CUSFTA & NAFTA: Cons of Free Trade
Canadian History CHC2D6-05
Siyan Liu
The CUSFTA (Canada - U.S.A. Free Trade Agreement) was established in 1987, officially implemented starting 1988. A few years later it was replaced by the NAFTA (North American Free Trade Agreement) in 1994, which is essentially the same as its predecessor but with Mexico added in. These trade agreements established and modified rules of international trade among the countries of Canada, the United States of America, and Mexico (Krugman & Germic, 2008). Free trade has indeed brought some benefits to the countries involved, greatly raising the amount of trade among all three countries in the years since it’s establishment. However those benefits are
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While free trade could potentially mean a lot of benefits, its superiority over protectionism is strictly theoretical, under the conditions that you disregard all the unique conditions of each country involved, and the possibility of exploitation of workers, resources and legal loopholes by large corporations. Realistically industries will be monopolized by whichever country that does it cheapest, thus making any competition in that industry from the other countries extremely unprofitable and unsustainable. Each country would only be able to focus on sectors that they have a comparative advantage in, while the other industries would stagnate, laying off masses of workers, causing high unemployment rates in the country. Furthermore, businesses are focused on their own profit so they’ll go for labour wherever it’s cheapest, which increases income disparity. Theoretically, free trade can bring about the largest amount of trade and aggregate wealth for everyone by making each country specialize in what it has an advantage in, to produce more for less, lowering the market prices to be more affordable, greatly boosting trade, and raising quality of life. Essentially free trade aims to maximize income for each country under the contemporary conditions. However even if everything miraculously goes as planned and that hypothetical situation is reached, even under these perfect conditions free trade will allow no further development of industry.
The North American Free Trade Agreement (NAFTA) is an international agreement between Canada, America and Mexico. This agreement took effect in January 1994 and was signed by President Bill Clinton. This agreement brought great changes in trade volumes and open new opportunities for millions of labours. Later, in January 2008 according to the schedule all duties and restrictions were eliminated. About 45,000 tariffs were eliminated in 1994 and only 3000 were left until 1999.
NAFTA was established in 1992 and came into effect January 1st 1994. NAFTA was created to eliminate or reduce any tariffs between the three countries. It was formed to uphold greater trade between three countries "the increase in agricultural trade was doubled after the eight- to 12-year 'phase-in' period” (Grant, newswise). It promoted conditions of fair competitions, it also increased investment opportunities. NAFTA shows how free trade increases wealth and competitiveness,delivering real benefits to families, farmers, workers, manufacture and consumers. The impact of NAFTA on trade relations between Canada and the U.S. is more difficult to measure because the two countries had a free trade deal even before. NAFTA has helped boost agriculture flows between the two
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.
The North American Free Trade Agreement, commonly known as the NAFTA, is a trade agreement between the United States, Canada and Mexico launched to enable North America to become more competitive in the global marketplace (Amadeo, 2011). The NAFTA is regarded as “one of the most successful trade agreements in history” for its impact on increases in agricultural trade and investment among the three contracting nations (North American Free Trade Agreement, 2011). Supporters and opponents of the NAFTA have argued the effects of the agreement on participating nations since its inception; yet, close examination proves that NAFTA has had a relatively positive impact on the economies of the United States, Canada, and Mexico.
When George H.W Bush was president of the United States, he was one of the presidents who agree to the North American Free Trade Agreement (NAFTA). President Bush prior to the end of his term pass the law to the next president Bill Clinton, who signed into law in 1993 the NAFTA (North American Free Trade Agreement) bill. The North American Free Trade Agreement (NAFTA) has resulted in a lot of families in terms of millions of lost jobs in the United States.
The North American Free Trade Agreement, or N.A.F.T.A, was established to improve the economy of the United States, Mexico, and Canada. It has been close to twenty-three years since the treaty was officially signed; time has given us insight into the effects that this agreement has produced.
