Question

Analyses of Canada's trade agreements.

1. List and describe two major trade agreements that Canada has signed with other countries. The description should include what these trade agreements are, when they are signed, under what historical background they were signed, and most importantly, the trade or investment theories that can explain their formation.

2. How have the above trade agreements performed since they were signed, including its major achievements or failures?

3. How have these agreements evolved over time? What are some major changes that have been made to them since they were signed? How do you theoretically explain these changes?

Answer 1

Answer to Q.no 1

Canada has signed various trade agreements with different countries. Two of them are as follows -

1) NAFTA - North American free trade agreement

​​​​​​​​​​​​This agreement superseded the Canada–United States Free Trade Agreement,1988. NAFTA came into effect from 1st January 1994. This agreement was signed by Canada, Mexico, and the United States which form a trilateral agreement in North America.

After signing the Canada - US free trade agreement, 1988 The prime minister of Canada, The president of Mexico and The US President reaches to an agreement i.e. NAFTA. But, It gets opposition from Canada and US. So, it was ratified in 1993 after adjoining 2 side agreements for labour and environmental cooperation.

This agreement was formed with the aim to remove the investment and trade barriers between these three countries.

2) CIFTA - Canada Israel free trade agreement

This trade agreement was signed on 31st July 1996 and came into effect from 1st January 1997.

From this agreement , most of the agricultural and manufacutured goods were benefitted as 80% tarrifs were reduced. But , some agricultural sector like poultry, Dairy were out of this benefit.

While , Canada and Israel were not major trading partners , The Canadian administration endevoured to put its business on the same footing of US Businesses.

The aim behind this agreement was to remove the trade barriers, tarrifs and to increase the investment between the two economies while promoting fair competition.

Answer to Q.no 2

a) NAFTA

Various economic analysis manifested that it was quite positive or favourable for the average citizen and overall north economy but not favourable for some minority workers of Industries.

Economists also states that withdrawing from this agreement would have negatively affected the economy of United States. Although The Mexico would have extremely affected by unemployment and distress in economy.

So, it was the biggest failure of this agreement

b) CIFTA

The updated agreement improves the access for Canadian corporations to enter into the market of Israel by removing and reducing the tariffs on fishries, agricultural products.

Since , it came into effect, Canada's 2 way merchandise trade with Israel has been tripled.

Answer to Q.no.3

a) NAFTA

When Donald Trump becomes the President in US , NAFTA gets replaced with a new agreement.

In 2018, The US, Canada, Mexico reached to a agreement to replace NAFTA with a new agreement i.e. United states - Mexico - Canada agreement and it has been ratified by March 2020. The new agreement came into effect from 1st july 2020.

b) CIFTA

It has included the support to gender equality, SMEs and Corporate Social Responsibility.

It has also improven the ways to reduce red tapism and increase transparency.