Auto Pact Presentation 3
- 1. THE CANADA And UNITED STATES AUTOMOTIVE PRODUCT AGREEMENT JANUARY 16, 1965 TO FEBRUARY 19, 2001
- 2. HENRY FORD OPENED FIRST CAR MAKING UNIT SAM MCLAUGHLIN OPENS HIS CARMAKING CO. AND EVENTUALLY MERGES WITH GENERAL MOTORS. THE ROARING 1920’s MARKED A SUCCESSFUL YEAR FOR THE AUTOMOBILE SECTOR 1930 – THE ERA OF DIFFICULTIES BEGINS WITH THE CRASH IN STOCK MARKET , WHICH EFFECTED THE CAR INDUSTRY AUTO TRADE DEFICIT INCREASED . THE SCENARIO BEFORE THE PACT (1904-1965)
- 3. AMERICA CONTROLLED 90% OF THE AUTOMOBILE INDUSTRY AND CANADA WANTED A SHARE OF THE MARKET . CANADA HAD A SAGGING ECONOMY AND A MASSIVE TRADE DEFICIT. AMERICA WANTED CANADA TO REDUCE THE AUTOMOBILE IMPORT TAX THAT WAS 17%. JANUARY 16, 1965, AUTO PACT WAS SIGNED BY THE CANADIAN PRIME MINISTER MR. LESTER B. PEARSON AND THE PRESIDENT OF UNITED STATES LYNDON B. JOHNSON. TRADE TARIFFS WERE ELIMINATED. EVERY CAR MADE SHOULD HAVE ATLEAST 60% CANADIAN CONTENT, IN PARTS AND IN LABOURS. THE SIGNING OF AUTO PACT
- 4. TRADE TARIFFS ELIMINATED CREATING A SINGLE NORTH AMERICAN MANUFACTURING MARKETS FOR AUTOMOBILES AND PARTS. SINGLE MARKET ALLOWED RATIONALIZING OF PRODUCTS IN CANADA AND UNITED STATES, FORMING AN INTREGRATED production and MARKETING SYSTEM. LARGER AND EFFCIENT CAR MANUFACTURING plants WERE BUILT, TO SERVE BOTH COUNTRIES LEADING TO EXPANDING AUTOMOTIVE INDUSTRIES IN CANADA. CANADIAN CONSUMERS GET A SELECTION OF CHEAPER VEHICLES. THE AUTO PACT CONTAINED SAFEGUARDS FOR CANADA, TO ENSURE THAT NORTH AMERICAN CAR MANUFACTURERS CONTINUED THEIR INVESTMENT AND PRODUCTION IN THIS COUNTRY. MORE JOBS CREATED. AUTO PACT A PRECEDENT
- 5. AUTOMOBILES INDUSTRY FLOURISED WITH THE SUCCESS OF THE AUTO PART SECTOR. JAPANESE CO. OPEN SHOPS. CANADA HAD A SHARE OF 18% IN THE NORTH AMERICAN AUTO INDUSTRY, COMPARED TO 5% IN 1965. A REVISED AUTO PACT CAME INTO EXISTANCE. JAPAN AND OTHER MANUFACTURERS LOSE RIGHT TO IMPORT PARTS AND VEHICLES IN CANADA,UNLESS THEY MEET THE CONDITIONS. HONDA AND TOYOTA PAY 6.1% AUTO TARIFFS, WHILE AMERICANS OPERATE TARIFF FREE. CANADA, U.S. AND MEXICO GET INTEGRATED INTO THE” NAFTA. FEBRUARY 19, 2001, “THE AUTO PACT DIES”. THE AUTO BOOM
- 6. THE AUTO INDUSTRY CAN NOW MOVE EFFICIENTLY WITHOUT THE SUPPORT OF THE AUTO PACT. THE U.S MANUFACTURES MORE CARS AND PARTS IN CANADA, THAN STIPULATED IN THE AUTO PACT. JAPANESE AND EUROPEAN COMPANIES AGREE TO DO BUSINESS DESPITE OF THE TARIFFS. THE PRESENT DAY CANADIAN AUTOMOTIVE INDUSTRY IS THE 6TH LARGEST IN THE WORLD. IT’S A MAJOR CONTRIBUTER TO THE CANADIAN ECONOMY ACCOUNTING FOR 12% OF THE MANUFACTURING GDP IN 2002. CANADA: POWER HOUSE OF CAR MARKET