In 1987, Prime Minister Martin Brian Mulroney began the road towards free trade. The first negotiations were made to lead Canada into FTA (Free Trade Agreement) with the United States. “FTA refers to a system of trading between countries without barriers such as tariffs (taxes) or quotas (limits on certain goods).” In 1992, the North American Free trade agreement was introduced by President Clinton, it “created free trade between Mexico, the U.S., and Canada.” It was made in the hopes of improving economies and promoting an expansion in job creations. The agreement diminished boundaries that were implied with international investing and trading. Even though the idea seemed acceptable at the time, it certainly created troublesome situations
The North American Free Trade Agreement is one of the more interesting topics which I almost chose myself. The agreement itself has become a political firestorm due to the most recent presidential election and has almost sealed the fate of the Trans Pacific Partnership free trade agreement. When NAFTA was passed it seemed like there were only weak arguments against it and nothing but benefits from all three participating countries would occur. Anyone can see that the gross domestic product and tax revenues generated from all three countries has had a significant boost as pointed out by Ian and his sources(de Mestral, 2011). However, I looked at the overall United States labor participation rate since the 1950’s and a steady decline occurs
North American Free Trade Agreement (NAFTA) is an agreement between Canada, United States, and Mexico which was signed on December 17, 1992 (Hassan,M & Nassar R 2016) but wasn’t established until January 1st, 1994. NAFTA is a trade agreement between the North American countries. It is an agreement that would allow businesses to obtain resources from each of the three countries. The idea behind it was to make it easier for countries to trade and to increase productivity. Since NAFTA businesses, trade, and also investments have increased which in return has brought strong economic growth between these three countries. Because of the strong economic growth more jobs were created which in return gave better prices for goods, consumers,
The North American Free Trade Agreement is an agreement that permits free a trading zone in North America. It was initially signed by Canada and Mexico in 1992, and later adopted by the United States on January 1, 1994. According to William Orme (1998), “NAFTA creates the world’s biggest and richest market, a $6 trillion market of 360 million consumers” (Ormer, 1998. pg. 9). Once implemented, NAFTA immediately lifted the tariffs and reduced several non-tariffs barriers to trade. Ford (2008), stated that “trades between the parties currently account for about 80 percent of Canadian and Mexican trade and more than a third of U.S. trade.” Before NAFTA companies in the U.S. used to pay a 12 percent tariff on parts shipped into Mexico and an additional 2 percent tax on finished products that were sent back into the U.S. By eradicating the tariffs allow companies in the U.S. to increase their capital and consent to future trades being
Mexico’s economy was modernized, their merchandise manufacturing was boosted, and their farm exports to the United States were tripled (in text citation). NAFTA has had a positive impact on Mexico’s productivity and consumer prices, continuing the transition from one of the world’s most protectionist economies to one of the world’s economies most open to trade. In addition to liberalizing trade, Mexico reduced public debt, introduced a balanced budget rule, stabilized inflation, and built up the country's foreign reserves. Canada’s trade with the U.S. has increased rapidly since Canada’s trade liberalization. Since NAFTA, Canadian exports to the United States grew from $110 billion to $346 billion (in text citation). One of the biggest economic effects for Canada has been the increase in agricultural flows, having more than tripled their agricultural trade with America. From the economic growth in America, Canada, and Mexico, it is easy to conclude that NAFTA is succeeding in its goals to modernize Mexico, create jobs, and improve and increase
barriers were eliminated within ten years of the Act. A national treatment for member countries was adopted to liberalize trade services and investments. Performance requirements were removed, and dispute mechanism for investment conflicts were created. Protectionist issues emerged regarding progress in eliminating anti-dumping policies and persistent administered protection frameworks.5NAFTA did not substantially liberalize trade amongst all three counties in the agreement and fell short of its high expectations but it has certainly been a beneficial liberalizing force overall for Canadians. The North American Free Trade Agreement has been beneficial for Canada due its strengthening of relations with the United States, and increasing economic growth in our nation.
Some advantages of free trade; Free trade occurs when there are no artificial barriers put in place by governments to restrict the flow of goods and services between trading nations. When trade barriers, such as tariffs and subsidies are put in place, they protect domestic producers from international competition, rather than create trade flows. It is also beneficial to consumers as they can gain great amount/variety of goods and services.
+ It creates employment opportunities. A clear advantage of free trade advocates point out is the need for more workers by the exporting country. With its market expanding globally, the demand for goods and services increase. Because of this, more labor force is necessary to ensure delivery and consequently, more jobs are available for the people.
According to its supporters, free trade policies allow countries to specialize in goods which they can naturally and efficiently produce. Countries generally try to be self-sufficient by using the resources they have to produce everything they need and the main reason behind this is to avoid the expenses of trade. However with trade becoming far cheaper due to the removal of barriers, each country that previously did this can now focus on what they need to produce and trade what they are not efficient at rather than wasting resources by producing everything possible. Furthermore, this not only means the resources are being put to better use but it also means that the country can trade at a lower cost due to the removal of barriers and can now put those finance’s into better use. Another advantage is that as time goes on and MNC’s set up in different countries, local firms have the opportunity to access some of the latest technology from some of the more developed countries of the world. Moreover, the world becomes a more competitive environment since MNC’s move and local firms have to match up to their par leading them to either gain from this exponentially as well as be able to grow in the near future to become a big firm in order to compete with the MNC or to join with them.