The 1965 Automotive Products Trade Agreement or Auto Pact is Canada's most successful trade agreement - and a building block of Canada's modern economy. By creating a single North American market for vehicles, the Auto Pact allowed for the rationalization of the North American market for vehicle production.
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Since signing the Auto Pact, the Canadian automotive industry has enjoyed unprecedented growth: production and automotive manufacturing employment have increased 200% and automotive shipments grew from $2.2 billion in 1964 to $70.7 billion in 1995. The Canada-U.S. Auto Pact was negotiated in 1965 and provided participants with multilateral duty-free access into Canada provided that two conditions were met. In general terms, these were: Produce at least one car, truck or bus for every vehicle the manufacturer sells in Canada. And Achieve a minimum of 60% Canadian Value Added (or Canadian Content) for vehicles produced in Canada. Yet the World Trade Organization voted against the Auto Pact because they felt that it broke several international trade rules. This was due from the rising complaints from countries like Japan. Japan and the European Union filed complaints with the World Trade Organization because they wanted to be able to export vehicles duty free into Canada from their plants from Japan and Europe.
General Motors, Ford, Chrysler and Volvo were among the light duty manufacturer participants. CAMI joined in 1989 and became the only transplant to commit to the Auto Pact requirements. Honda and Toyota did not make the required commitments to join the Auto Pact. However, the Government of Canada provided Honda and Toyota with special duty remission programs, which granted them Auto Pact-like duty free treatment.