UNITED STATES TARIFF COMMISSION REPORT TO THE COMMITTEE ON WAYS AND MEANS ON Washington 379 CONTENTS Petition in the United States for imposition of Conclusion of the U.S.-Canadian Agreement. U.S. and Canadian tariff structure. The "Big Three" motor vehicle producers are predominant in both countries. Prices of motor vehicles are higher in Canada Independent parts producers in the United States U.S.-Canadian trade in automotive products. Economic analysis of the agreement and collateral commitments. Obligations of the United States under the agreement. Obligations of Canada under the agreement. Collateral commitments by Canadian motor vehicle Motor vehicles and original motor-vehicle equipment General limitations of authority. Comparison with other trade agreements authority. Relationship to the GATT and other trade agreements. Appendixes: Appendix A.--Statistical tables. Appendix B.--Section 303 of the Tariff Act of 1930. 53-606 0-6525 UNITED STATES TARIFF COMMISSION Washington April 23, 1965 REPORT TO THE COMMITTEE ON WAYS AND MEANS ON INTRODUCTION H.R. 6960 is designed to "provide for the implementation of the agreement concerning automotive products between the Government of the United States of America and the Government of Canada, and for other purposes." The Agreement Concerning Automotive Products between the United States and Canada was signed in Johnson City, Texas, on January 16, 1965. Like nearly all proposed legislation, H.R. 6960 is best understood in the light of its historical and economic background. Accordingly, this report reviews the subject in three major sections. The first briefly describes the events antecedent to the negotiation of the agreement and submission of the bill, as well as the major economic factors pertaining to trade in automotive products between the United States and Canada. The second section analyzes the U.S.Canadian agreement and the important collateral commitments made by automotive producers to the Government of Canada. The third section analyzes the provisions of H.R. 6960, and compares its provisions to those of prior legislation and to U.S. obligations under the General Agreement on Tariffs and Trade (GATT). The Appendixes at the end of the report include statistical tables and copies of relevant documentary materials. HISTORICAL AND ECONOMIC BACKGROUND Events Antecedent to the Submission of H.R. 6960 The Bladen plan In 1960, the Canadian Government appointed a Royal Commission on the Automotive Industry, with Professor V. W. Bladen as the sole Commissioner, to recommend measures "to provide increased employment in the economic production of vehicles for the Canadian Market and export markets." The appointment of the Royal Commission resulted largely from concern about the lack of growth in Canadian motor vehicle production and the substantial import balance of Canada's trade in automotive products. In his report of August 1961, Professor Bladen recommended an "extended content" plan. Canadian companies would be permitted to import all motor vehicles and parts duty-free, conditional only upon fulfillment of certain percentages of Canadian content in their costs of production. Exported Canadian automotive products were to count toward the fulfillment of the Canadian content; thus the remission of import duties would operate to promote Canadian exports of parts. 1/ The tariff rebate plans In November 1962, partly in response to the recommendations made in the Bladen Report, the Canadian Government initiated a program to Professor Bladen offered seven recommendations which he regarded as complementary to one another. The six proposals not dealt with above were intended to relieve the tax burden on the industry and to improve its competitive position (especially against imported British cars). |