continued from page 6 States, which PrimeMinister Trudeau' s recent visit to Washington has done nothing .to dissipate. I hope i t is not too late to correct the impression and alter the drift to capitulation. Myths & Reality (1) It is said that the Canada-U. S. Auto- m o t ive Agreement signed in 1965 com- m i t ted both countries to move towards c om pl1 e tely free-trade in automobiles and automotive parts.'..Since 1965" it is argued, the Americans have lived up to this agreement but Canada has not. They w an t no restriction but we stil insist on "protrective" safeguards which con- tradict the purpose of the pact. Media & Myths. T h I s myth has been propagated not only by Senator Russell Long, Chair- man of the United States Senate Fin- an ce Committee, but also by the C.B. C. and numerous daily newspapers who in news reports have stated as assumed f a c t that free trade was indeed one of the objectives of the agreement. Canada's "Blessing" (2) The second myth i s that the Auto Pact has been an unqualified blessing for 'Canada and substantially less than this for the United States. It is argued that thelPactnotonly resulted in a series of annual favourable trade surpluses with the United States but has aI so led to phenomenal increases in employment in this industry in Canada. Even Prem- ier Davis contributed (probably inad- vertentîly ) to this myth when he said recently that the Pact has led to 35, 000 new jobs. (3) The third myth is directly related to the first two. Its essence is that af- t e r six years o f "protection", during which time "Canadian" auto-makers and sup pl1 iers have been able to renovate their captial equipment and streamline t h e i r production methods by reducing the numbe r of models, they are now ready to ls tand on their own feet. " Safeguards, it is argued, are both un- fair and unnecessary to protect such an efficient "lCanadian"I industry. So much for fairy tales. Reality (1) The Auto Pact did not commit Can- ada and the United States to achieving free-trade in the indus try. In fact, one of the stated objectives was to achieve "fair and equitable production" on both s i des of the border. Such a comm itment , in pr inciple, denies by dir ect impliicat- ion the different principle of free-trade for the obvious reason that i t recogni zes that free-tr ade could resul t in something qui te different from "fair and equitabl e" distribution of production. Laissez-faire Action Therefore, to remove the production safeguards from the Pact woul d not serve t o i m plement its purpose. On the con- trary, such laissez-faire action would completely vitiate its stated and signed objective of achieving "fair " production 1 e v e 1 s i n both Canada and the United States. N-The Auto Pact has not been an iUn.- q u a 1ified bl essing for Canada. it has, of cour se, resulted in an altering of the completely unacceptable pattern of tr a de in au tomobiles and parts which exi sted prior to 1965. And it has led WHITBY FREE PRESS, to a more efficient automotive indus- try In Canada employing somewhat more pe opl1 e by 1l97 0 than otherwise might have been the case. Once Poor Trade Balance Prior to 1965 our trade balance with the Un ited States ln the industry was extremely bad. We had been persistent- ly on the unfavourable side of an annual de f icit in automotive trade in the hun- dreds of millions of dollars. Clearly the situation required change. One op- tion w as to fol low other countries and consol idate the industry into one or two firms, streamline its production runs, an 4 obtain fuli Canadian control per- h a p s t hrough a newly created Canada Development Corp. becoming the major shareholder. The o t h e r opt ion, retcommended by Prof e s sor V. Bladen's 1960 one-man Royal Commission was to integrate our branch-plant subsidiaries more ration- a I y i nto the North American market. If we had certain safeguards to ensure that we got our share of the production Professor Bladen showed how changes could be introduced which would bene- f i t both Canada and the United States. This was to be achieved principally by r e m o v ing the duties paid by manufac- t u re r s in r e t urn for their providing m o r e Canadian content in manufactur- i ng. Canada could expect to improve its persistently negative tradebalance with the UnitedStates. The United States in turn expected to gain in the long-run by having an industry organi zed for produc- tionon a continental basisand thus being in a c om m an d i n g position for future growth in the Canadian automotive mar- ket. Such a belief in growth was and is rationally grounded. Our population and disposable income are rising. Since 1965 the economic advantages to both the U n i t e d