Last week looked to be the week that the U.S. would come to an agreement on how to help bail out the auto industry, but the plans and funds evaporated amidst a flurry of political wrangling. In contrast, Canada's lawmakers stayed on track, delivering a conditional CAD$3.5 billion (US$2.8 billion) industry aid package.
The $2.8 billion figure is exactly 20% of the $14 billion that had been proposed by the U.S. House of Representatives. Canada picked that number because it aligns with the production percentage actually carried out in Canada, reports the Detroit Free Press. "What we are signaling here tonight, both the governments of Ontario and Canada, is that we want to be part of the solution as well and it will be commensurate with the production that takes place here in Canada ... about 20%," said Federal Industry Minister Tony Clement.
That 20% falls well short of the $6.8 billion requested by the carmakers, however. Nonetheless, taken in concert with an appropriate package from the U.S. government, the Canadian loans will certainly help.
Canada's loan package remains conditional on the U.S. putting its own together, however. Reasoning on the conditional nature of the Canadian loans is sound - after all, even several billion in loans won't be enough to prop up the U.S. parent companies of the Canadian operations, and if they go bankrupt, so do the Canadian subsidiaries. Without aid from the U.S., any Canadian plan would essentially be throwing the money away.
The White House's potential alternative plan hasn't yet gained any traction, and there doesn't appear to be a seriously viable bill in Congress yet, so it may be another week or more before the U.S. approves any aid, if it chooses to do so at all.
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