Free Trade and the Economy of Canada Essay

Due to the differences between the countries in its profitable fundamentals; the International Trade occurs. The contracts between the countries consider as the primary driver of the global exchange. These contracts concluded on the basis of the countries beneficial elements and advantages. Each international trade between the countries depends on numerous focal points of this exchange process. The economics and producers effectiveness measured by absolute advantage for these economics/producers. For example; if the producer needs lesser amount of contributions/inputs to provide specific product, then this producer has an absolute advantage in producing

Investopedia.com states, “free trade is the economic policy of not discriminating against imports from and exports to foreign jurisdictions. (Buyers and sellers from separate economies may voluntarily trade without the domestic government applying tariffs, quotas, subsidies or prohibitions on their goods or services.)” In the previous decade, one of the many controversial subjects in the Canadian economy included whether or not it was beneficial for our federal government to eradicate free trade or open it up to other nations. During my research, I discovered that free trade agreements between Canada and other nations were not as beneficial as they may have seemed for they were often business and market oriented.

In 1985, a report published by the Royal Commission on the Economic Union and Development Prospects of Canada recommended that Canada establish a free trade agreement with the United States (Quinlan, 318). Brian Mulroney took the advice and set foot to establish such an agreement. This lead to the creation of the Free Trade Agreement through the process of the Free Trade Debate. The Free Trade Debate has strengthened our economy and has reinforced our relationships with neighbouring countries. Therefore, the Free Trade Debate has positively impacted Canada into making Canada what it is today.

In terms of technology, Canada seems to be very technologically advanced. It’s citizens have on-demand access to internet, smartphones, and the vastness of the internet entirely unrestricted. This translates into a sense of first-world wealth held by many Canadian nationals. Canada also has the Canadian Advanced Technology Alliance (CATAAlliance), which is the largest high-tech association in Canada, that matches businesses with technological opportunities across almost every sector.

Canada is a resource processing country, and many of its products take important positions over the world. Canada is also a technology intensive country with advanced technology and equipment of industry and agriculture and high labor productivity. There are more than 15 million people in its labor force, the respectively proportion of

     Over the past few years, Canada's economy has done comparatively well and has demonstrated some resilience to the fluctuating global economy. However, Canada remains to be relatively less competitive with respect to other developed countries. In this paper I will attempt to take a closer look at Canada's position in the global economy today and examine the relevant issues.

Free Trade is the ability to trade goods and services without barriers, and for prices to rise naturally through supply and demand. In theory, Free Trade was a way to break down the barriers between countries, banishing taxes and allowing prices to be naturally set through supply and demand. According to the World Trade Organization, this gives the poor countries the opportunity to specialize in the production of goods that derive from their environment and natural resources with the capacity to sell those same goods to the western world, while being able to buy back goods that may not produced in their native country. This idea is to be beneficial to all; however, the rich become richer while the poor remain poor.

Countries are enabled by free international trade to specialise or to focus in the production of the goods in which they have a comparative advantage. Specialisation countries can take the benefit of efficiencies generated from increased output and economies of trade. The size of the firm’s market are increased by the international trade which results in lower average costs and increasing in productivity, as it ultimately leads to increase in production.

Trade with another country such as India is beneficial when the country in question offers a variety of resources that are not available domestically within a country such as Canada. If the imports of one country are in line with the exports of another country, then

Free Trade is the concept we use when referring to selling of products between countries without tariffs, fees, or trade barriers. Free Trade simply is the absence of government interference or numerous restrictions, which has been labeled as laissez fair economics. Free Trade grants easier access to goods and services, promote faster growth for the economy, and also allows for the outsourcing of production of goods, which hurts the economy. Many believe that the free trade hurts developed countries and nations, due to the loss of jobs by international competition and can reduce the country’s GDP. Overall, free trade agreement with other countries can save time and money and increase participating countries economy.

Free trade is exchange of goods and commodities between parties without the enforcement of tariffs or duties. The trading of goods between people, communities, and nations is not an innovative economic practice. Nations are however the main element within a free trade agreement. By examining free trade through three different political ideologies: Liberal, Nationalistic, and Marxist approaches, the advantages and disadvantages will become apparent. Theses three ideologies offer the best evaluation of free trade from three different perspectives.

The basis of free trade is that in a growing economy the comparative-advantage shows that resources flow from lower productivity to those with higher productivity (Carbaugh, 2009). Along with increased employment in developing countries and higher standard of living, consumers benefit from more diversity on the market and cheaper prices. One of the baggiest challenges government’s faces is the pressure from public and domestic firms to protect the local work force from cheap foreign imports. Governments must find

”Free trade policies have created a level of competition in today's open market that engenders continual innovation and leads to better products, better-paying jobs, new markets, and increased savings and investment” (Denise Froning). Though Free trade plays a huge role in the economy today because of what and where it is used. Free trade allows for traders to trade across national boundaries and other countries without government interference. Meaning that traders have very few regulations that allow for them to do this without the government intervening. Free trade makes things for traders much easier and also allows for many more jobs in the US, such as exporting jobs, or jobs in the auto industry and plants. Though there are many

A country is said to be more productive than another country, if it can produce more output (goods) for a given quantity of input, such as labour or energy inputs. An example is that there are only two countries, Australia and Japan. They both produce computers and wine, and only one factor of production, labour. Japan produces 6 computers for every 1 bottle of wine, where as Australia produces only 4 computers for every 3 bottles of wine. This suggests that Australia should export some of its wine to Japan, and Japan should export some of its computers to Australia. Australia has an absolute advantage over Japan, when producing wine, and Japan has an absolute advantage over Australia, when producing computers (Gandolfo, 1998).

The principle of comparative advantage provides a simplified theory explaining why free trade is possible, even when one country has an economic disadvantage. Both the Ricardian and Heckscher-Ohlin theories rely on fixed economic assumptions of constant return and perfect competition. However, intuitively the basic principle of business is to increase returns through innovation, improving processes and technology or increasing economies of scale. Organizations understand they control pricing and are price setters, rather than price takers as suggested by perfect competition (Krugman & Obstfeld, 2003). The idea of increasing returns and imperfect competition challenge the foundations of comparative advantage.