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. Last Updated: 07/27/2016

WTO Declares Canadian Car Law Unfair

TORONTO -- The World Trade Organization said in an interim ruling that a Canadian law that allows Ford, General Motors and DaimlerChrysler to bring vehicles into Canada duty-free while charging others is unfair. The Geneva-based trade body says the 1965 Canada-U.S. auto pact is unfair because it violates rules that call for freer global trade, according to senior government officials quoted Wednesday by Canadian Press.

"They ruled that the auto pact is inconsistent with fair trade practices," said an official who asked not to be named.

The Japanese government asked to get the same trade privileges for Honda Motor Co. Ltd. and Toyota Motor Corp.

General Motors Corp., Ford Motor Co. and the former Chrysler Corp. were granted the duty-free concessions when they signed the historic trade pact designed to spur investment in Canada. The deal was a big boost to the Canadian economy and cut costs for the three companies. Last year, the companies saved roughly $35 million on the 15,000 vehicles they imported into Canada.

Japanese companies would have saved more than $120 million last year alone with the same privileges.

The 400-page confidential WTO report, which had been widely expected to denounce the pact, is being reviewed by government and industry players. A final WTO ruling is expected in January.

Japan, backed by the European Union, asked the trade watchdog to strike down the auto pact. "Our preference is ... for the Canadian government to eliminate tariffs,'' said Stephen Beatty, a spokesman at Toyota Canada Inc.

He said doing so would have little impact on the overall market because most of the best-selling Japanese cars in Canada are assembled in North America, which means they aren't subject to the tariff.