Canada Mulls ‘Repayable Loans’ For U.S. Carmakers

Trade Minister said Canada is studying the possibility of supporting U.S. automakers operating in the country with ‘repayable loans.’

TOKYO (Kyodo) -- Canada is studying the possibility of supporting U.S. automakers operating in the country with "repayable loans" as the North American car industry struggles to overcome the global economic downturn, Canadian International Trade Minister Stockwell Day said Thursday.

But Day, who is on an official visit to Tokyo, flatly denied Canada will bail out "any auto companies" and provide subsidies. "We are looking at repayable loans," he said in an interview with Kyodo News, without elaborating.

Day made the comments amid concern that the world's leading economies are raising trade barriers in order to protect their domestic industries in the midst of the global recession.

The danger of protectionism, he said, is well understood by exporting countries such as Japan and Canada.

Canada and the United States "are highly integrated" in terms of auto manufacturing, the minister stressed, arguing that Ottawa needs to help companies south of the border.

A car manufactured by one of the Big Three U.S. automakers -- General Motors Corp., Ford Motor Co. and Chrysler LLC -- crosses the border six or seven times during the production process, he said.

"What happens in a plant in Detroit will affect what happens in a plant in Windsor," Day said, referring to the Canadian city that borders Detroit, the center of the U.S. auto industry. "So you will see something smaller but proportionate to what the Americans are going to do," he said.

The U.S. government has urged GM and Chrysler to present restructuring plans in order to receive federal aid.

Day, who met Japanese Economy, Trade and Industry Minister Toshihiro Nikai on Wednesday, acknowledged that they had discussed efforts to increase opportunities for trade between Japan and Canada.

While falling short of specifying a schedule for the start of bilateral free-trade talks, Day said Nikai had named two Japanese officials who would be in charge of possible negotiations.

Canada has already selected two officials for the talks with Japan, he said. The four will "begin the discussions to explore what areas we can agree on to include in the possible economic partnership."

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