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PRINCIPAL QUESTIONS

CONCERNING THE UNITED STATES-CANADIAN
AUTOMOTIVE PRODUCTS AGREEMENT

AND PROPOSED LEGISLATION
WITH ANSWERS

(Prepared by Department of State, Department of Commerce, and Department of Labor, May 1965)

UNITED STATES-CANADIAN AUTOMOTIVE PRODUCTS AGREEMENT AND LEGISLATION INDEX OF QUESTIONS AND ANSWERS

General Effects of Agreement

1. How does the Agreement benefit the United States, its industry and workers?

2. Why has the Agreement been called "free trade"? Does it really provide free trade in automobiles?

3. How does the Agreement benefit Canada, its industry and

workers?

4. Does the Agreement, as sometimes alleged, give Canada what it sought to get under the remission plan?

5. How does the Agreement differ from the Canadian remission plan? Why is the Agreement any more beneficial to the United States?

6. Does the Agreement violate the antitrust laws? Has the Justice Department been consulted?

Why it was Made This Way

7. Why did the United States hasten to make this Agreement? Why didn't we impose countervailing duties and then negotiate from strength and make a better Agreement?

8. Why did the Executive Branch sign the Agreement without getting legislative authority first, as is usual for trade agreements? Is there any precedent for such action?

Relation to GATT and Third Countries

9. Doesn't the Agreement violate our GATT obligations and our longstanding most-favored-nation policy? How can we justify this? 10. Doesn't the Agreement run counter to our standard position on preferences?

11. What will the United States (and Canada) do under Article V which provides that access to the United States and Canadian markets provided for under the Agreement may be accorded on similar terms to other countries? Have other governments been informed that they may be eligible to participate on the same reciprocal terms? Have the United States and Canada agreed on similar arrangements with other countries?

12. What provision is made for agreements with other countries for free trade in automotive products?

Protection for Canada in the Agreement

13. What are the limitations in the Agreement to protect the Canadian automobile industry?

Effects of the Agreement and Companies' letters on U.S. Industry

14. Doesn't the Agreement just help the big companies? Will there be any new market for U.S. independent parts manufacturers? Isn't it true that the small companies that make replacement parts will be no better off?

15. What is the answer to the allegation that "the Agreement will cost U.S. parts manufacturers $200 million in the next few years"?

16. What are the "letters of undertaking" which the Canadian manufacturers have given to the Canadians? Were these letters approved by or known to U.S. officials?

17. In the company letters, what do the Canadian companies undertake to do by way of increasing producting in Canada? How is the increase in production to be computed?

18. Have the automobile companies committed themselves to source more parts in Canada which will be shipped to the United States?

How do we know there is no secret-agreement relating to production of parts in Canada? Or as to particular kinds of parts?

19. Do the automobile companies' letters require the companies to purchase parts in Canada to the extent of $260 million or in any other amount?

20. Is the charge true that the Canadian Government is requiring that there be a $250 million increase in the export of parts to the United States?

21. What will be the effect on the U.S. parts industry? Replacement parts industry?

22. What is the answer to the argument that "the major automobile manufacturers have given the Canadian Government assurances that the Canadian subsidiaries would gain a larger share of the North American automobile market"?

Effects on Balance of Trade

23. What effect do we expect the Agreement and the Companies' letters to have on the United States-Canadian balance of trade in automotive products in the next three years? In the longer run?

24. What plans do the automotive companies have to expand production in the United States?

Effects on Employment in Canada and the United States

25. What about the press statements that Canada plans to take 60,000 U.S. jobs under this Agreement?

Adjustment Assistance

26. Why should the Adjustment Assistance provision in this legislation be any different from the Trade Expansion Act?

27. Why is the determination of eligibility for adjustment assistance to be made by the President rather than by the Tariff Commission? 28. What is the meaning of the provision (sec. 303) that the President will make recommendations about adjustment assistance arrangements in the case of future agreements under the legislation?

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