04 December 2012

The free trade bust

Judging by the editorial hype in the corporate press and among Conservative politicians, the Canada-U.S. Free Trade Agreement was the greatest boon to this country since the fur trade. When the agreement celebrated its 25th anniversary in October, International Trade Minister Ed Fast claimed opponents of such agreements are "denying Canadians an opportunity to benefit from economic growth and long-term prosperity.”

A recent article in the CCPA Monitor by economist Jim Stanford begs to disagree. Accusing the boosters of being long on self-congratulation and short on facts, Stanford took a different approach and adduced a few pertinent facts re before and after:
  • Our exports to the U.S. today account for the same share of our GDP (19 per cent) as before the agreement was signed.
  • Our exports to the U.S. are now mostly unprocessed or minimally processed natural resources whereas in the mid-1980s they were mostly relatively sophisticated manufactured goods.
  • Our share of U.S. imports has declined from 19 per cent to 14 per cent.
  • Our productivity has declined as a per cent of U.S. rates.
  • Our inflation-adjusted family income levels are the same as in 1980.
In summary, the agreement did not boost our GDP, did not increase our share of U.S. imports or the quality of goods exported, did not improve our competitiveness, and did not increase our incomes. By Stanford's reckoning, the agreement was more bust than boon. Something to keep in mind as our government rushes madly about the globe eager to sign a free trade agreement with anyone who has a pen.

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