TEXT OF SUPPLEMENTARY EXCHANGE OF NOTES UNITED STATES NOTE MARCH 9, 1965. His Excellency the Right Honorable CHARLES S. A. RITCHIE, EXCELLENCY: I have the honor to refer to the Agreement concerning Automotive Products between the Government of the United States of America and the Government of Canada signed on January 16, 1965. It is the understanding of my Government that automobile truck tractors are included within the articles to be accorded duty-free entry by our two Governments pursuant to Article II and the Annexes of the Agreement. I have further the honor to request you to confirm the foregoing understanding on behalf of the Government of Canada. Accept, Excellency, the renewed assurance of my highest consideration. I have the honor to acknowledge receipt of your Note of March 9, 1965, which reads as follows: "I have the honor to refer to the Agreement concerning Automotive Products between the Government of the United States of America and the Government of Canada signed on January 16, 1965. "It is the understanding of my Government that automobile truck tractors are included within the articles to be accorded duty-free entry by our two Governments pursuant to Article II and the Annexes of the Agreement. "I have further the honor to request you to confirm the foregoing understanding on behalf of the Government of Canada. "Accept, Excellency, the renewed assurance of my highest consideration. I have further the honor to confirm the foregoing understanding on behalf of the Government of Canada. Please accept, Sir, the renewed assurances of my highest consideration. (S) C. S. A. RITCHIE 233 ARTICLE-BY-ARTICLE ANALYSIS OF AGREEMENT PREAMBLE The preamble of the Agreement sets out the principles underlying the Agreement. The Governments state their determination to strengthen the economic relations between the two countries. They recognize that this can best be achieved through the stimulation of economic growth and the expansion of markets available to producers in both countries within the framework of their established policy of promoting multilateral trade. They further recognize that expansion of trade can best be achieved through the reduction or elimination of tariffs and other barriers to trade operating to impede or distort the full and efficient development of each country's trade and industrial potential. Finally, they recognize the important place of the automotive industry in both countries and the interests of industry, labor and consumers in sustaining high levels of efficient production and continued growth in this industry. ARTICLE I This article sets out the three objectives of the Agreement. The first objective is the creation of a broader market for automotive products to permit achievement of the full benefits of specialization and large-scale production. The second objective is the liberalization of United States and Canadian automotive trade in respect to tariff barriers and other factors tending to impede this trade, with a view to enabling the industries of both countries to participate in the expanding total market of the two countries on a fair and equitable basis. The third objective is the development of conditions in which market forces may operate effectively to attain the most economic pattern of investment, production and trade. In this article, the Governments agree to avoid actions which would frustrate the achievement of these objectives. ARTICLE II Paragraph (a) requires the Canadian Government to accord dutyfree treatment to imports of the products of the United States described in Annex A. This treatment is required to be given no later than the entry into force of the United States legislation according the same treatment to imports of the products of Canada described in Annex B. In fact, the Canadian Government began giving duty-free treatment to imports of the United States products on January 18, 1965. Paragraph (b) requires the U.S. Government to seek, in this session of the Congress, enactment of legislation which would authorize the President to proclaim the duty-free treatment of imports of the products of Canada described in Annex B. The authority sought is 25 to include provisions permitting the implementation of such duty-free treatment retroactively to the earliest date administratively possible following the date upon which the Canadian Government has accorded duty-free treatment. As mentioned above, the Canadian Government accorded duty-free treatment on January 18, 1965. The U.S. Government is obligated to accord duty-free treatment promptly after the entry into force of such legislation, if enacted. ARTICLE III This article permits either Government to take action consistent with its obligations under Part II (arts. III through XXIII) of the General Agreement on Tariffs and Trade. Such actions include antidumping duties, escape clause measures, and national security actions. ARTICLE IV Paragraph (a) is a general consultation provision enabling either Government to request consultations on any matter relating to the Agreement. Paragraph (b), without limiting paragraph (a), recognizes that special consultations may be needed with respect to problems of U.S. automotive producers which do not at present have facilities in Canada. Paragraph 3 of Annex A recognizes that Canada may designate such a manufacturer as being eligible for the benefits of the dutyfree treatment with regard to the products of the United States described in Annex A. Paragraph (b) also recognizes that special consultations may be needed with respect to the implications for the operation of the Agreement of new automotive producers becoming established in Canada. This provision is intended to provide a safeguard against firms becoming established in Canada without being required to undertake significant production in Canada and thus becoming a conduit enabling third-country products to secure duty-free entry into the United States. The Canadian content requirement for duty-free entry into the United States embodied in paragraph 3 of Annex B also provides a safeguard against this occurrence. Paragraph (c) provides for a comprehensive review no later than January 1, 1968, of the progress toward achieving the three objectives stated in Article I. During this review, the Governments will consider such further steps as may be necessary or desirable for the full achievement of these objectives. This paragraph is intended to provide for future possible arrangements and other matters which may arise after the 3-year transitional period has expired. ARTICLE V This article provides that access to United States and Canadian markets of the kind provided by the Agreement may by agreement be accorded on similar terms to other countries. This permits either country or both countries to conclude similar agreements with third countries. ARTICLE VI This article provides for the provisional entry into force of the Agreement on the date of signature and its definitive entry into force when notes are exchanged between the two Governments giving notice that the appropriate action in their respective legislatures has been completed. Appropriate action by the United States would be enactment of the proposed Automotive Products Trade Act of 1965. Appropriate action for the Canadian Government would be consideration of the Agreement by the Canadian Parliament. ARTICLE VII This article establishes an unlimited duration for the Agreement. However, each Government is given the right to terminate the Agreement, effective after 12 months' written notice to the other Government of an intention to terminate. ANNEX A Paragraph 1 describes the products to be accorded duty-free treatment by the Canadian Government. A supplementary exchange of notes dated March 9, 1965, confirmed that automobile truck tractors are included among these products. Paragraph 2 defines certain terms used in the description of the products to be accorded duty-free treatment and in other definitions. Paragraph 3 relates to the designation of manufacturers not coming within the definition of "manufacturer" (as that term is defined in par. 2) as being eligible for the benefits of duty-free treatment. ANNEX B Paragraph (1) describes the motor vehicles and chassis to be accorded duty-free treatment by the Government of the United States. A supplementary exchange of notes dated March 9, 1965, confirmed that automobile truck tractors are included among these products. Paragraph (2) describes the other articles to be accorded duty-free treatment under the Agreement. Paragraph (3) makes clear that the articles described in paragraphs (1) and (2) include articles whether unfinished or in finished state but do not include articles which have less than 50 percent Canadian value added (40 percent for vehicles and chassis described in par. (1) until January 1, 1968). |