not always successful.
It took time and effort to understand the Canadian market, the Canadian way of doing business, and particularly the needs and wants of the Canadian consumer. Our members have spent many years on this and have made the necessary investment to understand the market, investing in infrastructure and building dealerships, investing in research, and building assembly plants to respond to the needs of the market. Our members understand that this is what it takes to be successful in Canada and in Japan—or in any other market, for that matter.
The first oil crisis of 1973 opened a new door as consumers in Canada saw small, fuel-efficient Japanese cars in a new and favourable light. After the second oil crisis in the late 1970s, Japanese automakers reached a critical level of sales to support a solid business case for local production in North America, providing the opportunity to be closer to their customers.
The case for Canada may not have been as easy due to its relatively small market, but the FTA in 1987 and the NAFTA in 1994 were critical in assuring access to the much larger U.S. market, which allowed the development of a deeper level of integration within North America. Today, only Japanese automakers have joined their U.S. competitors to make light-duty vehicles in Canada; moreover, the only medium-duty trucks made in Canada currently are Japanese.
Not only did investment to produce the most popular vehicles locally create thousands of jobs at assembly plants—and in fact, over the first quarter of 2012, plants in Canada built over 247,000 vehicles, almost 40% of total Canadian production—but over time those assembly plants generated even more jobs and new business opportunities in the supply base. The steady growth of production in Canada has also opened up new opportunities for Canadian suppliers to join global supply networks.
Like the Canadian auto industry overall, the Japanese auto industry in Canada punches above its weight. Every year since 1993 Canada has been a net exporter of Japanese brand vehicles, which contributes significantly to Canada's trade balance. Last year we exported over three times as many vehicles as were imported from Japan.
Without liberalized trade we would not have been able to build over 11 million vehicles in Canada since the mid-1980s. While many people are aware that Japanese automakers are building vehicles in Canada—particularly if you live in Alliston, Cambridge, or Woodstock—they may not be aware that over 50 Japanese parts-related plants have been established—and not just to supply Japanese OEMs, and not just in Canada.
Employment at our Canadian vehicle plants is close to 11,000 team members and associates, while employment among the 57 parts and related suppliers is in excess of 15,000 currently. While many of these parts plants are clustered in Ontario, there are some large Japanese parts operations in Quebec and British Columbia.
Local production in North America also meant that the need for imports would be reduced and reliance on local suppliers would be increased, particularly with the assured access provided by the FTA and NAFTA. Currently, two out of three vehicles that our members sell in Canada are built in North America. Moreover, for two members with extensive manufacturing in Canada, between 50% and 75% of their sales are Canadian-built vehicles.
Among other things, we believe that our presence in Canada has made the industry more competitive, has opened up opportunities to join global supply chains, and has introduced new, advanced technologies for safer, more fuel-efficient, and lower-emitting vehicles.
An EPA would add further impetus to opening up new business, building on more than two decades of industrial cooperation and investment in Canada that has generated technology transfer and Canadian auto parts investment in Japan from leading suppliers such as Linamar, Magna International, ABC Group, and the Woodbridge Group.
Altogether the Japanese auto industry supports over 67,000 Canadian employees in importing, exporting, manufacturing, distribution, sales, and service. The importance of the extensive dealer network among all our members throughout Canada should also be recognized as they are the first-line contact with customers. With over 1,250 dealerships across Canada, they employ over 39,000 Canadians in the sales and service of Japanese brand vehicles.
Despite recent global recession and last year’s earthquake and tsunami in Japan and floods in Thailand, which meant production and sales were curtailed by shortages and supply chain issues, which also hit us in Canada, there were no layoffs of full-time staff at any Japanese vehicle plant in Canada or the US. In fact, rather than being laid off, employees were redeployed for training and process improvements. As well, many employees went into the community and worked with local organizations, offering their capabilities and enthusiasm to community groups and agencies. Highly skilled and well educated dedicated employees are a critical part of maintaining a competitive and vibrant industry.
In summary, JAMA Canada supports liberalized trade with any country that has a level playing field and that can ensure that actual and potential foreign investors are treated equally and fairly. We support this Canada-Japan EPA as an opportunity for expanding trade, investment, jobs, and advanced technology among various sectors including automotive, particularly for those looking to diversify beyond traditional markets in NAFTA.
Both Canada and Japan are trading nations and have a long history of supporting multilateral trade liberalization as the preferred route to lower barriers to trade. With the Doha Round on the back burner, many countries have shifted focus to bilateral and regional trade deals.
In this context, neither Canada nor Japan can afford to be left behind. Japan remains the third-largest economy after the U.S. and China. As Japan is Canada’s fifth-largest trading partner, an EPA would boost prospects for Canada and Canadian companies to pursue broader strategies and strategic initiatives in Asia.
I thank you for your attention. I would be happy to take any questions.