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Cast in Concrete for All Time? The Negotiation of the Auto Pact*

Published online by Cambridge University Press:  10 November 2009

James F. Keeley
James F. Keeley
Affiliation:
University of Calgary
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Abstract

The Canada-United States Automotive Products Trade Agreement of 1965 has been a source of controversy between these two countries, yet has also shown considerable resistance to change. An adequate political understanding of the creation, content and history of the Pact requires an examination of the complexes of issues and goals within which the Canadian and American governments approached its negotiation. These influenced not only what issues were dealt with in the APTA but also how and how successfully. Canada was initially favoured, as is demonstrated by the outcome of the talks. However, the Pact postponed, rather than resolved, the differences between the two governments; subsequent controversies between them over the Pact stem in large part from these unresolved differences.

Résumé

Le Pacte canado-américain de l'automobile de 1965 a été sujet de controverse entre ces deux pays, il a cependant montré une résistance considérable au changement. Une compréhension politique adéquate de la création, du contenu et de l'histoire du Pacte nécessite un examen de l'ensemble des problèmes et objectifs à l'intérieur duquel les gouvernements canadien et américain entamèrent sa négotiation. Cela influença non seulement sur le type de problèmes à traiter à l'intérieur de l'A.C.P.A., mais aussi sur la manière de le faire et sur le succès des actions. A l'origine, le Canada était favorisé. Néanmoins, le Pacte reporta, plutôt que de résoudre, les differénds entre les deux gouvernements; les controverses subséquentes entre eux au sujet du Pacte sont en grande me sure le produit de ces différends non résolus.

Type
Research Article
Information
Canadian Journal of Political Science/Revue canadienne de science politique , Volume 16 , Issue 2 , June 1983 , pp. 281 - 298
Copyright
Copyright © Canadian Political Science Association (l'Association canadienne de science politique) and/et la Société québécoise de science politique 1983

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References

1 Canada, Inquiry into the Automotive Industry, The Canadian Automotive Industry: Performance and Proposals for Progress (Ottawa: Minister of Supply and Services, 1979), Appendix A-2.Google Scholar

2 Ibid.,iv. Simon Reisman, the sole commissionerforthe Inquiry, headed the Canadian delegation which negotiated the Pact.

3 Notable exceptions to this generalization are: Leyton-Brown, David, “The Mug's Game: Automobile Investment Incentives in Canada and the United States,” International Journal 35 (1979-80), 170-84,Google Scholar and Kirton, John, “The Politics of Bilateral Management: The Case of the Automotive Trade,“ International Journal 36 (1980-1981), 36–69.Google Scholar

4 Globe and Mail, October 4, 1982, and October 19, 1982.

5 Paul Wonnacott, Ronald J, Free Trade Between the United States and Canada: The Potential Economic Effects (Cambridge, Mass.: Harvard University Press, 1967), 343-49.Google Scholar

6 Canada, Royal Commission on the Automotive Industry, Report (Ottawa: Queen's Printer, 1961), 47–48, 66–73.Google Scholar

7 Canada, House of Commons, Debates (October 29, 1962), 1007-08, and (October 25, 1963), 3999-4000.

8 Dykes, James G, Background on the Canada-United Slates Automotive Products Trade Agreement (mimeo: Motor Vehicle Manufacturers' Association of Canada, July, 1977), 41.Google Scholar

9 Globe and Mail, September 23, 1963. The report of an American interdepartmental committee on the effects of the Canadian policy suggested that the longer-run effects would be more substantial, especially for independent parts-makers (United States Department of State, Report on the Canadian Automotive Tariff Remission Scheme by the Interdepartmental Committee Appointed to Consult with Industry, April 29. 1964).

10 In what appears to be an undated draft Aide Memoire (obtained from the United States Department of Commerce), there were references to both the employment and payments effects of the Canadian plan.

11 United States, Department of the Treasury, marginal note on Memorandum, “Mr. Roosa's Luncheon with Wynne Plumptre,” October 25, 1963.

12 See, for example, The New York Times editorial of September 26, 1963, cited in Gordon, Walter L, A Political Memoir (Toronto: McClelland and Stewart, 1977), 167Google Scholar. As noted later in the article, the United States consistently approached the issue of alternatives to the remissions scheme in terms of the Trade Expansion Act.

13 These themes are present in a variety of documents concerning both the 1963 scheme and the issue of the production guarantees in the Pact. See, for example, United States, Department of Commerce, “Notes on Discussion of Automotive Parts at Meeting of Joint U.S.-Canadian Committee on Trade and Economic Affairs, September 21, 1963,” undated.

14 For example, United States, Department of State, incoming telegram, October 7, 1963; outgoing telegram, November 14,1963; Department of Commerce, memorandum from Smith, E. G to Siegel, C., April 22,1964; Department of State, memorandum of conversationGoogle Scholar, “Free Trade Arrangement for Automobiles and Automotive Products,” August 17, 1964; Congress, Senate, Committee on Finance, Interest Equalization Tax Act, 88th Congress, 1st Session, 1963, 79.

15 United States, Department of State, letter from Ball, Mr. George, Under Secretary of State, to Hodges, Mr. Luther, Secretary of Commerce, September 18,1963; Treasury Department, memorandum to the Secretary, “President-Pearson Talks,” January 22, 1964; Department of State, memorandum of conversation, “Possible Free Trade Arrangement in Automotive Products,” July 7, 1964.Google Scholar

16 United States, Department of State, outgoing telegram, November 14, 1963.

17 United States, Department of State, memorandum of conversation. “Auto Parts,” June 25, 1964.

18 United States, Department of Commerce, memorandum for the file from J. P. Hendrick, Deputy Assistant Secretary of the Treasury. “Countervailing Duties–Canadian Auto Parts,” April 17, 1964: draft memorandum for the President, prepared by Mr. Hendrick, “Canadian Parts Rebate System–Countervailing Duty,” April 17, 1964. The second document is a partially-cleared working paper representing Mr. Hendrick's guess as to the Treasury position.

