The Auto Pact

The auto pact is a trade agreement between Canada and the United States for automotive parts and vehicles. It is known as the most successful trade agreement, helping Canada become one of the world's biggest automobile producing countries. This agreement allowed North American companies to import cars duty-free from anywhere in the world. It also guaranteed free trade of automobiles and parts between Canada and the US. This meant that manufacturers could locate their factory in either country, wherever the larger workforces is located or best location for shipping and sell their products to either country without having to worry about paying extra.
The pact started because of Canada was spending more money buying American goods then Americans were buying Canadian goods. The government had to do something before it got even worse. The pact was made to fix this imbalance. This imbalance was mostly due to the automobile industry. Canada was importing more auto parts and automobiles from the States, then Canada was exporting. Talks for a trade agreement in the automobile industry between Canada and the United States began in July 1964. By January 1965 Prime Minister Lester Pearson and President Lyndon Johnson signed the pact. Of course with any agreement there were conditions that went along with it.
The Canadian government wanted the number of cars brought into the country to equal the number of cars that were manufactured within Canada. This meant that the three large manufacturers: Ford, Chrysler and General Motors had to manufacture at least one vehicle for everyone brought into the country. Each car sold had to be at least 65% Canadian content.There was also a tax of 6.1% put on cars imported into the country, mostly from Japan, Germany and Britain.
This pact did not only help Canada become one of the world's biggest automobile producing countries that it did, but also tied Canadian and US closer together. T

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