Subject category:
Strategy and General Management
Published by:
Ivey Publishing
Version: 2001-09-27
Length: 16 pages
Data source: Field research
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Abstract
In 1998 it appeared that Japanese auto companies could be forced to pay duty on their non-NAFTA imports into Canada. The US Big Three auto makers (GM, Ford and Chrysler), in contrast did not have to pay such a tariff on their offshore imports such as those made by Ford-owned Jaguar (United Kingdom) and GM''s Saab (Sweden). The Japanese and US firms were treated differently because of the 1966 Auto Pact that made all Big Three imports duty-free. However, in the early 1980s, in order to encourage auto investment, the Canadian government granted virtual Auto-Pact status to Japanese firms (Toyota and Honda) located in Ontario. This eliminated tariffs on the Japan-made models they sold in Canada. Public debate arose during the Free Trade Agreement (1989) and North American Free Trade Agreement (1994) trade negotiations. The US, under the Big Three influence, pushed Canada to withdraw the Pact-like benefits it used to attract the Japanese factories. Canada eventually complied with the US demands, while leaving the Pact in place for US automakers. This led the Japanese government to challenge the fairness of the proposed tariff at the World Trade Organization (WTO). While waiting for the WTO process to unfold, the Japanese and US automakers were considering how to respond to the forthcoming judgement.
Location:
Industry:
Size:
Large
Other setting(s):
1998
About
Abstract
In 1998 it appeared that Japanese auto companies could be forced to pay duty on their non-NAFTA imports into Canada. The US Big Three auto makers (GM, Ford and Chrysler), in contrast did not have to pay such a tariff on their offshore imports such as those made by Ford-owned Jaguar (United Kingdom) and GM''s Saab (Sweden). The Japanese and US firms were treated differently because of the 1966 Auto Pact that made all Big Three imports duty-free. However, in the early 1980s, in order to encourage auto investment, the Canadian government granted virtual Auto-Pact status to Japanese firms (Toyota and Honda) located in Ontario. This eliminated tariffs on the Japan-made models they sold in Canada. Public debate arose during the Free Trade Agreement (1989) and North American Free Trade Agreement (1994) trade negotiations. The US, under the Big Three influence, pushed Canada to withdraw the Pact-like benefits it used to attract the Japanese factories. Canada eventually complied with the US demands, while leaving the Pact in place for US automakers. This led the Japanese government to challenge the fairness of the proposed tariff at the World Trade Organization (WTO). While waiting for the WTO process to unfold, the Japanese and US automakers were considering how to respond to the forthcoming judgement.
Settings
Location:
Industry:
Size:
Large
Other setting(s):
1998