Protection for the Automobile Manufacturing Industry

THE AUTOMOBILE MANUFACTURING INDUSTRY

American governmental efforts to protect the domestic automobile manufacturing industry in the United States began with the United StatesCanada Automobile Pact in 1965. The government came to the aid of the industry again in the early1980s, with the negotiation of the voluntary import quota agreement with Japan.

The United StatesCanada Automobile Pact

In 1965, as well as in the preceding three decades, the automobile and automobile parts industry in the United States was concentrated in the MichiganOhioIndiana region. Certainly some production facilities (mostly assembly plants) were located outside of this region, but the bulk of the industry was within it. At the same time, as well as in the years preceding 1965, the bulk of the automobile and automobile parts industry in Canada was concentrated in southern Ontario just east of Michigan and just north of Ohio. Thus, in 1965, the automobile and automobile parts industry was geographically concentrated, irrespective of international political boundaries.

In the years before 1965, the British Commonwealth was still an economic reality, as well as a political entitythe United Kingdom did not become a member of the EEC until 1973. The preferential tariff agreements between the Commonwealth countries caused automobile manufacturers from the United States to build production facilities in Canada, as a means of avoid

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e manufacturers to favor one or the other in specific situations. The Voluntary Agreement With the Japanese In the early 1980s, sales of new automobiles in the United States plummetted. At the same time, a combination of high gasoline prices, declining income levels, and the threat of unemployment caused sales of fuel efficient, foreignmade automobiles to hold up better than those of almost all Americanmanufactured models. One result was a significant market share increase for foreignmade automobilesparticularly so for Japanese manufactured automobiles. Another result was pressure placed on the federal government in the United States by both 21management and labor in the automotive industry to curtail the importation of foreignmade automobiles to the United States. While the Reagan Administration throughout its tenure resisted the implementation of overt trade restrictions, they were never above governmenttogovernment pressures to ease trade problems. Such governmenttogovernment pressures with the Japanese involving Japanese automobile exports to the United States were among the first of this type of action taken by the Reagan Administration. The governments of the United States and Japan, and the Japa
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Approximate Word count = 3359
Approximate Pages = 13 (250 words per page)

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