Trade Sanctions In Canada In The Early 1900's

Over the past 150 years, Canada’s relationships with other nations has led to the development of many trade sanctions. The nations involved in these trade sanctions haven’t always had the greatest relationship, allowing Canada to become the tie between the nations, advancing the development of countless Canadian industries. Due to Canada’s relatively small population, its automotive industry, hasn’t been able to grow as a self-sustained industry, leading the industry’s development to occur solely through economic sanctions. The two dominant forces these automotive sanctions face are the United States and Europe, each having a large stake in the development of the industry.

During the early 1900s, countries focused on becoming self-sufficient,

introducing the creation of tariffs between countries. While this went on, a new automotive industry was in the midst of development which lead to a 35% automotive tariff between the countries and the foundation of Canada’s automotive industry. Although Canada was unable to develop an industry focused on common automotives, such as cars, a new company evolved with a unique automotive project. This company was Bombardier, though this company did not have much effect in the early 1900s, the company evolved to become a huge factor in Canada's automotive industry. While United States focused on more common automobiles, Detroit became the international leader in the automotive sector, because of their superior roadway infrastructure. This location was perfect for Canada, because Detroit was within a one kilometer proximity to the Canadian city, Windsor. Inspiring a movement into Windsor, which would become the spark for the Canadian automobile industry, leading to the creation of the 62 billion dollar industry. Without Canada’s tariff, Detroit may never have expanded across the Canadian border causing automotive companies, such as Ford and General Motors to only operate in only United States, leaving Canada’s automobile industry to collapse. Therefore, proving that the trade tariff created the base for the industry.

Avoiding tariffs was only the first major reason for expansion to Canada, the other reason United States expanded their borders into Canada was because of trade sanctions they had with Britain.

After First World War, when mass international automotive development began, with Europe in ruins. This was a great opportunity for the automotive industry to expand within a new continent in the midst of development, because the society in Europe could form their society around the new technology, making Europe a huge automotive market. Canada’s relationship with Britain was strong at the time, because the British felt that Canada was still a part of their colonies, causing Britain to lower tariffs on Canadian exports. This extra sanction allowed the Canadian industry to get a slight advantage during the early 1920s when Canada and United States were racing to get an advantage in the automotive industry. Nonetheless, United States was able to use their superior economic status and excess population to gain the upper hand. A little later, United States began to expand their borders, they witnessed these economic sanction Canada had with Britain and saw an opening. This factor led to the Ford and General Motors creating Canadian sectors of the companies, Ford Canada and General Motors Canada; allowing the companies to have access to the sanctions. This was a critical move for the Canadian automotive industry, and showed how international trade sanctions developed this

industry.

The Second World War ended with a revolutionary technology that would pave the path to our society today, through fear of the unimaginable power it held; was the nuclear bomb. The “Cold War” had a large impact on United State’s globalization and innovation; directly impacting the Canadian automotive industry. Second World War saw safer and effective automotives take to the sky, inspiring companies to obtain commercial advantages from the technology. Bombardier, was able to capitalize on this idea, and was able to gain ground as a strong international company in aerospace. Since aerospace consists of billion dollar projects, they cause international disputes to this day. For example, the recent argument between the Trump and Trudeau administration showed that trade sanctions are still under debate today. This is hard to believe for Canadians in the 21st century, because of the strong economic agreements that the United States and Canada have had in the past. Initially, early in the “Cold War” fear of airborne attack was imminent, so an agreement to protect North American airspace was created, the North American Aerospace Defence Command (NORAD). Inspiring more investment into aerospace technology, creating smaller businesses for repairs, security, and software to support larger companies like Bombardiers. These smaller companies continued to expand, causing Canada to become a sustainable base for aerospace companies that was internationally competitive. NORAD still stands as a prevalent aerospace agreement between Canada and the United States. Eventually, focus began to shift to common automotives, leading to the creation of the trade deal Canada-United States Auto Pact. This trade agreement established the integration of the Canadian and United States markets; creating a centralized North American automotive market. Allowing Canada to get closer ties with the United States, eventually pulling the industry out of a or the 600 million dollar deficit, to over a billion dollar in surplus. This was huge for the Canadian industry, showing the world that the Canadian automotive sector stands at the top. The Auto Pact was an important part of the North American Free Trade Agreement. With the Auto Pact being cancelled in 2001, the trade agreement is now dependent on NAFTA.

As the world evolved with growing international tensions, a new hope emerged, globalisation, which was the idea of creating international trade relationships to expand the economy.

Globalisation brought new relationships for Canada, helping their economy to become more successful. Initially, when the Second World War ended, countries were attempting to build up their own economies before embracing globalisation. Eventually, as tensions started to rise with the “Cold War”, countries started to make alliances and began strengthening their militaries. These alliances would eventually become trade relationships in the late 20th century, when globalisation was much more effective with cheaper travel, easier communication and fewer international disputes. Causing the movement of many international companies to expand to Canada. Leading to today, where intercontinental companies own over 60% of Canadian manufacturing facilities. In the past decades, countries in these automotive trades have made trade agreements with Canada to reduce tariffs. For example, Britain recently signed a free trade agreement that is expected to expand exports from 13,000 per year to 100,000 per year! This allowed Canadian companies to grow their market and caused a boost to the economy. Its effect can be seen in today’s growing economy with many companies posting annual record highs in 2017. These intercontinental trade agreements are in the midst of doubling the value of the Canadian automotive

industry; directly affecting the industry for generations to come.

These economic sanctions have allowed the automotive industry to grow to the size it is today. Canada was unable to establish their own automotive companies, so they have relied heavily on these sanctions. Without sanctions from United States and Europe, this industry would have never been established, losing 14.3 percent of Canadian exports. As United States begins to become more self-sufficient, a more opportunities will open up for the automotive industry in the future, and with Canada obtaining more sanctions; it is guaranteed that this industry will continue to grow in the years to follow.