Photo by Jason Kyrk/ Windsor Star
With the imminent renegotiation of the North American Free Trade Agreement (NAFTA) in the news headlines, Council of Canadians chairperson Maude Barlow has tweeted, “Time for a new Auto Pact?”
The Canadian Encyclopedia notes, “The Canada-US Automotive Products Agreement (Auto Pact), [was] 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. Under the agreement, motor-vehicle manufacturers [were] obliged to maintain the same ratio of production to sales in Canada as existed in the 1964 model year; to maintain Canadian value-added or Canadian content equal to the 1964 model year; and have been required (from 1965 onwards) to increase Canadian value-added by 60% of the growth in the value of passenger cars sold (50% for trucks and 40% for buses).”
In 1999, more than 3 million vehicles were manufactured in Canada. Unifor notes, “Ironically, that was the same year the World Trade Organization first ruled that the Auto Pact violated the ‘laws’ of global free trade (and two years later Canada’s government bowed to the WTO’s wishes and dismantled the Pact altogether). Meanwhile, Mexico’s industry was taking off in the wake of the 1994 NAFTA deal, and the surge of offshore imports to North America was gathering momentum. So Canada’s output slipped over the coming years, and Canada fell from the 4th largest auto producer in 1999 (a remarkable achievement for a small country) right out of the top ten by 2008.”
The union adds, “Within a decade after signing NAFTA, Mexico suddenly became the favoured jurisdiction for new plants: based on super-low labour costs, suppression of normal union activity and political dissent, and a rapidly developing supply base. Since 2009 that country has ‘landed’ eight new assembly plants, as automakers of all kinds rush to take advantage of low labour costs, a developing transportation infrastructure, and an expanding supply base. Mexico now accounts for one in five of all vehicles assembled in North America. The U.S. accounts for two-thirds of continental production (a share that has been stable since the financial crisis). And Canada is down to producing less than one vehicle in seven.”
Unifor highlights, “The most galling and offensive aspect of Mexico’s automotive take-off is that average Mexicans are not even benefiting from this southward continental migration. Real industrial wages in Mexico are no higher (after inflation) than they were when NAFTA was signed – despite the incredible expansion of output, quality, and productivity since then. Mass displacement of agricultural populations (another legacy of NAFTA) has pushed millions of desperate Mexicans off the land and into urban labour markets. Most insidiously, there is a demonstrated and sustained pattern of democratic and labour suppression in Mexico that prevents Mexicans from winning a fairer share of the growing pie they produce.”
We believe a North American Auto Pact should be explored to ensure that each country receives a proportional share of employment and investment, that workers have good jobs and fair wages, and that human rights and collective bargaining rights are respected in all countries.
For further analysis, please read Unifor’s paper Searching for stable ground: securing the future of Canada’s auto industry (June 2015).
