Free Trade Agreement and its Effects on the Canadian Economy
Free trade agreements are a significant part of a country`s economic development strategy. Canada`s economy has been driven by export growth, making it vital for the country to have free trade agreements in place. In this article, we will examine the benefits and drawbacks of free trade agreements and their impact on Canada`s economy.
The early 1990s saw the creation of the North American Free Trade Agreement (NAFTA), which eliminated tariffs and trade barriers between the United States, Canada, and Mexico. This agreement opened up new markets, increased trade, and created jobs. In 2018, NAFTA was renegotiated and replaced with the United States-Mexico-Canada Agreement (USMCA).
The USMCA has provisions that are meant to benefit Canada`s economy. Specifically, it protects Canada`s automotive and dairy industries. However, many experts argue that free trade agreements can lead to lost jobs in certain sectors, as firms relocate to countries with the lowest labor costs. Critics argue that free trade agreements hurt industries that use high labor costs, such as manufacturing or agriculture.
Despite the criticisms, free trade agreements have led to significant growth in Canada`s economy. In the early 1990s, Canada`s total merchandise trade was $272 billion. By 2018, total merchandise trade was $1.4 trillion. Moreover, from 1990 to 2017, trade with the US increased by over 200%.
Free trade agreements have also made it easier for Canadian businesses to expand globally. With reduced trade barriers, Canadian businesses have been able to access new markets and increase their international competitiveness. This has led to increased export growth, which in turn has helped boost Canada`s economy.
Free trade agreements have also facilitated the creation of new jobs in certain sectors, such as information technology and finance. These sectors have benefited from increased globalization and the expansion of the digital economy. Moreover, free trade agreements have led to lower prices on consumer goods, including cars, electronics, and clothing.
In conclusion, free trade agreements have had both positive and negative effects on Canada`s economy. While critics argue that free trade agreements can lead to lost jobs in certain sectors, the benefits of increased trade and access to new markets have led to significant growth in Canada`s economy. Ultimately, the success of free trade agreements depends on how well they are negotiated and implemented. As such, Canada must continue to develop and maintain free trade agreements that benefit its economy.