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A continental auto industry

In 1965, a landmark agreement with the United States transformed Canada's tiny car-making industry into a world leader. The Auto Pact created thousands of Canadian jobs and was the backbone for a generation of economic growth. But the Auto Pact also tied Canada's fortunes more closely than ever to its southern neighbour.

It's a clear day on a Texas ranch when Canada begins a new economic relationship with the United States. On Jan. 16, 1965, Prime Minister Lester B. Pearson and President Lyndon B. Johnson sign a limited free trade agreement formally called the Canada-United States Automotive Products Agreement. Dubbed the Auto Pact, the agreement signals a marriage between North America's auto industries.

Trade tariffs are eliminated under the pact and, in manufacturing terms, Canada and the United States are now like one big carmaking country. Without tariffs, the United States can build bigger, more efficient car plants to serve both countries. In turn, Canada gets a chance to expand its automotive industry. Canadian consumers also win with a larger selection of cheaper cars.

The Auto Pact is limited free trade because there are safeguards for Canada. The agreement states that for every car sold in Canada, one has to be built here. And each vehicle built in Canada has to have 60 per cent Canadian content in parts and labour. If the conditions aren't met then tariffs will be applied.
• A member of the Canadian Department of Finance, Simon Reisman, negotiated the 1965 Auto Pact. Twenty years later Reisman was chosen by Prime Minister Brian Mulroney to head the Canada-U.S. free trade negotiations.
• Lester B. Pearson was the 14th prime minister of Canada. During his term in office (1963-68), the Canadian flag was adopted, the Canada Pension Plan, the Canada Assistance Plan and Medicare were introduced.
Medium: Television
Program: CBC Television News
Broadcast Date: Jan. 17, 1965
Guest(s): Lester B. Pearson
Duration: 2:11

Last updated: May 23, 2012

Page consulted on January 31, 2014

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