Canada's Part In The North American Free Trade Agreement

2907 words - 12 pages

Canada has changed drastically to become the nation it is today. Evolving from a young country, Canada today is viewed as a democratic and proud nation. After Canada received its independency from Britain in 1867 it has progressed into a wise nation that has slowly related it self to the United States of America. The USA has many things that Canada needs to import and the United States ask for the same in return. In the 20 century trade is seen as a growth in a country's economy. This is why Canadian Prime Minister; Brian Mulroney, agreed to a free trade contract with the United States on January 1st 1988. Many Canadians had different views and perspectives on how this contract would turn ...view middle of the document...

Canada wanted to gain access for Canadian goods, service and capital to Mexico, as well as to resolve specific annoyances with the United States from the Free Trade Agreement (FTA), and lastly to ensure that Canada remained an attractive location for investors wishing to serve the whole market in North America. (Government, IV) Most of these objectives have been met so far.The economy of Canada changed vastly due to NAFTA. A closer relationship between the three countries was achieved in comparison to the rest of the world. Since the Free Trade Agreement, The United States had the largest foreign investment in Canada with 64%. By the end of 2000 $126 billion dollars was invested in Canada from the United States, an increase of $15 billion from 1984. (Government, III, and IV) This increase in investment came from a variety of things like petroleum, and transportation equipment to manufacturing industries.Another object that increased the flow of money coming into Canada was the Canadian dollar. It initially rose 4.1% from 1989 to 1991. "My suspicion is that the Canadian dollar was part of the (free trade) deal", state Dickson.(Halberstadt, 9). From 1989 to 1994 Canada was able to keep a 2.25% short term interest rate above the US (Zahniser, V). The total market value of all the goods and services produced within the borders of a nation during a specified period is known as the Gross Domestic Product (GDP). In 1980-1988 the average GDP was: 3.2% and in unemployment rates 9.6%, in 1989-1996 the GDP decreased to 1.4 % and unemployment rates increased slightly to 9.7 % (Internet 5). Mainly Ontario and Quebec industries were being affected, more then the resourceful Western provinces. The GDP reached a high in 1994 and was the only year of growth above 2.4 % (Internet 1), (Micro, 6).NAFTA had a rollercoaster affect on the employment rates in the country. NAFTA earned 0.1 % in GDP, and after 1996 produced many more jobs. Due to the high amount of investment in Canada, money was still coming in and the dollar was a steady price. During the late 1980s and early 1990s 40% of Canadian families' income fell 4.5%, and only 20% of the Canadians increased 6.6% on average (Internet 5). This was due to many plant closures and layoff. Canada was losing jobs to there partner south of the United States border; Mexico. This era has been known as the lowest economic growth since The Great Depression. Leading economist Pierre Fortin has characterized this period as "the great Canadian slump" -- the longest period of below potential growth since the Great Depression (Internet 5). NAFTA has caused a loss of 276, 000 jobs in manufacturing. In food manufacturing, a decrease of 33, 000 jobs occurred, in clothing 36, 000 jobs, in primary metal 23, 000 jobs, in Fabricated Metal Products 19, 000 jobs, in Electrical & Electrical Products 40, 000 jobs, and in Transportation Equipment 1,000 jobs (Internet 3). The only increase was in Machinery (Non Electrical) with 6,000...

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