It removed tariffs on cars, trucks, buses, tires and automotive parts between the two countries, greatly benefiting the large American car makers. In exchange the big three car makers (GM, Ford, Chrysler) agreed that automobile production in Canada would not fall below 1964 levels and that for every five new cars sold in Canada three new ones would be made there.
Before the Auto Pact the North American automobile industry was highly segregated. Because of tariffs only three percent of vehicles sold in Canada were made in the United States, but most of the parts were manufactured in the U.S. and overall Canada was in a large trade deficit with the States in the automobile sector.
The Pact saw vast and immediate changes. Canada began to produce far fewer different models of cars, rather much larger plants producing only one model for all of North America were constructed. While in 1964 only seven percent of vehicles made in Canada were sent south of the border by 1968 this was sixty percent. By the same date forty percent of cars purchased in Canada were now made in the United States. Overall the agreement was of great benefit to Canadian workers and consumers. The more efficient market lowered prices and the increased production created thousands of jobs and wages in the auto industry rose to match those in the United States. Automobile and parts production quickly surpassed pulp and paper to become Canada's most important industry. The trade deficit has turned into a trade surplus worth billions of dollars annually to Canada.
At the same time there are important disadvantages to this arragement. It left the Canadian automobile industry firmly in the hands of American corporations. Unlike, for instance, Sweden with Volvo Cars and Saab Automobile, Canada has no domestic car makers, despite a long history of Canadian car companies. The agreement also led to the creation almost exclusively of blue collar jobs. Administration and research and development remained in the United States. The agreement also prevents Canada from pursuing free trade in automobiles with other nations, such as Japan. The growth has also been very regionally skewed with southern Ontario overwhelmingly being the main centre of production.
To provide a more positive association, "Otto of Autopact" was created, and it is Otto's somewhat abstract, smiling face that we see on the screenshot below - along with a new improved slogan ("One Less Thing to Worry About").
Nothing remains of Autopact.com (the domain currently goes nowhere), but two clips from its television and radio campaigns have been preserved on ROI Marketing's Web site, along with an interesting "brand-repositioning" case study conducted by this firm on behalf of Autopact.
If you have other information, including amplification and/or corrections concerning the history of Autopact.com that you would like to see incorporated into this WebElegy, please send e-mail to Steve Baldwin and I will try to include it as time provides.
Canada-US Automotive Products Agreement (Autopact), a conditional free-trade agreement signed by Canada and the US in January 1965 to create a single North American market for passenger cars, trucks, buses, tires and automotive parts.
The 2 principal purposes of the Autopact were to lower Canadian production costs through more efficient production of fewer lines of motor vehicles and parts, and to lower consumer prices.
Under the Free Trade agreement negotiated with the US in 1987, Canadian safeguards would remain, with North American auto producers losing their right to import parts and vehicles duty-free from other countries unless the safeguards were met.
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