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The Canada United States Free Trade Agreements

1215 words - 5 pages

The implications of the Canada-United States Free Trade agreement and the subsequent NAFTA agreement pertaining to Canadian trade with the United States.The arguments in favour of these agreements include:1) Comparative AdvantageThe notion is that everyone will benefit when countries specialize and trade freely what they produce most efficiently. Less intervention by the government would enhance the process of free trade and help achieve the proper economies of scale.2) Elimination of Barriers and TariffsNAFTA has eliminated barriers to trade and tariffs on most products, and formed a larger integrated market, building North American as one of the most competent regions in which to conduct business.3) International CompetitivenessThese agreements enhance Canada's goods and services. Additionally, these agreements improve access to the United States and Mexico and guarantee Canada's position as a prime location for investors to reach all of North American.4) CompetitionUnder these agreements, Canada has more opportunities to develop and demonstrate their economic expertise, technical knowledge and leadership.5) Economic GrowthFree trade stimulates economic growth, increases employment and boosts overall incomes in Canada.6) DemocratizationBecause the agreement promotes discipline and transparency, pressing social problems (such as anti-dumping, environmental deterioration and labour rights) can be improved.The arguments against these agreements include:1) Loss of Manufacturing JobsA significant effect of the agreements would be the loss of manufacturing jobs and the shift of corporations and plants over to Mexico where cost of production are much lower than in Canada. This would seriously affect Canadian employment.2) Overly Dependent on a Few SectorsSpecialization through comparative advantage would make Canada overly dependent on a few resources or products. This would upset the market and economic situation if demand falls in those areas.3) ProtectionismLabour unions and domestic industries use this argument to push protectionism. Their viewpoint is that these agreements can create tremendous strain on the Canadian economy.4) Infant Industry ArgumentMany economists argue that industries in the developing and initial stages of the economy need protection against international competition to allow them to establish themselves.5) Cultural ImperialismMany arguments over the influence of Latin American culture on Canadian cultural trade and identity exist. In particular, some worry about industries in relation to French Canadian industries, such as French wines.6) Free trade with a lower standard country threatens the maintenance of higher business standards and corporate governance in Canada.The results of these agreements thus far for Canada:These agreements play a significant role in economy and trade because Canadian trade is very heavily concentrated with the United States. Under these agreements, Canada's goods and services have better access...

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