Class Notes (839,315)
Canada (511,260)
Economics (1,617)
ECON 2K03 (28)
Lecture

Topic 14.docx

4 Pages
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Department
Economics
Course Code
ECON 2K03
Professor
Jack Leach

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Topic 14 • Royal Commission on the Economic Union and the Development Prospects for Canada (1982) • declared Canada should seek a free trade deal with the Americans • given how dependent Canada was on US market, it did not make sense to sour relations through economic nationalism - Our reliance on trade is detrimental - Americans own energy, natural resources and manufacturing sector - Buy up assets of assets of Americans in order to get rid of foreign investment - Period of tremendous debate in Canada - Pushing for Canada to loosen its ties with America, one that is less reliant on importing and exporting from US and finding another route - 1972, foreign investment review agency to monitor firms to check interests - Petro Canada  increasing Canadian ownership - Canadianize the Canadian economy - This all comes when Brian Mulroney was elected (conservatives) - 75% of what we exported went to US The Road to Free Trade Agreement • 1984 election of Brian Mulroney and the Conservatives • 75% of Canadian exports go to the US by the early 1980s • over 40% of exports were manufactured goods • led to renewed interest in securing access to US markets - We became major actors in manufacturing goods - Mulroney said that 75% of Canadian exports would be a huge market to lose. Making American sour would be horrible – let’s make them our best friends - Throughout our history, we’ve been trying to cozy up to the US - The US does not need us, they can carry on without us • initiative launched at the Quebec summit in March of 1985 • Canada more interested in a new arrangement than the US THE DEAL • tariffs to be virtually eliminated over a ten year period • a dispute settlement mechanism is created • US gets secure access to Canadian resources - Canada was much more interested in the US than the US was in us - US exports 4% to us - Tariffs were supposed to be eliminated on a 10 year period. - There need for some kind of dispute settlement - Argument was that Canada was subsidizing exports - They had to them impose a soft wood import tax The Free Trade Election, 1988 • two views of Canadian nationalism a) State and protective tariffs hold the country together b) Canadian entrepreneurs ready to play on the world stage • Conservatives win election • FTA implemented January 1, 1989 - Our goods would flow on a north south basis - Canada was ready to play on international stage - We moved being an net importer to ne
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