Overall, NAFTA has not been devastating or transformative for the Canadian economy. Opponents of the 1988 free trade agreement warned that Canada would become a glorified 51st state. While this has not been done, Canada has also not closed the productivity gap with the United States. According to the OECD, the country`s GDP per hour worked was 74% of U.S. GDP in 2012. It was also the first Canadian election to use a lot of negative publicity; Anti-free trade advertising showed that negotiators were “moving away” from the free trade agreement, which turned out to be the Canada-U.S. border at the end of advertising. Although some opinion polls showed that there were slightly more Canadians against the deal than for him, the Mulroney Progressive Conservatives took advantage of being the only party in favour of the deal, while the Liberals and the NDP divided the vote on free trade. In addition, future Quebec premiers Jacques Parizeau and Bernard Landry supported the agreement, which was seen as a factor in supporting the PC party in Quebec. [16] Mulroney won a government majority and the agreement was introduced into law, even though a majority of voters had voted for parties opposed to free trade. [17] [18] The NAFTA structure was to increase cross-border trade in North America and stimulate economic growth for stakeholders. Let`s start with a quick look at these two topics. Following the signing of the auto pact, the Canadian government considered proposing free trade agreements in other sectors of the economy.
However, the U.S. government was less sensitive to this idea and wanted to remove some of the guarantees from the pact. Canada`s attention has focused on the issue of a broader free trade agreement between the two countries. [8] NAFTA shows the classic dilemma of free trade: diffuse benefits with concentrated costs. While the economy as a whole may have recovered slightly, some sectors and communities have experienced profound disruptions. A southeastern city loses hundreds of jobs when a textile factory closes, but hundreds of thousands of people find their clothes slightly cheaper. Depending on how you quantify it, the overall economic benefit is probably greater, but not very noticeable at the individual level; the overall economic loss is small in the grand scheme of things, but devastating for those it directly affects. Over the next two decades, a number of academic economists have studied the effects of a free trade agreement between the two countries. Some of them , Ronald Wonnacott and Paul Wonnacott,[9] and Richard G. Harris and David Cox[10] – concluded that Canada`s real GDP would increase significantly if U.S. and Canadian tariffs and other trade barriers were eliminated and that Canadian industry could produce on a larger and more efficient scale.
Other free trade economists were John Whalley of the University of Western Ontario and Richard Lipsey of the C. D. Howe Institute. [11] It is probably certain to give NAFTA at least some of the credit for doubling real trade among its signatories. Unfortunately, the simple impact assessments of the agreement stop. For optimists in Mexico, nafta 1994 seemed to be full of promise. The agreement was indeed a 1988 Canada-U.S. extension. Free trade agreements, and it is the first that has linked an emerging market economy to development.