How The Canadian Economy Is Dependent On the U.S Economy
The Canadian economy is determined largely by the United States economy threw the North American Free Trade Agreement (NAFTA) and the Free Trade Agreement (FTA). The North American Free Trade Agreement was an agreement that came into effect on January 1,1995 which involves Mexico, Canada and the United States of America. This agreement is said to produce 1 billion to 3 billion dollar gains in each country. NAFTA ensures that a certain amount of goods produced and traded between the three countries has to have a minimum percentage of its parts produced in North America. The Free Trade agreement is between the United States and Canada. The Free trade agreement came into effect in 1989 even though three fourths of trade between Canada and the United States was already free. This agreement to Canada is huge because it set up a free trade zone between the U.S and Canada, which is the largest free trade zone in the world. The Free Trade agreement is huge to Canada because 20 per cent of Canada's GDP comes from exports to the United States. This agreement eliminated "all trade restrictions such as tariffs, quotas, and non tariff barriers." The Canadian economy gains access to the U.S economy that is ten times its size. While t
The disadvantages to these agreements mostly concern the Mexico factor in NAFTA. People fear that Canadian business firms will move to Mexico and take advantage of lower wages. People also fear the American firms will move back to the U.S because the tariffs have been eliminated. "Economists are also concerned that Japan and South Korea will begin to build plants in Mexico to ship goods tariff free through the U.S and into Canada, thus decreasing Canadian exports into the U.S. Everything in Canada seems to be interconnected with the U.S and because of the high percentage of trading that these two countries do, when the Canadian economy experience a boom it is due to the fact that the U.S economy is also experiencing a boom as well. When you compare the TSE and the Dow Jones the same usually occurs, when the Dow Jones increases so to will the TSE. As you can see the Canadian economy needs the U.S economy, the two have become interconnected. The Canadian economy needs the high population and the high incomes that the U.S has to offer. While the U.S economy needs the Canadian auto sector and the fast natural resources that the Canadian economy has to offer. Canada also relies on the U.S for imports, Canada imports 233,634,800 million worth of goods in 1998 alone. Canada imports mostly automobile parts, chemicals, machinery, crude petroleum, durable consumer goods, computers, telecommunications equipment and parts. Since NAFTA came into existence the Canada has spent 96.6 billion on imports. Canada imports automobile parts mainly from the U.S. "As with exports commodity imports are dominated my automotive product." With about 30 per cent of automotive parts bought from importing around 87 per cent of that comes from the U.S. Every Canadian industry relies on the American consumers to sell their product to and the Canadian industries rely on the goods that they import from the U.S. Take for example the Canadian auto sector without the high U.S demand for their products many of these auto industries wouldn't be as profitable as they are now. The Canadian auto sector sells 87 per cent of its product to the U.S that is the highest percentage in the world. With major U.S corporations invading Canada it is just seems that most of the chains in Canada are American owned. he U.S economy will gain the lower-priced Canadian goods. The main advantages of the FTA and the NAFTA are. Canada will gain free trade into the market that it relies on the most the U.S. These agreements are suppose to generate 3 billion dollars of annual gains. Canada will be able to "obtain more total output from its scarce resources." The disappearance of tariffs will increase Canadian imports and exports into and from the U.S. That Canadian unemployment will decrease. That a percentage of parts will have to be made in North America. The Canadian economy relies totally on the United States of America. With the two free trade agreements the NAFTA and the FTA, Canada does 70 per cent of its exporting and importing from the U.S. The NAFTA and the FTA agreements make exporting and importing of goods to and from the U.S non-tariff free. The FTA has allowe
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Approximate Word count = 2140
Approximate Pages = 9 (250 words per page double spaced)
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