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Canada open to auto bailout; watching US situation

Canada's prime minister said Monday he is open to providing aid to North America's struggling auto sector and will watch closely what the U.S. government does.
/ Source: The Associated Press

Canada's prime minister said Monday he is open to providing aid to North America's struggling auto sector and will watch closely what the U.S. government does.

Prime Minister Stephen Harper said he was prepared to look at options that would help the auto sector. General Motors Corp., Chrysler and Ford Motor Co. all have large operations in Canada.

Harper said a failed auto sector would cause a tremendous dislocation in the Canadian economy, but that he doesn't want a sector that would be permanently supported by government or not viable without government help.

"We are all aware of the deep problems of some of the major companies in the auto sector. We are also aware of some of the actions that are taking shape in the United States," Harper said. "The government of Canada will examine all possibilities. We haven't ruled anything out or anything in."

Harper made the comments after a special meeting with provincial leaders about the economy.

Ontario Premier Dalton McGuinty said he is looking for co-operation from Harper on a rescue package. McGuinty said he can't compete with U.S. bailouts. He noted that the U.S. has already committed $25 billion for their auto sector, with more aid likely to follow.

Canada's auto and auto parts sector employs more than 120,000 people.

"We're the largest auto producer in North America," McGuinty said before the meeting. "We're talking about 400,000 jobs, direct and indirect, and the auto sector is the mainstay of about 12 Ontario communities."

McGunity said after the meeting that he was he hopeful aid would be forthcoming

"I think there's an opening here for us. I think the prime minister understands that right now we have an unlevel playing field," he said.

The U.S.-based automakers have yet to hear whether they'll get aid from the U.S. government. The automakers met with congressional leaders last week in hopes of securing financial help.

"I know the Americans are looking at certain approaches. We're going to be watching those things very carefully and obviously developing our own responses here in Canada," Harper said.