U.S. ‘focused on China' in trade talks as Canada pushes to reach a deal
International Trade Policy Researcher Stuart Trew on negotiations with the U.S. and why Canada is reaching out to other allies to discuss trade.
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Young people face new challenges in the job market as youth unemployment soars
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Toddlers among Canadians detained by ICE
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Lester Pearson, his Buick and the pact that changed the Canadian auto sector
Dumaresq de Pencier is the exhibit and project coordinator for the Canadian Automotive Museum in Oshawa, Ont. Late Prime Minister Lester B. Pearson's 1963 Buick isn't quite the vehicle you'd expect to be used by a former head of state: It's about the size of an upper-end sedan for its time – with a bit of extra chrome here and there – but no bells and whistles such as bulletproof glass or an intercom. It's only when you see the little Canadian coat of arms emblazoned on the inside doors that you realize the Oshawa-made, custom limousine formerly owned by Canada's 14th Prime Minister might be anything beyond a run-of-the-mill model for its day. It's surprisingly understated when you consider Pearson's legacy, including a Nobel Prize for peacekeeping, the iconic Maple Leaf flag, encouraging official bilingualism, improving women's rights, universal health care and the 1965 Auto Pact that shaped the North American auto sector (now under threat by U.S.-driven tariffs). Yet, Pearson was a famously modest person, a diplomat uncomfortable with the public spotlight, which his vehicle – recently restored and now on display at the Canadian Automotive Museum in Oshawa – reflects. Pearson's stamp on the auto industry Pearson was by no means a car buff but, by being born in 1897, he was the first Canadian prime minister to have grown up in and around the creation of the automobile. When he came to office in the mid-1960s, Canada was in the midst of an industrial crisis. Canada's auto industry had long been protected by import tariffs on American industrial goods instituted in the late 19th century. The local market was a walled garden, producing a small range of locally sold vehicles. Canada-only vehicle marques such as Ford's maple-spangled Frontenac, General Motors's successful Acadian and Chrysler's Windsor (which remained in Canadian production for six years after its American counterpart), were usually low to mid-range cars fitted with high-end trim, perfect for Canadian buyers who wanted a fancy-looking car at an affordable price. Pearson's limousine is a classic example of Canadian car-building of the time: It combines the roomy chassis of a Buick LeSabre, the engine of a Wildcat, the trim of a high-end Electra and internal components from that year's Cadillacs to create a luxurious-looking limousine on a not-so-luxurious platform. But as the American car industry grew throughout the 1960s, the quaint local manufacturing style on this side of the border began to fall by the wayside. As prices dropped, more American cars were being imported to Canada as tariffs didn't have much financial impact. With fewer cars being shipped from Canada to Europe, owing to the growth of companies such as Volkswagen, Canada's trade deficit skyrocketed. Canadian governments under Prime Minister John Diefenbaker and then Pearson tried – and failed – to boost industry growth with protective tariffs, triggering genuine fears of a trade war that the U.S. auto manufacturing juggernaut would likely win. In 1964, 90 per cent of the Canadian auto industry was American-owned. Its hundreds of thousands of employees were represented by the United Auto Workers, headquartered in the U.S. Any fixing of the Canadian auto industry would have to be an international collaboration. Pearson's administration eventually came up with the Auto Pact, officially known as the Automotive Products Trade Agreement, signed by Pearson and President Lyndon Johnson in Texas in January, 1965. After a year of wrangling with the Big Three auto manufacturers (Ford, GM and Chrysler) and the unions, the two administrations produced something that was almost, but not quite, free trade. The Pact introduced a system wherein American-designed cars had to include Canadian-made parts and a ratio whereby every American car sold in Canada was matched by a car built here. Canada's market was no longer threatened by the American one – it was part of it – with cars and car parts traded tariff-free. Existing manufacturers had to expand their Canadian branches or risk losing the benefits of the Pact, with a 'buy-in' investment of $260-million (more than $2.5-billion in today's dollars). The Pact was deeply controversial among the American public, but auto builders weren't complaining. The Big Three could dramatically simplify their production, making an interchangeable range of vehicles on either side of the border. The Auto Pact's success and unpopularity The effects were dramatic and rapid. New factories sprouted across southern Ontario and Quebec. Existing plants were vastly expanded. Before the Pact, American-owned plants in Canada were building around 650,000 cars and exporting less than 1,000 of them to the U.S. Ten years later, Canadian plants built 1.5 million cars, exporting one million of them. By the 1970s, about 10 per cent of all cars sold in America were Canadian-made and many more included Canadian parts. On the American side, exports to Canada jumped dramatically as production grew. The Pact remained unpopular yet successful throughout the 1970s and 80s, despite U.S. President Richard Nixon's administration threatening to cancel it on several occasions. In 1986, it became part of the Canada-U.S. Free Trade Agreement, which kept most of its provisions in force while simultaneously rendering them obsolete. Its effect continued. By 1999, Canadian car production peaked at a whopping three million vehicles. Canada's auto sector has faced challenges and turbulent times since: Recessions, bailouts, downsizing and outsourcing have led to an industry that is somewhat leaner and shabbier than the monolith it once was. Still, it has remained an essential part of the Canadian economy, thanks in large part to a modest man in a modest limousine.
