The Canada-U.S. Auto Pact of 1965: An Experiment in Selective Trade Liberalization

In this paper we analyse the Canada-U.S. Auto Pact, a selective trade liberalization agreement which created a duty-free North American market for the major U.S. multinational automobile producers, but continued to protect them from offshore producers. The new international trade/I.O. literature predicts that, given the probable unexploited economics of scale and specialization in the tariff-protected small Canadian economy prior to 1965, …