US and Canada FTA

Introduction

Canada-US Free Trade Agreement can be said as one of the major affair in the modern Canadian history. There are many different views of this issue; some would say Canada enjoys a huge advantage from it. "The Canadian prime minister proclaimed that the new agreement would result in a net increase of 350,000 jobs"(BARLOW 1990, p.140) In the other way, other would say Canada is the victim of this issue. From the view of most Canadian, the lost from the free trade must be more than the gain. That is because right after the agreement has established, Canada has stepped into a small recession period, unemployment has became a major issue, businesses move away from Canada (BARLOW 1990, p.69). This essay is divided into three roughly parts, which looks at the issues of economy, human, and environment; besides it can be stated that the Canada-US Free Trade Agreement is not a good deal for Canada.

History

On January 1, 1989, the Canada-US Free Trade Agreement has finally been came into effect. Later on, North American Free Trade Agreement (NAFTA) was established in 1994, which included Mexico in the Free Trade area too. These two agreements are both established under Article XXIV of the General Agreement on Tariffs and Trade (GATT). The GATT is established in 1947 by many countries (not just Canada-US), in order to allows countries to form free trade areas. Therefore, greater trade liberalization can be achieved (CAMERON AND WATKINS 1993, p.35).

Economy

As the meaning of the name, free trade is to remove the government controls or regulation on economics activity that affect trading between US and Canada. The most important issue is the elimination of tariff for the import and export between Canada and US. However, right before the free trade agreement has been established, the tariff collected by Canada is much more than the US. It is clearly that the FTA results a directly economic loss for Canada (CAMERON AND WATKINS 1993, p.95). There is not the only concern, but several other issues has brought out indirectly.

From the point of view of a business, the goal is to use the minimum cost to get the most out of it. A company cannot run without people, it cannot run without paying the employees. As a traditional, wages for Canadian mostly are higher than the American. This is due to the higher income tax and more public service the government has to provide. If the labor cost in US or Mexico is less than in Canada, and the tariff has been minimized, to earn more profit, businesses must move out of Canada. "Four years after the deal has concluded, there were about 500,000 fewer Canadians holding full-time jobs than before the deal." This proves the deal is actually eliminating the job opportunity in Canada (WAARNOCK 1988, p.110).

Another major concern for a business is the taxation from the government. As everybody knows, Canada is a high tax rate country. Due to the relatively small population, large land mass, and our ...