article by Maurice Strong (courtesy National Post, Canada)
It is surely clear that the bailout of the U.S. automobile industry will not resolve its fundamental problems. But it could provide the time for a new approach that accords with the realities of the industry and can contribute to a resolution of its problems.
While I would not pretend to be an expert on the automobile industry, the close association I have had with it and my concern with its impacts on the environment — particularly the risks of climate change — have convinced me that radical changes are needed in the design and the use of automobiles. The need is particularly urgent in making the transition from fossil fuels to more environmentally benign alternatives and to develop new people-friendly approaches to transportation.
It would be unrealistic to expect that this can be done by denying ownership to people in China, India and other developing countries. The automobile industry is experiencing a growth that can be slowed down and rationalized but cannot be stopped. A prime example: The need to reduce carbon-dioxide emissions from autos is urgent and immediate. It cannot be achieved without giving high priority to the development of alternatives to oil and gas as their fuel, and to improved judgment and greater care in vehicle utilization. To be sure, some promising technologies and approaches are being developed, but thus far none are being developed on a scale that can be expected to meet this need in sufficient time.
The current crisis in the industry makes it possible to break new ground in resolving this fundamental dilemma in ways that would have been seen as unrealistic before the crisis. The Chinese have always regarded crises as creating opportunities. Now China could play a major role in helping to rescue the U.S. automobile industry while contributing to resolving the economic and environmental issues confronting the industry worldwide.
China’s domestic industry has been developing rapidly. Chinese companies are already moving into international markets and are inevitably targeting the U.S. market. While they have yet to meet the rigorous quality standards required, it is only a matter of time before they achieve this. In the meantime, the Chinese have provided U.S. and other foreign companies with some of their most profitable markets. And companies of both countries confront the challenge of leading the transition to the post fossil-fuels era.
All of this, I contend, provides a unique opportunity for a new era of co-operation between the Chinese and the North American auto industries in which others, like India, could also participate.
The main elements of such an agreement would be:
- Encourage and facilitate China to make major investments in General Motors, Ford and Chrysler that would enable them to reconstruct and revitalize their companies on a basis that would ensure their survival and competitiveness, including the use of Chinese components. This would be done through investment by, or joint ventures with, leading Chinese companies.
- The U.S. and Canadian markets would be opened on a selective basis to Chinese automobiles, which would be marketed through the General Motors, Ford and Chrysler dealer networks, restoring the viability and profitability of dealerships afflicted by the industry crisis.
- The U.S. companies would have their established positions in the China market secured. They would obtain the right to expand their production and distribution in that market in co-operation with their Chinese partners.
- The United States, Canada and China would agree to undertake and support a co-operative program of technological development in which their main companies would lead. These developments would be designed to produce a new generation of environmentally benign, people-friendly automobiles with particular focus on the development of alternatives to fossil fuels as well as alternative approaches to personal transportation.
There is no question that the negotiation of such an agreement, involving the governments of the countries as well as their industry leaders, would be difficult and complex. But the massive economic and environmental benefits that would accrue to them, and indeed to the entire world, provide a powerful incentive to undertake it. The new administration in the United States and the demonstrated capacity of the Chinese government to manage the processes of fundamental change make this challenging opportunity unique.