Nafta and the Canadian Economy

Topics: North American Free Trade Agreement, International trade, United States Pages: 7 (2223 words) Published: October 24, 2007
Canada and the United States have had a very old closeness where the two nations live serenely together. The borders are open to one another, not armed and the residents of each nation have value for the other. Like any other friendship, The United States and Canada have also had their share of troubles in the past. One of the problems between the two nations deals with the finances of each country. The North American Free Trade Agreement also known as NAFTA, is sometimes called in to mediate between Canada and the US. NAFTA has been positive on helping the Canadian economy in general. "By 2004, Canadians could look back on fifteen years of experience under the new arrangement. Michael Hart asked what have we learned from that experience?" (Hart, 2004) NAFTA was designed to be able to level the playing field for the three nations when it comes to import and export business. The agreement calls for the mediation of disagreements and the three nations that belong agree to allow NAFTA's mediation decisions to stand. The NAFTA attempts to level the playing field in international trade by allowing certain equalizing tariffs much in the same way racing cars qualify for starting position in a race. The trade disputes between the two countries have been mediated and settled through use of the arbitration panel that was established under the North American Free Trade Agreement with varying results along with outcomes. Usually the NAFTA agreements and rules have been favorable for the economy of Canada (Trade, 1996). One example of such profit allowing decisions was reached in 1996 when Canada and the US had a dispute about Canada's marketing boards that regulate prices for eggs, dairy products and chickens. The US fought the ability for Canada to maintain the regulations stating it would cost the US about $1.billon dollars, but the mediating panel of NAFTA ruled Canada was within its rights to use its marketing board. The NAFTA ruling in Canada's favor provided continued revenue for the Canadian economy. "U.S. dairy, poultry, egg and barley interests filed the original complaint Jan. 22, objecting to Canadian tariffs ranging from 180 to 350% on U.S. dairy, barley, eggs and other products. Drinking milk in the U.S. that fetches $14 to $15 per hundred pounds would sell in Canada for $16 to $17 for each hundred pounds, thus pricing U.S. milk out of the Canadian market, the U.S. industry said (Trade, 1996). " This ruling came three years following the threat by Canada not to become members of the Northern American Free Trade Act (Seek, 1993). At the time of the threat Canadian national economists were warning the Canadian government that signing the agreement would lead to the economic ruin of the nation. There were many concerns about how the agreement would impact manufacturing and other aspects of the nation's economy. The opposite has proved itself to be true. The economy of Canada has improved under the watchful eye of NAFTA and its decisions, rules and boundaries. The biggest accomplishment that NAFTA has done to improve the Canadian economy is to provide an agreed upon mediator for disputes between Canada and the United States. Before the NAFTA implementation when there were trade disagreements it often threatened the trade relations across the board between the two nations (Launches, 2002). Without a mediator the two governments were left to argue out the situation and try to resolve it. The NAFTA implementation gave each nation an avenue to pursue complaints in the trade transactions. Canada's economy has improved because of NAFTA because it has placed rules and trade agreements in place that all members have agreed to abide by. This eliminates many possible disagreements that would occur without the prearranged agreement (Launches, 2002). Since the inception and implementation of NAFTA Canada has had a recourse if it did not agree with a decision being made by the other members. In addition to allowing Canada to...

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