1. Free Trade Agreements: Benefits and Consequences

2. Trade Agreements: Why are they necessary?
They promote a positive relationship between countries, especially neighbouring countries.
They allow for exotic and rare goods to be traded with out high tariffs.
Trade agreements allow corporations to be very profitable and employ a large number of people.

3. North American Free Trade Agreement (NAFTA)
This agreement was signed in 1994 between Canada-U.S.A.-Mexico.
What did it do for these countries?
It eliminated all tariffs on goods traded between these countries.
All import/export quotas (limits) were eliminated.
Allowed companies to invest in/buy companies in any of the countries involved in the agreement.
Intellectual property – music and movies have copyright protection .
Auto industry – Mexico removes quotas and duties/taxes on cars and parts from Canada and the U.S.A.

4. NAFTA – Benefits for Canada
Allows Canadian companies to sell their goods/services without tariffs in the American and Mexican economies.
It makes goods imported from the U.S. cheaper for Canadian shoppers (No tariffs = lower prices).
It keeps Canada’s economic strength competitive when compared to other trade blocs and regions (ex. European Union)

5. NAFTA – Negatives for Canada
Canadian jobs would be lost or relocated to the US and Mexico. This would put pressure on Canadian companies to cuts workers’ wages.
Social programs (healthcare, EI, education) might be threatened as companies push to lower taxes.
US culture would become even more dominant over Canadian culture.

6. Important Economic Vocabulary
Look up and define each term/phrase:
Tariff
Quota
Direct Investment
Trade Bloc
Intellectual Property
GNP
Standard of Living

7. Free Trade Questions
Look at the map on page 307. Using the figures provided, work out the per capita GNP rates for Canada, US, and Mexico. What does this tell you about each country’s standard of living?
Examine the maps on page 310, which show the value of Canada’s Exports and Imports.
Considering the total dollar amount of exports/imports did Canada enjoy a favourable or unfavourable balance of trade? Explain.
Canada’s trade with most African countries is quite uneventful. Explain why this might be so.