Opinion Paper

" NAFTA IS GOOD FOR CANADA " Express your views on the assigne topic based on identification, intrepration, and intregration of concepts, as they relate to the given issue. Emphasis will be on clarity and depth of the though process.

Si vous avez des remarques, c'est à rendre cet après midi... donc n'hésitez pas à commenter je peux encore faire qq changements !

Voila ma critique, revue et corrigé.





We live in a globalized world where information and communication occupy a key place. We observe an interdependence increased on all the levels which corresponding globalization and regionalization of markets. In January 1994 Canada, Mexico and the United State decided, to increase collaboration and face the global market, they would agree to reduce trade barriers through the creation of North-American Free Trade Agreement (NAFTA Secretariat Web Site). This agreement was supposed to improve the access to these three markets, to promote productivity, employment and increase "cooperation" between each partner. Given that the WTO allows the creation of free trade areas between nations, does the NAFTA, the world’s largest free trade area, have beneficial effects for the Canada?
I will try to answer to this question by giving my opinion with a first part concerning political reason, then I will deal with the economic repercussions. I will finish with the social consequences of NAFTA for Canada. .

NAFTA is not a simple agreement. Indeed, in order to be more competitive, more dynamic and more open, in the international scene, this alliance requires a harmonization of certain trade laws and practices of the tree members. By creating a harmonized alliance, these three countries can face the European Economic Union, the Asian Pacific Economic Cooperation and other countries/alliances, in a united force. More precisely, the political goal of NAFTA is to stay competitive and push each of the members to work hand-in-hand. Thanks to this political agreement, NAFTA guarantees better access of Canadian products from Canada into the United States. Simply put, this means that "If I do get into a fight with the USA, I have access to the dispute settlement mechanisms in Chapter 11, 19 and 20 and that the USA cannot arbitrarily close to me". Plus, NAFTA harmonizes standards for trade in products and services and for customs purposes. In other words, my products are not subject to long waits at the border for customs and inspection. These all means more trade, faster trade and more economic benefits for Canada. This is one of the primary reasons why NAFTA is good for Canada. The implementation of NAFTA also led to significant increases in foreign direct investment between Canada and Mexico: "Since 1993, Canadian investment in Mexico has quadrupled to $2.2 billion in 1998." (NAFTA's impact. Foreign Affairs and international Trade Canada) creating new partnerships and relationships with Mexico. Nevertheless, I think that entering into this alliance can cause some troubles (currency depreciation, bad relationship, economic troubles...). But here Canada, USA and Mexico, manage the system through cooperation: They worked to control inflation, restructure, pay off their debts and stabilize their currencies. The political benefits can also be seen with the "Settlement of the disputes", which have resolved more than 50 disagreements (NAFTA à cinq ans. Department of foreign Affairs and international Trade). Thus, NAFTA was signed because it made political sense encouraged better cooperation and relations. Most importantly, it was signed for its positive economic implications."Canadian service exports to the United States rose by 64% to $26.7 billion, while imports from the United States increased by 24% to $32.2 billion" (NAFTA's impact. Foreign Affairs and international Trade)

According to the statistics published by the Office of the United States Trade
Representative, (March 2008) Canada has become the largest importer of US agricultural products and total trade between the U.S. and Canada. Reaching $562 billion in 2007, up from $534billion! (NAFTA cargo sets record in 2007 November 24, 2008 by Splatty) However NAFTA generated negative points. According to Food and Agriculture by R. Dennis Olson the net farm income fell by more than half, from $3.9 billion to $1.5 billion rising input costs and falling farm prices. "Canadian farm debt increased more than doubled from $22.5 billion to $54 billion. In the meantime, retail food prices climbed as farm prices fell" (Lessons from NAFTA: Food and Agriculture by R. Dennis Olson December 2, 2008)
In this circumstance, Canadian farmers and consumers have lost in this accord.
Excepted this negative point, Canada's trade between the partners had tripled to 903 billion dollars per year since 1994 and has also eliminated the high Mexican tariffs that traditionally existed on agricultural exports. NAFTA has also generated a greater variety of products. Furthermore, "Trade of commodities is not the only thing that has grown in response to NAFTA as Canada also has benefited from an increase of trade in services". (Canadian Benefits of NAFTA. Kwintesseential) In my opinion by reducing tariffs, Canada's trade increased partly because its businesses use products produced by Mexico where the life cost is cheaper. Investing in Mexico allows the companies to get cheap labour and let them save cost from high price of employment, salary and tax. But can NAFTA be blamed for Canada unemployment rate due to the delocalization of jobs to Mexico?

Actually, it is hard to say that NAFTA raised unemployment rates in Canada since many surveys, declarations and articles show differences results. In fact, several articles, authors and recent political people raise conflicting arguments about NAFTA and unemployment rates. For instance, Rich in 1997 provided statistics of unemployment rising “Because of the peso crisis and a lack of skill of workers". Brown in the Economist 1998 on the other hand, argues that the NAFTA created many new jobs in the country. (Nafta Revisisted, Gary Clyde Hufauer and Jeffrey J Schoot . 2005). The effects of NAFTA are, as we can see, complicated to quantify. I think the agreement has been in effect for too short time to know the real effects of the agreement, even if Gary Clyde Hufbauer and J Schott think that: “employment are less than promised by politicians and more than promised by pundits” (Nafta Revisisted, Gary Clyde Hufauer and Jeffrey J Schoot . 2005) My feeling is, this quotation reveals exactly what people have experienced in Canada : they expected more jobs due to NAFTA but in reality, and according to one book, employment increased in the NAFTA area approximately at about the same rate the population did from 12.7 to 15.7 million between 1993 and 2003 (Nafta Revisisted, Gary Clyde Hufauer and Jeffrey J Schoot . 2005)). In my point of view, NAFTA didn't involve loss of jobs but created some new opportunities for some people. In other words, I think that NAFTA, through this "more open market", is bringing corporations from three different national cultures together. More precisely with a market of 439 million people, companies from any of the three countries can generate and meet new needs for people, new cultural approaches and as a result produce new jobs. In addition, more Canadian companies are, since the agreement, investing (acquisitions, partnerships, joint ventures, strategic alliances) in USA or Mexico to penetrate new markets and acquire new resources. "Job growth associated with exports to Mexico is estimated at between 90,000 and 160,000" (NAFTA's impact. Foreign Affairs and internationalTradeCanada)

Finally, I believe that NAFTA not only contributes to the creation of more jobs and lower consumer prices through better competition, but also better trade relations among the three countries. It is a positive-sum game where Canada can find and share important resources with their partners for a better economy in all three countries.
The Canadian economy enjoys many benefits from this agreements and managed its trade relations with the United States and Mexico well over the years since 1994. Despite the increase of the Canadian farm debt, I believe this agreement is very auspicious for the future of Canada economy. This Free Trade Area has been for Canada a historical turning point. However NAFTA needs, in my point of view, more time for satisfy everybody in order to build this agreement more able to compete with the European Union or other Alliances.