The North American Free Trade Agreement And Canada Politics Essay

The North American Free handle Agreement And Canada Politics demonstrateThe North American Free Trade Agreement (NAFTA) was ceremonially signed by the leaders of Canada, the coupled States, and Mexico on December 17st, 1992. After deliberations in apiece countrys democratic hall of indicant, it officially came into effect on January 1st, 1994.NAFTA is first and fore approximately an economic cartel surrounded by its three member countries. Its primary goal is to finish up trade barriers and subsidies for national industries in order to create a truly free North American market which would better foster competition, thus change magnitude wealth and productivity. With those changes in effect, its effect was expected to be an increase income and a higher standard of living for the citizens of each country. At the same time, NAFTA would theoretically leave behind the member nations to leverage the advantages of a large free trade bloc in order to become more powerful internatio nally. Essentially, NAFTA was created with the vision of making Canada, the United States, and Mexico, more competitive internationally and within their borders, for the benefit of their governments and citizens.Looking specifically at the United States and Canada, there was previously an economic precursor to NAFTA a two-sided symmetry simply called the Free Trade Agreement (FTA). This obligation came into force approximately 5 years before NAFTA, on October 4th, 1988. It carry ond the same linguistic rule vision as the future NAFTA agreement to reduce trade barriers much(prenominal) as government barriers to competition, and liberalize the clime for investment thus allowing the easier facilitation of trade between the two countries.Reading economic reports and the opinions of pundits, youll find a lot of different opinions regarding NAFTA. iodin thing is known there is still a large totality of uncertainty and a lack of consensus as to whether NAFTA has been, in sum, a positive thing for Canada. Famous economists such as Nobel Winner Paul Krugman nonplus give tongue to that NAFTA has had a near zero effect on the Canadian economy, whereas economic reports such as one by Martin A. Anderson come out in unconnected to Krugmans belief, supporting its enactment. Further in this summary, we will explore the central issues of NAFTA and its effect on Canada and its people.NAFTA and Economic GrowthAs previously mentioned, NAFTA remains a factious issue. In truth, it is extremely difficult to isolate NAFTA as a variable in economic growth and opposite key metrics of society due(p) to the interwoven nature of our economy. With the plethora of variables considered, it is challenging to prove NAFTA as a cause for improving economic conditions. However, it does seem that the a large amount of paper come out in support of NAFTA as an engine of economic growth, citing its positive effect on the Canadian economy by highlighting the public trend in lower u nemployment rates and higher income from trade.Cited is an entry into the Journal of Economic Development with an article concerning which NAFTA member country has benefitted most from the treaty. It states that its effect on US Gross Domestic Product (GDP) has been minimal, whereas Canadas GDP has experienced a statistically significant increase due to the agreement. The paper goes on to theorize that this whitethorn be due to Canadas reliance on trade for its economy especially trade between NAFTA members. It goes on to say that the lack of effect on the US GDP may be due to the fact that its economy is very much larger than our own, and that changes are not as clearly visible due to its scale. To perplex the scale of Canadian trade with the United States in perspective, in 1999, 82% of Canadian trade was trade between NAFTA nations. More recently, in 2009, 73% of Canadian exports went to the United States. The effect on such large parts of our economy being export dependent wi ll be discussed later in this summary. rough more key metrics of changes in the Canadian economy, comparing 1995 to 2005The unemployment rate diminish from 8.3% (1995) to 6.8%(2005).Canadian GDP was $721.26 billion in 1995 and $1024.92 billion in 2005 (values set for inflation), a 42% increase.Interprovincial trade has increased 15.29% due to NAFTA since 1994.Notably, interprovincial trade increased in Alberta by 30.1%, Prince Edward Island and Newfoundland by 24%. Interestingly, British Columbias interprovincial trade share decreased by 30.39%.Trade with the United States increased by 20.41% in Saskatchewan, and 17.77% in Manitoba. Most notably, Prince Edward Island increased trade with the United States by 67.07%. In contrast, British Columbias share of trade to the United States increased by only about 1%.Some of these values may have changed due to the changing economic climate of the past 5 years. For example, the unemployment rate has since increased to a current value of 7. 