The Automotive Products Trade Agreement, commonly known as the Auto Pact or APTA, was an important trade agreement between Canada and the United States. It was signed by Prime Minister Lester B. Pearson and President Lyndon B. Johnson in January 1965.[1]
It removed tariffs on cars, trucks, buses, tires, and automotive parts between the two countries, greatly benefiting the large American car makers. In exchange the big three car makers (General Motors, Ford, and Chrysler) agreed that automobile production in Canada would not fall below 1964 levels and that for every five new cars sold in Canada, three new ones would be made there.
Before the Auto Pact the North American automobile industry was highly segregated. Because of tariffs, only three percent of vehicles sold in Canada were made in the United States, but most of the parts were manufactured in the U.S. and overall Canada was in a large trade deficit with the States in the automobile sector.
The Pact saw vast and immediate changes. Canada began to produce far fewer different models of cars. Instead, much larger branch plants producing only one model for all of North America were constructed. In 1964, only seven percent of vehicles made in Canada were sent south of the border, but by 1968, this was sixty percent. By the same date, forty percent of cars purchased in Canada were made in the United States. Automobile and parts production quickly surpassed pulp and paper to become Canada's most important industry. The trade deficit was reversed into a trade surplus worth billions of dollars annually to Canada.
The agreement is considered[who?] to have benefitted Canadian workers and consumers by dint of lowered prices and increased production creating thousands of jobs and increasing wages. At the same time, the Auto Pact brought significant disadvantages, as well. It left the Canadian automobile industry firmly in the hands of American corporations. Canada no longer had any domestic car makers, and the agreement also led to the creation of almost exclusively blue collar jobs while administration, research and development remained in the United States. The agreement also prevented Canada pursuing free trade in automobiles elsewhere internationally, and this North American exclusivity required Canada to adopt American technical regulations rather than participating in the international consensus on auto safety and emissions regulations. Sector growth under the Auto Pact was also highly localised to southern Ontario, with little employment benefit to the rest of Canada.
The Auto Pact was abolished in 2001 after a World Trade Organization ruling declared it illegal, though by that time NAFTA had effectively superseded it.
References
External links
- CBC Archives A multimedia look at the Canadian auto industry before and after the trade agreement.
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