States and Canada havebeenreal. Canada no longer needs totakefor granted the inevitability of a large trade deficit in automotive trade. For theAmericans, it remains true that companiesowned by them still dominate the Canadian market. American Pressures However, given the present pres- s u r e a f rom the United States and the apparenitwillingness of the federal Lib- e r a I s to acquiesce, two facts must be stressed. The fir st is that even dur ing t he l ife-time o f the Pact, Canada has h ad a defi ci t i n automotive balance of t rade figures in every year since 1965 w i th the s olIe exception of 1970. The cumul at ivé total is a net deficit be- tween 1965 and 1970 inclusive of almost two b iilion dollar s ($1, 979. 4 millIion). The decision to produce different mod- els in Canada in 1970 might have led to another deficit, not a surplus. We have h a r dly taken advantage of Uncle Sam. Next year the shoe might be on the other foot. Employment in the lIndustry In terms of employment in the indus- try the situation has not been exactly miraculous. According to figures pro- duced b y the Dept. of industry, Trade & Commerce there were 69, Q0 GCnad- lans e-M p 10oy ed in the r 4xtry i 1964 (re year before the Pact). In 1970 the figure was 82, 024, representing a growth ove r six years of only 13,016. Of course this increase in jobs has been good. But it is not the "phenomenal" in- c r e a s e described by the government; Thursday, December 23rd, 1971, Page 7 nor is it anywhere near the 35, 000 fig- u r e cited by Premier Davis. Besides, shouldn't a growing population, partic- ularly one with many in the young auto- buying age, lead to a normal growth in employment in the automotive industry? The fact is that in 1964 Canadians con- s umed 7, 5% of all the North American cars soldon the continent, whilewepro- ducedonly'4% of that total. In 1969 (the last year for which there are available statistics), consumption remained at the 7. 5% level while our share of product- ion rose t o only 5.5%. We still do not produce even what we consume in North American automobiles. Havewe cheated Uncle Sam? Hardly. (3) The third myth asserts that a now- efficient "Canadianl industry no longer needs to have its workers protected by out-moded safeguards. In 1960 the Royal Commission on the Auto Industry stres- s e d that w i t h o u t safeguards an Auto P a c t betw e e n Canada and the United States would be disastrous for us. The reasons are obvious. In terms of either ownership o r control we do not have a "Canadian" a u t o m otive indust ry. The i n d u s t r y is almost totally owned and controlled in the Uni ted States. There- fore, we must have assurances that dec- isions made in that country must over a p e r i o d of time ensure that Canadians w i I I have a "fair and equitable" share of the production. lnmattersof this sort, no nation can simply rely on good will. For example, it isobvious that given the present high I eve I of unemployment in the Un i ted Statesand the related financial incent- ivesnow being processed through Con- g r e ss des igned to reward financially t h ose m ulti-national U. S. companies w h i c h p roduce at home, political and econom ic pressures of considerable magnitude will induce the auto compan- ies to transfer and expand production in the United States. Safeguards Suspension To suspend the safeguards for even two y e a r s could be disastrous. Apart f rom the difficult problem of restoring the safeguards, two years will be suf- f i c ient time for major investment dec- isions to wipe out entirely the benefits of thePactprecisely because such dec- i s ions ma de during that per iod could de t er m ine what will transpire in the industry for the next 5 - 10 years. How many thousands of Canadians could lose their jobs in that time ? It i s understandable that the short- run concerns of the Uni ted States Treas- ury Department have led to pressure on the Auto Pact safeguards. However, it will no t be understandable if the Gov- ernment of Canada yields to them. The Aut o Pact was designed t o redress a serious and prolonged economic imbal- ance. It is not weighted in Canada's fav- our. Both countries benefit. 1lbelieve that for Canada the existing safeguards, related to 196/4 levels and shares of production, are insufficient. The mimimLum safeguard, which should be ou r obj e c t ive, is 100% Canadian Val-ue Added - that is, Canadians should have the right taproduce in dollar value at least that which we consume in autom- tive products. Howeve- itrithe c h o ic e is b e t ween the present safe- guar ds and none at ail. And, ifthe Trudeau government chooses the latter, then for once the epithet "sell-out" will be entirely appropriate.