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POLI 243 (75)
Chapter 22

Political Science Chapter 22 Summary.docx

2 Pages

Political Science
Course Code
POLI 243
Mark Brawley

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Political Science Chapter 22 Summary Canada and the Free Trade Agreement with the US Background: The Historical parameters of the US-Canada relationship - Auto Pact: introduced waivers on the duty for original equipment parts and automobiles; US could integrate production in the 2 countries; the US had to produce a certain % in Canada and the target was ensured to make 60% of content of vehicles sold in Canada being produced here - Improvements in trade were hope to stimulate the economy - Canadian firms needed higher economies of scale to maintain competitiveness thus they needed access to the US market Fears of the New Protectionism - GATT was in trouble by the early 1980s - As more and more countries entered international trade, and rich countries were downturned economically and rising interest rates= protectionist pressures - Non-tariff barriers (NTBS) became prevalent as GATT blocked most tariff rises - NTBs are easily disguised as exercise of state’s regulatory powers in areas of the environment, safety or health; like banning a form of fishing or requiring products to include special features; this wasn’t illegal b/c GATT didn’t have jurisdiction in an economy’s internal affairs - Feared that GATT would begin a steady decline and then fail altogether - Free Trade Agreement btwn US & Canada was a “just-in-case GATT fails” not GATT replacement Canada’s Attitude toward the US - It was the popular perspective that trade relations with the US would leave Canada vulnerable so many wanted to lessen economic dependence on the US as much as possible or regulate it - Gov’t took distancing actions b/c of this attitude - Foreign Investment Review Agency (FIRA) and National Energy Program (NEP), were created to regulate foreign investments in Canada and to promote Canadian ownership of the energy sector automatically cutting and limiting percentage of US ownership, respectively - Whenever Canada liberalized its trade relations foreign investors responded by increasing their holdings in Canada - So we knew that investment levels were being and could be affected by trade policy - Despite distancing attempts, Canada and the US are quite intertwined - The US dominates the connection between Canada and US Canada Initiates Talks - Goal: securing access to US market, opening up parts that were once blocked to Canadian exporters and establishing special rules for some sectors - Aim to replicate the Auto Pact in other sectors of Canadian industry - Unfortunately, it wasn’t easy to see where each side would win or lose so couldn’t create reciprocity - Public was in support of a free trade agreement between US for many years US Priorities - Saw Canada’s offer as an opportunity for immediate potential gains and a way to establish important precedents - US= large Canadian trading partner; Canada= one of US’s many large trading partners - US aims: get issues like liberalization of trade in services on the world’s agenda, and to open investment opportunities and put in place controls on intellectual property - US=interested in Canad
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