Nafta

Is NAFTA good or bad for

Canada?

Shehraam Nawaz Janjua

Economics Assignment

Mr. spinelli

1866

What would this island be without foreign trade but a place of confinement to the

inhabitants, who (without it) could be but a kind of Hermits, as being separated from the

rest of the world; it is foreign trade that renders us rich, honorable and great, that gives

us a name and esteem in the world.

Charles Molloy

De Jure Maritimo et Navale, 1676

Even before Charles wrote this in 17th century there was a sense of foreign trade and

its benefits amongst the people. Trade is the reason for the rise of many civilizations such

as the Muslims because the backbone of there economy was the international trade. A

new theory was suggested by a Scottish philosopher Adam Smith in the 18th century that

the economy would grow much quickly if there was no trade barriers, thus this concept

came to be known as 'Free Trade'.

In today's world free trade is flourishing and many economies of the world have made

treaties with each other and declared them selves as one market, these are also called

trading blocs. The major one of these treaties is the NAFTA (North American free trade

agreement), it has three members Canada, Mexico and USA.

Background of NAFTA

Mexican's wanted to make a free trade agreement with USA as Canada did with

CFTA (Can-US free trade agreement), this brought fourth the issue to Canada that either

they would continue the bilateral trade with USA or open there markets further and

include Mexico and turn this agreement into trilateral. So in 1992 the agreement was

made and after a year it was put into affect. NAFTA became the world largest trading

bloc, 'area of 21,588,638 and a population of 430 million people who produces $12

trillions worth of goods and services yearly' (1).

When NAFTA was put into affect, it promised many major impacts on each of they

country's economy but as the time progressed there had been many questions raised by

the individuals of the three countries, like trade deficits, labor issue, lower wage rate and

the environmental issues. So through this essay paper we'll see that how is one country

like Canada is effected by NAFTA, to determine that if it is good or bad we have to see

its advantages and disadvantages to Canada.

Advantages to Canada

Canada's goals in the negotiation of NAFTA were very simple. They wanted to improve

their access for their goods and services to Mexico and the United States. Canada wanted

to guarantee their position as a prime location for investors seeking to serve all of North

America. The NAFTA deal has realized these objectives set by Canada and will supply

Canada with a new and sharper edge to their international competitiveness, giving

Canada access to new 85 million possible customers . "The agreement has set a path for

Canada widening their trade horizons, while also giving them a bigger stage on which to

demonstrate their economic expertise and leadership" (2).

Agriculture products play a significant role in Canada's exports to other countries.

Canada's excellent and fertile farming land has produced many great results. A very

superior livestock and excellent crops have contributed to a productive and prosperous

trade of their agricultural products and services around the world. "Canada's total exports

surpasses $13 billion a year"(3). Under NAFTA all the barriers over the agricultural

goods would be lifted thus the farmers would face a lower cost and would gain higher

profits. Incase of livestock Canada also have the edge over other countries because like

Mexico lacks an adequate fresh water supply, their livestock operations aren't very big.

Therefore