Canada Battles To Preserve Auto Import Exemption

Canada lodged a legal appeal Mar. 2 against a World Trade Organization (WTO) ruling that found that its 1965 auto pact with the United States discriminates against foreign car importers. In 1998 the European Union and Japan brought separate cases against Canada's use of the auto pact, which charges a duty of 6.1% on any non-North American imported cars. Ottawa's use of the pact was ruled illegal Feb. 11 by a WTO panel, which found that while the U.S. secured a waiver for the pact from the WTO's trade rules, Canada did not request an exemption from the requirement to treat all foreign trade partners equally. WTO arbitrators now have between 60 and 90 days to provide a final ruling. European and Japanese car manufacturers were angry that the Canadian government allowed Mercedes-Benz cars to be imported duty-free as part of the DaimlerChrysler group while maintaining the 6.1% tax on their own imports. The Ford Motor Co. and General Motors Corp. also were allowed to import cars into Canada duty free under the pact.