CANADA

Stevens’s secret Korean project

PAUL GESSELL February 3 1986
CANADA

Stevens’s secret Korean project

PAUL GESSELL February 3 1986

Stevens’s secret Korean project

The top-secret project is known to a select few in Ottawa as “Sinclair Stevens’s baby.” For several months the Mulroney government’s minister for regional industrial expansion has been quietly negotiating with a huge South Korean multinational, Daewoo Corp. Their common goal: to open a textile factory in Canada that would employ 1,200 people and manufacture men’s suits. Stevens, however, faces a major problem.

Maclean's has learned that Daewoo wants at least half of the workers to be imported from South Korea— and to work for less pay than is normally given Canadian garment workers.

Federal officials said last week that the negotiations are at a “very preliminary stage.” But Nam Chun Kim, general manager of Daewoo’s Montreal office, said he expects that a corporate survey team will visit Canada within a month to examine site proposals in Quebec, New Brunswick or Nova Scotia.

Said Kim: “If the Canadian government accepts our request, we’ll be ready to invest any time within three to five months from the agreement.” And Daewoo’s plans for Canada do not just include textiles. Added Kim, who is not directly involved in the talks: “If business looks good, we’ll build another factory.”

Daewoo, he noted, is involved in everything from electronics to shipbuilding, and it had 1984 sales of $7.7 billion (U.S.).

The actual percentage of workers to be imported for the suit factory is now under negotiation with Ottawa. Changes to existing immigration rules would likely be necessary if hundreds of foreign workers were imported en masse.

Knowledge of the Daewoo proposal is limited to a handful of people within Stevens’s department and has not yet reached the full cabinet, according to official sources. Even Immigration Minister Walter McLean initially told Maclean's that he was unaware of the Daewoo proposal but recalled hearing about a similar project in which a South Korean company wanted to im-

port workers to economically depressed Cape Breton. Said McLean: “The last one I saw was somebody, an entrepreneur, trying to do something in Cape Breton, but the people there didn’t think it was going to come to pass.” McLean, however, said he would

make inquiries about the Daewoo plan. The next day an aide, Paul Cloutier, said all questions should be directed to Stevens’s office.

Both union and industry representatives predicted that the government will face a major battle if it allows Daewoo to import hundreds of workers and pay them less than union wages. Unemployment is high in the Canadian textile and clothing industries—the total number employed has decreased 11.9 per cent since 1981—largely because of stiff competition from lowwage countries such as South Korea. But growing international protectionism has caused declining sales and unemployment in South Korea, making foreign investment projects an attrac-

tive proposition. Eric Barry, president of the Canadian Textiles Institute, said that there “would be quite a noise” from Canadian unions if Daewoo were allowed to import workers. And John Alleruzzo, a Quebec director of the Amalgamated Clothing and Textile Workers Union, pointed out that unemployment among Quebec clothing workers is already 20 per cent. Said Alleruzzo: “I

don’t know how the government could even consider such an offer.”

The plans under discussion indicate that Daewoo would have an annual production of 360,000 men’s suits made of 100-per-cent wool and another 90,000 suits of wool and polyester mix. About half of the production would be exported to the United States. In theory that plan would allow Daewoo to circumvent U.S. import quotas that apply to textile products from South Korea but not from Canada —although U.S. competitors would likely protest. The elimination of tariffs in any future U.S.Canada free trade agreement would be an added bonus.

The negotiations apparg ently began last August, when Stevens visited South z Korea. But the minister is I reluctant to discuss the I project. Asked to comment 9 on Daewoo’s wish to import workers, Stevens said: “When we were in Korea that type of thing was raised. But you’d have to look at a lot of the details, the type of business they’d be in, before I’d want to come to any decision.”

Stevens played a major role in negotiating a deal last year with the South Korean firm Hyundai to build a $300million auto plant near Bromont, Que. More such projects, Stevens has said, are invited. Said Young Kil Park, a spokesman for the South Korean embassy in Ottawa: “Many big companies in Korea are showing interest in coming to Canada.” Union manager Alleruzzo said he, too, welcomes foreign investment. His caveat: that foreigners employ Canadian workers.

—PAUL GESSELL in Ottawa