Some Thoughts On Canada United States Sectoral Free Trade

The implementation of the proposed agreement would remove many of the remaining barriers to commerce between Canada and the US, but there remain many details of the proposed Agreement and many potential consequences uncertain. This volume contains the proceedings of a conference that sought to provide a neutral forum to assess the implications for Canada. Analyses the elements of the Agreement, and the regional, sectoral and labour market adjustment issues and broader concerns with respect to cultural, economic and political sovereignty.

A joint conference was held in Washington in January, 1988, to assess the major features of the agreement. This volume includes the papers prepared for that conference, and the remarks of discussants on each paper. Includes a US and Canadian perspective, dispute resolution mechanisms, the auto sector, implications of the energy provisions, services and investment, implications for the Uruguay round, and the political perspectives from a Canadian government minister and a US administration representative.

Canada is the largest trading partner of the United States, and the two governments have begun negotiations for a free trade agreement which would tie their relationship even closer. This study analyzes the difficult problems that must be addressed in the negotiations - including quite different perceptions in the two countries of what constitutes fair trade. It suggests several possible ways of reducing differences over subsidies and countervailing duties. It also addresses the exchange rate relationship between the two dollars, and how this affects the trade outlook. An appendix by John Williamson calculated a fundamental equilibrium exhange rate for the Canadian dollar.

This study examines the probable impact of free trade on Canada and its various regions in light of recent trade theory and evidence. It discusses the regional and sectoral impact of free trade in general terms under both traditional trade theory and with recent alternative assumptions. It also suggests evidence to support the change to a new trade model, and presents results from three different free trade studies that incorporate the new assumptions of economies of scale and imperfect competition. Finally, it looks at the likely impact of a Canada-U.S. free trade arrangement on the individual regions of the country and on selected industrial sectors.