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Lecture 3

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Administrative Studies
ADMS 1010
Eytan Lasry

ADMS 1010 Week 3 Notes Relentless Change – Case 3 (pp. 60-78) Uneasy Partnership – Chapter 4 (pp. 99-140) Agriculture and Manufacturing Canada’s Economic History - Canada first caught the attention of European nations due to abundance of fish off eastern coasts - French and English were the first to establish settlements, mainly to preserve the fish they caught before transporting back - Fur trade soon begins to outdistance fishing as major economic activity o Fur hats were popular in Europe - Fishing settlements tended to be seasonal - Fur trade settlements were permanent - In the US, agriculture played a bigger role o Labour intensive activity caused population to grow much faster than Canada o Majority of the fur trade was done in conjunction with Aboriginals - Fur trade led to the development of HBC (important trading company and property holder) - Timber replaced the fur trade in importance o Great Britain was fighting a series of wars in Europe o Limited places in England to get timber it needed to build its fleets - Labour intensive timber trade helped immigration to Canada o Immigration patterns spread out along waterways - Canal development became important in opening up Canada’s interior - Railways began to grow, further pushing immigration further and opening up new resources o Includes lines linking Canada to US cities History of Canadian Trade st 1816 1 US Tariff Act; increased in 1824 & 1828 1846 Repeal of British Corn Laws 1854 The Reciprocity Agreement 1858 Cayley-Galt Tariff 1866 US abrogates the reciprocity treaty 1870 The National Policy 1911 Reciprocity Agreement (defeated) 1929 Smoot-Hawley Tariffs 1945 GATT – The General Agreement on Tariffs and Trade in 1989 Canada – US FTA (Free Trade Agreement) 1994 NAFTA ADMS 1010 Week 3 Notes The “Corn Laws” in Britain - 1794 – 1846 - Set duties on grain imports into Britain to protect British agriculture from outside competition - Corn = Cereal Crops - In 1846, Corn laws were repealed as an action to move towards free trade - Affected Canada negatively at first, but Canada recovered in 1850s Reciprocity Agreement of 1854 - Canada needed to find new avenues to sell its products due to repeal of the Corn Laws - US represented a huge opportunity with its large growing market and proximity to Canada - US granted right to fish in Canadian waters while Canadians could sell raw materials and agriculture products without tariffs in the US - Tariffs were reduced on many products - Repealed in 1866 due to desires by American businesses to return to protectionist ways - This repeal helped to push Canada towards Confederation The National Policy - Policy was based on high tariffs to protect the manufacturing industry o US firms were dumping surplus goods into Canada at below costs - Macdonald hoped by creating a strong manufacturing base in Canada, it would become more secure and less reliant on the US - At this time, manufacturing played a small role in Canadian economy Objectives of the National Policy: - Construction of railways to link the two coasts of Canada and aid in the movement of goods - Encouragement of immigration to Western Canada - Exercise of residual legislative powers to establish a strong central government to unite, expand, develop and settle a newly established nation Results: - Raw materials industries suffered due to the policy o Tariffs on raw materials were lowered to help manufacturers - Canada had an economic boom and the creation of a strong manufacturing base, but this was occurring globally at the time - Too many inefficient companies that could not compete without protectionist policies in place were created - Create the railway, which led to an interconnected nation and promoted Westward settlement expansion ADMS 1010 Week 3 Notes The Reciprocity Agreement of 1911 - Liberal government representative – Wilfrid Laurier; Conservative government rep – Robert Borden - Liberal gov’t was in the lead in lead 1911 election - Negotiated a free trade agreement with the US - The West was happy about this agreement o Seeking markets for its agricultural products - Manufacturing businesses of Central Canada were strongly against it o Manufacturing interests of Toronto and Montreal switched their allegiance and financing to the Conservatives - Conservatives argued free trade would undermine Canadian sovereignty and lead to an annexation of Canada by the US - As a result, Liberals lost the election - Free trade put on hold until 1988 Protectionism - Using tariffs and other non-tariffs barriers to lower importation of goods - Attempts to strike a competitive balance between imports and domestically produced goods - Contrasts with the free trade model o Goal of free trade model: eliminate barriers to trade Types of Protectionism: 1. Tariffs a. Tax on imported or exported goods b.
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