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Canada quietly concludes additional auto talks with Japan

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Canada and Japan have agreed to additional trade rules on motor vehicle safety and environmental standards, according to a side letter tabled in the House of Commons Tuesday.

The new measures take effect with the rest of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) trade deal on Dec. 30.

North American auto manufacturers — Fiat Chrysler, Ford and General Motors — had expressed concerns about whether the CPTPP tilts the playing field in Japan’s favour. Even after the text was signed, the Canadian government continued negotiating to try to address their concerns.

It’s not clear that this side letter, dated Nov. 29, resolves their issues.

“We expect full and reciprocal market access,” said Mark Nantais, president of the Canadian Vehicle Manufacturers Association (CVMA) representing these automakers. “Thus far, we haven’t seen that.”

When CPTPP takes effect, Canada will begin to eliminate its 6.1 per cent tariff on car imports from Japan and the other countries that have ratified the agreement. (Eleven countries signed the CPTPP, but only seven — including Canada and Japan — have ratified it so far and are now ready to start cutting tariffs.)

For Japanese vehicle brands not currently manufactured in Canada, the CVMA estimates that some $300-400 million in annual tariffs could be avoided once Canada’s tariff is fully phased out over four years.

In theory, that could make cars like Mazdas or Subarus cheaper here — assuming the savings are passed on to consumers and not reinvested elsewhere by the companies.

About 25 per cent of the Japanese branded vehicles sold in Canada are imports. But according to the Japanese Automobile Manufacturers of Canada (JAMA), imports represent about half of the 100 models available, including the “next generation” hi-tech vehicles that may use greener power sources (electric, fuel cell or hybrid) or more artificial intelligence than Canadian-made vehicles.

While Nantais admits consumers could benefit from more choices down the road, he wonders whether that creates jobs in Canada.

Regulations discourage exports

North American carmakers interested in exporting to Japan don’t currently face tariffs. But the Japanese have regulations in place that amount to non-tariff barriers for foreign brands, making it difficult to sell into that market.

“We should be negotiating agreements on the basis of what opportunities are provided,” Nantais said. “If barriers are not resolved, it continues to limit market access.”

The new Canada–Japan side letter includes language intended to discourage non-tariff barriers in the future.

Japan agrees not to discriminate between foreign and domestic brands with its vehicle standards, regulations or government incentives. It also agrees to streamline its testing process for noise and emission standards in imported vehicles — but not necessarily to eliminate the requirement for testing altogether.

 

A visitor looks at a cutaway Suburu Forester at an auto show in 2013. Over the next four years, Canada will eliminate its tariffs on vehicles from Japan. (AFP/Getty Images)

The letter commits Japan to recognizing specified motor vehicle standards, but the standards laid out are the U.S. Federal Motor Vehicle Safety Standards (FMVSS), not their Canadian equivalents.

Because North American automotive manufacturing is so heavily integrated, the Canadian government tries to line up its rules with American standards. But should they diverge in big or small ways down the road — for example, if Canadian regulators want a higher standard than the one in place in the U.S. — it’s unclear the Canadian standards would be recognized in Japan under this side letter. That could mean new red tape for exporters.

Nantais said he fears this could lead to subjective interpretations of the rules, leaving potential exporters entering the Japanese market without the certainty they may need to justify major investments.

Then there’s the question of how enforceable the new measures really are.

“We don’t believe side letters are the best instrument,” Nantais said.

Japanese support their own brands

In an earlier draft of this side letter, Canada proposed a more demanding dispute settlement procedure than the CPTPP otherwise included.

The Japanese responded that this would never be acceptable to the legislators who needed to ratify the deal, so this final text refers only to resolving future arguments over automotive trade barriers using the dispute settlement mechanism laid out in chapter 28 of the main CPTPP agreement.

Separately, Canada and Japan already had agreed to accelerated timeframes for settling disputes between them.

David Worts, JAMA’s executive director, said that while North American automakers have been vocal about the barriers they face in Japan, the real reason they aren’t selling more cars there is that they aren’t making the small, fuel-efficient cars the Japanese want and need.

About 80 per cent of U.S. sales to Japan are Jeeps, he added.

“Japanese consumers tend to be very brand conscious and they’re very loyal to their local brands,” Worts said.

In the end, this letter is more about what Japan will agree to import than what it’s already exporting to Canada.

The newly renegotiated North American free trade agreement is far more significant for Canada’s auto industry than the CPTPP. The majority of the cars Canada makes are sold to Americans.

Concerns remain that the CPTPP and the new Canada–U.S.–Mexico Agreement don’t match up — particularly when it comes to their rules of origin for determining which cars and parts avoid tariffs.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, calls this new side letter “birdcage liner” that fails to deal with the real reasons carmakers can’t sell into Japan.

“If it doesn’t sell one more car, don’t expect me to congratulate you,” he said.

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Real Estate

7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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Real Estate

10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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