Auto Pact

Auto Pact: Creating a Borderless North American Auto Industry, 1960-1971

DIMITRY ANASTAKIS
Copyright Date: 2005
Pages: 240
https://www.jstor.org/stable/10.3138/9781442687387
  • Cite this Item
  • Book Info
    Auto Pact
    Book Description:

    The 1965 Canada-United States Automotive Trade agreement fundamentally reshaped relations between the automotive business and the state in both countries and represented a significant step toward the creation of an integrated North American economy. Breaking from previous conceptions of the agreement as solely a product of intergovernmental negotiation, Dimitry Anastakis'sAuto Pactargues that the 'big three' auto companies played a pivotal role - and benefited immensely - in the creation and implementation of this new automotive regime. With the border effectively erased by the agreement, the pact transformed these giant enterprises into truly global corporations.

    Drawing from newly released archival sources, Anastakis demonstrates that, for Canada's automotive policy makers, continentalism was a form of economic nationalism. Although the deal represented the end of any notion of an indigenous Canadian automotive industry, significant economic gains were achieved for Canadians under the agreement. Anastakis provides a fresh and alternative view of the auto pact that places it firmly within contemporary debates about the nature of free trade as well as North American - and, indeed, global - integration. Far from being a mere artefact of history, the deal was a forebearer to what is now known as 'globalization.'

    eISBN: 978-1-4426-8738-7
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Tables
    (pp. ix-x)
  4. Acknowledgments
    (pp. xi-xii)
  5. Abbreviations
    (pp. xiii-2)
  6. Introduction
    (pp. 3-16)

    As conditions unfolded after the Second World War, nothing defined a nation’s industrial maturity or its international economic standing like the success of its automotive industry. In the 1950s and 1960s, the cars coming off the assembly lines in Detroit represented the ultimate in terms of the American dream and the post-1945 ascendancy of U.S. industry, technology, culture, and economic might. For the war-torn countries of Western Europe, the slow rebuilding of their auto industries marked a return to economic prosperity and what they considered to be their rightful place among the nations of the ‘developed’ world. For a devastated...

  7. 1 The Canadian Auto Industry, 1900–1963
    (pp. 17-42)

    The issue of protectionism versus free trade, which has bedevilled Canadian leaders since Confederation, was central to discussions on the automotive industry. The National Policy, the main plank of Canada’s economic strategy for most of the country’s history – and the most significant factor in shaping the Canadian auto sector – emerged from the failure of Canada’s first prime minister, Conservative John A. Macdonald, to establish a free trade regime with the United States.¹ In 1879, therefore, the Macdonald government put in place a tariff structure that, for example, made finished goods entering Canada dutiable at a rate of 35 per cent....

  8. 2 Canadian State Intervention in the Auto Industry and the Failure of Automotive Free Trade, 1963–1964
    (pp. 43-73)

    The election of 8 April 1963 resulted in a minority Liberal government led by Lester Pearson. With the same constraints in the automotive sector that prevailed under Diefenbaker and the Conservative regime, and following the same advice offered by the same automotive team in the federal civil service, the Liberals were able to aggressively expand the Tories’ auto policies as part of their own economic agenda. Yet the overall strategy of the Liberals emerged only with difficulty, as the government’s determined interventionism in the auto industry brought it into conflict with the United States, and for a time it seemed...

  9. 3 The Big Three and the Creation of a Borderless Auto Industry, 1965
    (pp. 74-102)

    By late 1964 negotiations to resolve the North American auto problem were at an impasse. Unrestricted free trade, the solution suggested by the American negotiators, was unacceptable to the Canadians. With no new ideas, the two sides had parted, and officials in both capitals were pessimistic, believing that no answer could be found before the Modine petition (see Chapter 2) forced the U.S. government to impose countervailing duties on Canadian products entering the United States. Although the negotiations had been secret, word leaked out that the talks did not go well and there was the perception that the two countries...

  10. 4 The Implementation of the Auto Pact, 1965–1966
    (pp. 103-123)

    In January 1965, Prime Minister Lester Pearson and President Lyndon Johnson signed the Canada–U.S. auto pact. Immediately afterwards the pact would come under attack from determined opposition on both sides of the border, as a wide range of individuals, associations, and other interests attempted to have the auto pact changed, suspended, or terminated. They opposed the agreement, because of its practical implications, for ideological reasons, and on procedural grounds. Some were against it for all of those reasons, others because of a specific impact it would have on their part of the auto industry or on the national interest....

  11. 5 Managing the Borderless North American Auto Industry, 1965–1968
    (pp. 124-146)

    The Canada–U.S. Automotive Products Trade Agreement had an immediate impact on the Canadian auto industry. The Big Three quickly rationalized their administration and production on a North American basis: Canadian firms and workers were subjected to dramatic changes. By 1968 joint industry-government management of the auto industry was well established. Ottawa was eager to see that the automakers fulfilled their commitments while the automakers sought to better their position under the agreement. A delicate balance between the automakers and the government emerged: As each side brought pressure on the other to gain better terms in implenting the auto pact,...

  12. 6 Consolidating the Borderless North American Auto Industry, 1968–1971
    (pp. 147-171)

    Despite a rapidly shifting relationship between Canada and the United States, and significant changes in political leadership and governmental personnel, the operation of the Canada–U.S. auto pact continued undisturbed until 1968. Thereafter, as the cross-border automotive trade balance swung rapidly in Canada’s favour, the administration of President Richard Nixon grew ever more frustrated, until it demanded that all the Canadian ‘transitional’ production safeguards in the agreement be removed. U.S. pressure reached a breaking point, and the Canadians offered to make concessions. But by then it was nearly too late, and the Americans refused the offer. Instead, in August 1971,...

  13. Conclusion: The Borderless North American Auto Industry, 1971–2001
    (pp. 172-184)

    After surviving the difficulties to do with President Nixon’s austerity measures, the Automotive Products Trade Agreement of 1965 continued to function undisturbed as the pre-eminent Canada–U.S. agreement on trade and the organizing mechanism facilitating the steadily growing continental trade in automotive products. Cars and parts continued to flow across the border unmolested by tariffs: in some years more flowed south than north, but in most years the reverse was true. The vast majority of Americans remained entirely unaware of this chronic imbalance, most likely few even knew of the auto pact’s very existence, let alone its place in the...

  14. Appendix A. Text of the Automotive Products Trade Agreement, 1965
    (pp. 185-190)
  15. Appendix B. Sample Letter of Undertaking, Ford Motor Company of Canada
    (pp. 191-194)
    K. E. Scott
  16. Appendix C. Automotive Statistics, 1960–1999
    (pp. 195-202)
  17. Notes
    (pp. 203-254)
  18. Bibliography
    (pp. 255-276)
  19. Illustration Credits
    (pp. 277-278)
  20. Index
    (pp. 279-285)