19 United States, the White House, memorandum from the President to the Secretaries of State, the Treasury and Commerce, April 28, 1964.

20 United States, Department of State, memorandum of conversation. “Canadian Auto Parts Scheme,” April 24, 1964.

21 United States, Department of State, memoranda of conversation “Free Trade Arrangement for Automobiles and Automotive Products,” August 17,1964; “Possible Free Trade Assignment in Automotive Products,” September 24-25,1964; “Possible Free Trade Arrangement in Automotive Products,” November 12-13, 1964.

22 United States, Departmentof State, memoranda of conversation, “Auto Parts,” June 25, 1964; “Possible Free Trade Arrangement in Automotive Products,” November 12-13, 1964.

23 This account is drawn primarily from the following documents: United States, Department of State, memoranda of conversation, “Auto Parts,” June 25, 1964; “Possible Free Trade Arrangement in Automotive Products,” July 7, 1964; “Free Trade Arrangement for Automobiles and Automotive Products,” August 17, 1964; “Possible Free Trade Arrangement in Automotive Products,” September 24-25,1964; “Possible U.S.-Canadian Free Trade Arrangement in Automotive Products,” October 9, 1964; Department of Commerce, “Report on Discussions with the Canadians on Non-Tariff Matters Affecting the Automotive Free Trade Regime,” October 29-30, 1964; Department of State, memoranda of conversation, “Possible Free Trade Arrangement in Automotive Products (Fourth General Round of Discussions),” November 12-13, 1964; “Negotiation of Draft Agreement for U.S.-Canadian Free Trade Arrangement in Automotive Products,” December 28-29, 1964. In the interest of brevity, these will generally not be cited individually in the remainder of this article.

24 United States, Department of State, memorandum of conversation, “Defense Production Sharing and Auto Parts Scheme,” June 16, 1964.

25 See, for example, United States, Department of State, position paper, “Canadian Automotive Duty Remission Plan,” April 27, 1964: Department of Commerce, “Suggested Course of Action on the Canadian Remission Scheme at the Forthcoming Joint Cabinet Meeting,” undated.

26 For the text of the intergovernmental Agreement and of the “letters of undertaking,” see, for example, United States, Senate, Committee on Finance, Canadian Automobile Agreement: United States International Trade Commission Report on the United States-Canadian Automotive Agreement: Its History, Terms, and Impact, 94th Congress, 1st Session, 1976, Appendices E and F.

27 An explicit reference to free trade was avoided at Canada's request; there may have been a fear of an adverse public reaction in Canada if the term was used (United States, Department of State, memorandum of conversation “Rassible Free Trade Arrangement in Automotive Products [Fourth General Round of Discussions],“ November 12-13, 1964).

28 Ibid.

29 This discussion of the August 17 meeting is based on United States, Department of State, memorandum of conversation, “Free Trade Arrangement for Automobiles and Automotive Products,” August 17, 1964; and airgram from Ottawa embassy, “U.S.-Canadian Auto Products Talks,” August 31,1964. The first quotation is from the memorandum of the August 17 discussions; the second from the airgram.

30 These were the September 9 meeting of the president and the prime minister in connection with the Columbia River Treaty; the September 7-11 meetings of the IMF in Tokyo, which Treasury Secretary Douglas Dillon and Finance Minister Walter Gordon attended; and possibly at a meeting of Secretary of State Dean Rusk and Secretary of State for External Affairs Paul Martin, on September 13. United States, Department of State, memorandum of conversation, “Possible Free Trade Arrangement in Automotive Products,” September 24-25, 1964. See also, Canadian Institute of International Affairs, Monthly Report on Canadian External Relations, September 1964, 91, 92, 98.

31 See, for example, Kirton, “The Politics of Bilateral Management,” 48-49.

32 At least one American observer, however, saw the new proposals as a Canadian “cave-in” (United States, Department of Commerce, memorandum, “Preliminary Agreement on Free Trade Arrangements in the Automotive Sector.” September 30, 1964).

33 Quoted in Keohane, R. O. and Nye, J. S., Power and Interdependence: World Politics in Transition (Boston: Little, Brown, 1977), 207.Google Scholar

34 Dykes, , Background on the Canada-United States Automotive Products Trade Agreement, 52–53.Google Scholar

35 Ibid., 67.

36 Canada, Inquiry into the Automotive Industry (1979), Appendix A-2.

37 Beigie, Carl E, The Canada-U.S. Automotive Agreement: An Evaluation (Montreal: The Canadian-American Committee, 1970), 61, 64–65, 98–103Google Scholar: United States, President, Annual Reports of the President to the Congress on the Operation of the Automotive Products Trade Act of 1965, various years.

38 Calgary Herald, August 13, 1980: Financial Post, October 18, 1980: Globe and Mail. October 14, 1981.

39 The definition is from K. A. Oye, “The Domain of Choice: International Constraints and Carter Administration Foreign Policy,” in Oye, K. A., Rothchild, D. and Lieber, R. J(eds.), Eagle Entangled: U.S. Foreign Policy in a Complex World (New York: Longman, 1979)Google Scholar, 13. For possible explanations for the absence of tactical issue linkage, see Nye, Keohane, Power and Independence. 214. and Dobell, P. C. “Negotiating with the United States,” International Journal 36 (1980-1981). 25.Google Scholar

40 See Oye, , “The Domain of Choice,“ 17–18.Google Scholar