- Automotive Products Trade Agreement
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 MinisterLester B. Pearson and PresidentLyndon B. Johnson in January 1965. [http://ms.radio-canada.ca/archives/2002/en/wmv/autopact19650107et1.wmv]It removed tariffs on cars,
truck s,bus es,tire s, andautomotive 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 America n automobile industry was highly segregated. Because oftariffs , 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 largetrade 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 plant s 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 now made in the United States. Overall the agreement was of great benefit to Canadian workers and consumers. The more efficient market lowered prices and the increased production created thousands of jobs and wages as the auto industry rose. Automobile and parts production quickly surpassed pulp and paper to become Canada's most important industry. The trade deficit has turned into atrade surplus worth billions of dollars annually to Canada.At the same time there are important disadvantages to this arrangement. It left the Canadian automobile industry firmly in the hands of American corporations. Unlike, for instance,
France withCitroën andRenault , Canada has no domestic car makers, despite a long history of Canadian car companies. The agreement also led to the creation of almost exclusivelyblue collar jobs. Administration and research and development remained in the United States. The agreement also prevents Canada from pursuing free trade in automobiles with other nations, such asJapan . The growth has also been very regionally skewed, withsouthern Ontario overwhelmingly being the main centre of production.The Auto Pact was abolished in 2001 after a
World Trade Organization ruling declared it illegal, though by that time theNorth American Free Trade Agreement (NAFTA) and other agreements had made it largely irrelevant.References
External links
* [http://archives.cbc.ca/economy_business/trade_agreements/topics/326/ CBC Archives] A multimedia look at the Canadian auto industry before and after the trade agreement.
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