Essay about How The Canadian Economy Is De

2078 Words 9 Pages
The Canadian economy is determined largely by the United States economy threw the North American Free Trade Agreement (NAFTA) and the Free Trade Agreement (FTA). The North American Free Trade Agreement was an agreement that came into effect on January 1,1995 which involves Mexico, Canada and the United States of America. This agreement is said to produce 1 billion to 3 billion dollar gains in each country. NAFTA ensures that a certain amount of goods produced and traded between the three countries has to have a minimum percentage of its parts produced in North America.
The Free Trade agreement is between the United States and Canada. The Free trade agreement came into effect in 1989 even though three fourths of trade between Canada
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Since Canada does a lot of exporting of raw material these materials use to have such a high tariff and were not being as traded to their potential now they are being traded frequently to the U.S because of the FTA.
The FTA has allowed Canada and the U.S to “reduce trade obstacles by standardizing their product standards, testing and approval processes.” The FTA now states that Canada can’t restrict oil and natural gas exports to the United States therefore Canada can’t charge Americans higher prices in Canada. The FTA has excluded some industries from the agreement these industries are Agricultural, Cultural Industries, Social Insurance programs and Regional development programs. Since there are so many rules and regulations under the FTA a binational panel will settle the disputes. The panel settles these disputes by determine whether each country’s regulators are applying to their trade laws. Canada or the U.S can end the FTA by giving six months notice. Since U.S exports to Canada only account for a small 1.3 per cent of its GDP and Canadian exports to the U.S account for 20 per cent of its GDP, Canada can’t afford to lose this agreement while the end of this agreement would hardly even effect the U.S.
The NAFTA set up free trade over North America. Since Canada already had free trade with the U.S the NAFTA set up free trade with Mexico. The NAFTA has been controversial both in Canada and in the U.S because people are afraid that…