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U.S. CUSTOMS IN CONFLICT WITH CANADA

 U.S. CUSTOMS IN CONFLICT WITH CANADA
 ANNA, Ohio, March 2 /PRNewswire/ -- Americans at Honda's engine


plant in Ohio were distressed today to learn of the U.S. Customs' determination that the Civic engines they make do not qualify under the U.S.-Canada Free Trade Agreement.
 "For the two thousand Americans who work at the engine plant, this is a baffling result," said Al Kinzer, Engine Plant Manager and Honda of America Mfg. senior vice president.
 "We know these are American engines. We make them in Ohio from aluminum ingot and molten iron. We don't understand Customs' rules that don't count basic manufacturing processes such as the casting and machining we do at our engine plant."
 Today's action by U.S. Customs is in direct conflict with a determination last week by Canada that Honda's engines are made in America. An audit completed last week by Canada found that the engines made by Honda in Ohio meet the rule of origin and qualify under the Free Trade Agreement.
 The engines audited by Canada are the same engines audited by U.S. Customs. "We have the ridiculous situation that U.S. Customs is trying to disqualify an American product that Canada has already accepted as American," said Scott Whitlock, executive vice president of Honda of America Mfg.
 The engines are the key component of the Honda Civics manufactured at Honda's Canadian automobile plant. "Treating these American engines as if they were foregin disqualifies Honda's Canadian cars from duty free treatment," said Whitlock. "This is a clear setback for U.S.-Canada free trade."
 In the last two weeks, Canadian officals have been sharply critical of the U.S. Customs audit of Honda.
 "We don't understand why U.S. Customs rushed this audit to completion without resolving the conflict with Canada," Whitlock said. "It's amazing to us that U.S. Customs would provoke a dispute with Canada by adopting new rules, more than three years after the Treaty became effective."
 Honda has criticized the new U.S. Customs rules which:
 -- execlude casting and machining costs from the cost of producing the engine cylinder head and block;
 -- encourage importing of foreign parts instead of purchasing of American parts; and
 -- exclude from production costs the dollars spent on worker health, safety and training and environmental.
 Honda began producing engines at its Ohio engine plant in 1985 and has produced Civic automobile engines since 1986. More than 2,000 Americans work at the engine plant which represents an investment of $670 million.
 "Today's results says that this engine plant might as well be overseas," said Kinzer. "It's all the more ironic since this plant is the only American producer of small displacement automobile engines."
 Honda has indicated that it will appeal today's decision. "In the meantime, this sends a negative signal about doing basic manufacturing in the United States," said Susan Insley, Honda of America Mfg. senior vice president.
 -0- 3/2/92
 /CONTACT: Roger Lambert of Honda of America Mfg., Inc., 513-644-7714/ CO: Honda of America Mfg., Inc. ST: Ohio IN: AUT SU:


LC -- CL020 -- 3974 03/02/92 12:38 EST
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Publication:PR Newswire
Date:Mar 2, 1992
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