The Canada-U.S. auto pact created the modern Canadian auto industry

January 16, 2018

On January 16, 1965, Prime Minister, Lester Pearson, and President Lyndon Johnston met in Texas to sign the Canada-US Auto Pact. The agreement represented an important compromise between free trade and providing decent work Canadians.

The Auto Pact is credited for invigorating the domestic Canadian auto industry. It established new rules for the manufacture of cars in both the U.S. and Canada. By imposing a content requirement for cars manufactured and sold in Canada, the Auto Pact represented an important compromise between the principles of free trade and market fairness. It stands as an important reminder of the importance for balance, especially in light of more recent trade negotiations, like the Trans Pacific Partnership (TPP) agreement, which threaten to undermine Canada’s auto industry.

The first commercially produced car in Canada, the Le Roy, went on sale in 1902. It was actually a close copy of the popular American “Oldsmobile”. Two years later, Henry Ford established Ford of Canada to produce his famous Model T’s. This was the beginning of the interdependent Canada-U.S. auto industry.

Prior to the Auto Pact, car and truck parts were made in the US and assembled in Canada. The Auto Pact resulted in the removal of tariffs between the two countries, meaning parts and vehicles could travel freely across the border. There were also job guarantees stipulating that automobile production in Canada would not fall below 1964 levels.

The goals of the pact were to increase efficiency and reduce production costs in Canada by producing a smaller range of vehicles and components than previously. The Pact also sought to lower vehicle prices for consumers. The main result was an invigorated Canadian car industry – and a stronger economy. More jobs were created, wages in the sector increased, and within a short time, the auto sector became Canada’s most important industry. However, importantly, the Canadian industry remained firmly in the hands of the American “Big Three” companies – Ford, General Motors and Chrysler.

Ultimately, “free trade” killed the Auto Pact. The deal was always about protecting jobs while improving trade, but today’s global trade regimes put the free movement of capital ahead of workers and communities. In 2001, the World Trade Organization (WTO) decreed that the Auto Pact was illegal and Canada’s auto industry has been in turmoil ever since.

Related Articles

Supreme Court ruling on Uber underscores workers’ rights

OTTAWA – By ruling today that Uber drivers have a right to reasonable dispute resolution, the Supreme Court of Canada has defended the workers’ rights. “This decision underscores the message that a worker is a worker,” said Canadian Labour Congress President, Hassan Yussuff. “This ruling sends a clear message to employers that they can’t skirt around workers’ rights by using…
Read More

Canada’s unions stand in solidarity with citizens of Hong Kong

The Canadian Labour Congress (CLC) stands in solidarity with labour unions, workers and citizens in Hong Kong as they battle for their democratic freedom. The latest escalation in this long-fought struggle is the recent introduction of national security legislation by the Chinese government which will allow Chinese state security forces to operate in Hong Kong. “Our Brothers and Sisters are…
Read More

Canada’s Unions call on the Canadian government to fight to stop the annexation of Palestinian lands

The Canadian Labour Congress condemns the recent unilateral move by Israel to annex parts of Palestinian territory. This move dismantles decades of work towards a just and negotiated settlement between Israel and Palestine. Israel’s new coalition government has announced it will move forward with the process of annexing West Bank settlements and the Jordan Valley as early as July. The…
Read More