How Canada and the UK Could Work Together Post-Brexit

Until the official Brexit date of March 29, 2019 the UK remains in the European Union — which means that Britain remains a party to the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada.

And the CETA accord is a very fine agreement (as it should be, because it took 7-years to negotiate) but it may take another year or two to become fully implemented. At the moment CETA is only partially implemented, but eventually 98% of tariffs between Canada and the EU will be eliminated.

Once Brexit happens on March 29, 2019, the UK will cease to be a CETA signatory and something else (a ‘drop-in’ agreement) will need to replace it.

That is the topic of this blog post.

Enter the United States, Canada, and NAFTA.


Where’s Canada on the International Trade Map?

Canada is a surprisingly strong exporting country. With a population of only 36 million and a territory that measures 3.855 million square miles, it means the country is practically empty.

Across this huge landscape are fields of crops larger than the entire UK, but Canada’s few cities are large. In fact, the Greater Toronto Area (the GTA) is larger and has a greater population than the New York Metropolitan Area.

And it’s an exporting superstar; Making it the 11th highest exporting nation in the world.

“Canada is currently the fourth largest exporter of cars in the world and the ninth largest auto producer in the world, making 2.1 million cars a year. Trade with the U.S. is by far the most powerful driver for the automotive sector.”Export Development Canada


What if There’s No New NAFTA Agreement?

If the NAFTA agreement falters due to insufficient efforts between U.S. and Canadian negotiators Canada will end up producing cars for itself — which means it won’t be exporting 1.8 million cars to the United States annually once NAFTA is terminated (or) once President Trump slaps a 25% tariff on Canadian cars exported to the United States.

Which means a lot of Canadian autoworkers are going to become unemployed the day after that announcement.

Which means that Canada (insert drum roll here) needs a ‘Plan B’.


President Trump Isn’t ‘Being Evil to Canada’ He’s Protecting American Interests Because That’s His Job!

You can’t blame him for that. For goodness sake he’s the President of the United States, not of Canada.

But Canada can’t sit idly by and wait for the world to end. The country must pick itself up and get on with business.

And the best way to do that is to respectfully approach the UK and inform them that it’s likely NAFTA will be terminated or changed in ways that result in Canada having an excess auto manufacturing capacity of up to 1.8 million units per year.

Such manufacturing capacity could be very useful to the UK government and to UK industry.


How Canada and the UK can Work Together for Mutual Benefit

The cost of living in the UK is much higher than it is in Canada, therefore wages in the UK are higher than in Canada.

And it’s the reason why only premium car lines are built in the UK where the high labour cost for exceptional hand-built cars are reflected in the final price and nobody minds paying extra. See; Aston Martin, Jaguar, Land Rover, etc.

Even Rolls Royce and Bentley were forced to move to continental Europe because they couldn’t afford the high labour costs of UK workers and the costly land/building/business costs of manufacturing cars in the United Kingdom.

Post-NAFTA, huge opportunities exist for Canada to export lower-priced GM, Ford, and Fiat Chrysler (FCA) cars and trucks to the UK — freeing-up huge amounts of disposable income for Britons.

Which means that saved money will be spent elsewhere in the UK — whether on home renovations, tuition, school supplies, vacations or investments — because it isn’t going anywhere (it isn’t going to magically vanish!) it will simply be spent on other items.

Any Canadian-built vehicles that are exported to the UK over what the UK market can sustain can be forwarded to Commonwealth of Nations countries by UK re-exporters.

India alone has a population of 1.32 billion and its economy is rising fast to become the third-largest consumer economy in the world. There’s no lack of demand for cars and trucks in the Commonwealth.

A Must Read: India Poised To Be Third Largest Consumer Economy (Forbes)

All of which works to help the UK economy.


Trump Wins, Trudeau Wins and May Wins!

President Trump wins because he will have prevented Canada from exporting 1.8 million vehicles to the United States annually, and American factories (meaning American workers) will need to fill that demand gap, Prime Minister Trudeau wins because he will have saved the Canadian jobs associated with the manufacturing of those 1.8 million cars and trucks, and Prime Minister May wins because she will have ushered in three new lines of lower-priced vehicles for UK consumers and those savings will translate into higher levels of disposable income for British consumers that can be spent elsewhere in the UK economy.

It’s so easy when you know how…

Written by John Brian Shannon

Why American Automakers Should Stop Building Cars in Other Countries

by John Brian Shannon | Reposted from JohnBrianShannon.com

At first glance, the idea that the ‘Big Three’ American automakers (Chrysler, Ford and GM) would stop manufacturing their cars and trucks in other countries might seem like a ground-breaking idea.

But it’s not as shocking as some new ideas that have come to light, such as putting engines in sailing ships enabling them to easily cross entire oceans, or passenger travel by aircraft instead of train, or that man should walk on the Moon by 1970.

Still, the idea that America’s Big Three automakers could stop building their cars in other countries might be seen as a novel idea.


Why Would American Automakers Want to Stop Building Cars in Other Countries?

Let’s take the case of the North American car market:

Chrysler, Ford, and GM have auto assembly plants in Canada, the United States and Mexico where they produce millions of cars and trucks per year. The majority of those vehicles are then sold into the U.S. because it’s a far bigger market than the Canadian and Mexican vehicle market combined.

Which means that many American auto industry jobs are lost to Canada and Mexico.