9%. However, when interpreting these results, a trend becomes visible the Maritimes seem to have enjoyed a much larger share of trade than prior to NAFTA.The secondary sector of the Canadian economy concerns itself with manufacturing and general industry. Following the enactment of the FTA and NAFTA, the Canadian manufacturing industry had started to experience forceful changes. Because they were no longer as insulated to international competition, labour intensive industries such as Quebecs textile industry started to decline as cheap goods from other countries began to immortalise the market. Though many labour intensive jobs have shifted away to cheaper outsourced locations, there are large sections of Canadian industry that are more resilient to such shifts. One of these is the high-technical school sector, which employs a large amount of skilled labour and creates advanced goods such as aircraft, new types of metal alloys, and intellectual property such as software. Industri es such as biotechnology are much harder to outsource given their advanced nature, allowing Canadas relatively educated populace to contribute to the growth of these sectors resulting in a net gain of employment. Most of these high-tech firms are located in Canadas industrial core Southern Ontario and Quebec.Ontarios location is greatly conducive to creating a good environment for trade. Northern Ontario produces many primary resources, such as forest products and minerals. Exports from Ontario to the United States were about the same value as its exports within Canada. By 1998, Ontarios exports to the United States increased to 2.5x the value of trade to the rest of Canada. The automobile industry is often cited as Ontarios most important export industry as it accounts for a large share of its trade, creating an environment of dependence upon that industry. Quebec is also heavily trade dependent, with exports of 25% of Canadas information technologies, 55% of aerospace production, 30% of pharmaceuticals, 40% of biotechnology, and 45% of high tech exports. Prior to 1989, about half of Quebecs trade went to other parts of Canada, and the other half was exported. By 2002, approximately 65% of Quebecs trade leaves Canada.NAFTAs ControversiesThough NAFTA has clearly influenced our economy, most visibly with an increase in our exports and GDP, many believe that his trend presents a double-edged sword. The basic question put forward is to what length do we lack our exports to increase?. A more globalized, or north-Americanized, economy also increases the risk of encountering economic repercussions due to recessions or the booms and busts of other countries. The most notable example of this would be the current economic recession, which many argue is only affecting Canada because of lower demand stemming from the economic uncertainty in the United States. With increasing globalization, it is becoming obvious that the intertwining of economies will continue and tha t our ability to insulate ourselves from global economic conditions will continue to decrease.It can be argued that NAFTA intertwines more than our economies. A controversial statute of the agreement Chapter 11 grants corporations the right to sue the signatory countries for compensation if their investments are adversely affected through regulatory means, especially if those regulations favour local businesses or constituents.One notable case of Chapter 11 useEthyl Corporation (USA) v. Government of Canada. Sued over Canadas federal ban over the gas additive MMT, which some studies have linked with neurotoxic effects. Canada was forced to overturn the ban and pay Ethyl Corporation in excess of $19million in compensation. solarize Belt Water, Inc (USA) v. Government of Canada. Sun Belt Water filed a learn for $105 million arguing that Canadian legislation thwarted its plans to export bulk quantities of fresh water from Canada. This claim has yet to be settled.Another important is sue of concern is the so-called softwood woodland dispute between the United States and Canada. The dispute has carried significant implications for British Columbia, as the province accounts for over half of the total logging output of Canada. In 1982 the US lumber industry logged its first complaint. Tariffs have been fluctuating since 1986, and in 2001 duties on softwood lumber imported into the United States have reached as high as 27%. Both a NAFTA panel and the World Trade Organization have issued non-binding resolutions siding with Canada against the United States. Unfortunately, the tariffs remain despite these rulings and it appears that NAFTAs ruling against the United States has not influenced its policy. As recently as 2006 a new agreement has been reached in which import duties of $4billion that were charged will be returned (a total of $5billion in duties has been collected), however, Canada will be forced to increase export taxes on its own lumber if its price falls b elow US $355 per thousand board feet, in order to protect US companies.NAFTA has presented several environmental concerns to Canadians. As having one of the worlds largest capacities of freshwater, Canada has been infra pressure to commoditize the resource in order to allow for its trade. The case mentioned above (Sun Belt Water, Inc v. Canada) goes to show this pressure. For the time being, legislation and political will has generally hostile the bulk sale of Canadian freshwater.Final NotesIn the end, it can be said with some confidence that the North American Free Trade agreement has significantly altered the Canadian trade landscape. Though trade between NAFTA nations appears to have become more pervasive, questions remain about whether the continuing integration of other national economies is truly a good thing for Canada. Some believe that our very democracy is at stake now that foreign corporations have the power to overturn Canadian policy which at a basic level is overturn ing the decisions of our elected politicians the only representatives of the Canadian people.