President Trump wants to lower the unemployment rate in his country and help make his domestic auto industry stronger and more responsive to the American market via high tariffs or restrictions on the number of cars Canada and Mexico could export to the United States.

The trade-off of that move would be worse relations with Canada and Mexico which have long benefited from Big Three auto factories located in their respective countries and Canada and Mexico would be loathe to lose those economic benefits.

And although I see U.S. President Donald Trump’s point on this — I’d rather talk about solutions that could work for all three countries.


What if There’s a Way for Each of the NAFTA Countries to Win?

Let’s pretend for a minute that we’re looking at the North American auto industry from the vantage point of 5-years in the future.

Five years on, let’s say that every Chrysler, Ford and GM car and truck sold in the United States is manufactured in the United States, unemployment is at an all-time low, and the American economy is rocketing along like it was in the 1960’s. Great!

What about Canada?

As the Big Three factories presently located in Canada would still remain, new licensee companies approved by Chrysler, Ford and GM could build all the Chrysler, Ford and GM vehicles required for the Canadian market and build 100% of them in Canada, while still keeping to U.S. auto company specifications and quality. Such licensee companies would be required to meet the same manufacturing standards and warranty terms.

Canadian companies like Magna International already produce a significant number of the parts required for all of the Big Three automakers; Extending their license to include vehicle assembly on behalf of one of the U.S. auto companies would be an easy transition.

Or, entirely new companies could be formed; One company (‘Chryton Co.’) could build all Chrysler cars and trucks for the Canadian market by purchasing the existing Chrysler manufacturing plants in Canada and paying the required per-unit license fees to Fiat Chrysler USA, while Canadian-owned ‘FordX’ could build every Ford car and truck for its Canadian dealers after paying its per-unit license fee to Ford USA. Likewise, GM vehicles would be built by a Canadian-owned and GM-approved company (‘AC Delco’) that would pay a license fee to GM USA for each vehicle it builds for the Canadian market.

In that way, all Chrysler, Ford and GM vehicles destined for the Canadian market would be manufactured in Canada by Canadian workers — and other than paying license fees to the respective USA auto manufacturer — the Canadian automotive manufacturing industry would be 100% Canadian. That’s 100% Canadian-owned and 100% Canadian-staffed. (They would still need to match U.S. manufacturing and warranty standards however)

Exactly the same could be done in Mexico for Mexican companies and consumers. (They would still need to match U.S. manufacturing and warranty standards)

And all Chrysler, Ford and GM cars and trucks destined for the U.S. market would be manufactured in the United States by American workers and the U.S. auto industry would find itself in the middle of an economic boom!


In an Era of 3D Printing, License Fees Will be Everything

Welcome to the future!

If you live in Canada and you want a Ford car you’d simply order the car online and the Ford-approved Canadian company 3D prints and otherwise assembles your Ford car and the car arrives at your local dealership a few days later.

You might even choose to watch it being 3D printed, painted, and assembled on your tablet or laptop computer.

Yes, other than upholstery and tires, etc. all 3D printed cars and trucks will be made from aircraft grade aluminum alloy as aluminum works better than steel for 3D printing.


Not Only The Big Three, But European and Japanese Automakers Too!

Imagine if EVERY new car and truck sold in Canada is built in Canada by Canadian companies that pay a license fee to the respective American, European, or Japanese automaker. That equals full employment in the Canadian auto sector, without the (understandable) griping by President Trump about American job losses.

Imagine if EVERY new car and truck sold in the U.S.A. would be built in the United States by American workers, and even European and Japanese vehicles sold in the U.S. would be built by U.S. companies that paid for the rights to 3D print and assemble those cars. That equals full employment in the American auto sector.

Imagine if EVERY new car and truck sold in Mexico would be built by Mexican companies that pay a license fee to the respective American, European, or Japanese automakers. That equals full employment in the Mexican auto sector, without any griping by President Trump about American job losses.

NOTE: I understand that hand-built cars like Rolls Royce, Ferrari, Aston Martin, etc. would decline to take part in such an arrangement, but those cars account for less than 1% of the North American market share. They would simply continue to export their cars to their North American customers as usual.

Again, manufacturing and warranty standards would need to be carefully vetted by the licensor before granting manufacturing rights to licensees. Even so, every country in this equation would ‘Win-Win-Win’.

And consumers could purchase a locally built vehicle that wasn’t shipped across the continent or thousands of miles of ocean.

Shop Local, and still get the ‘foreign’ car of your dreams!


Auto Manufacturers Would Make the Same Per Vehicle Profit in Foreign Countries as Now — But Via License Fees (only)

The era of ‘things-based’ globalization is morphing into ‘ideas-based’ globalization where things are designed in country ‘A’ by a company that retains 100% rights over who is allowed to 3D print and assemble its products in country ‘B’ — which could be literally anywhere on the planet.

Whether it’s T-shirt graphics electronically transmitted and licensed to a company thousands of miles away (as is done now) or whether licensed companies 3D print and assemble your foreign car in the city where you live — globalization might finally become all that it can and should be — creating hundreds of thousands of jobs in each country for workers in 3D printing/manufacturing factories that could literally build anything, anytime, for anyone, as long as they have purchased the proper license.

Such ‘On Demand’ manufacturing might become the biggest job creator ever and lower the tensions brought on by the endless competition between the world’s free trading nations.


Ready for the future? Order your locally-manufactured foreign car here.

(OK, just kidding… But it might be that easy in only a few years!)

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