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The Growth of Free Trade The Growth of Free Trade

Growth of Free Trade Agreements n n n The key to the growth of Growth of Free Trade Agreements n n n The key to the growth of economic globalization has been an explosion in the number and extent of these agreements By 1992, an explosion of FTA’s mostly between 2 countries (bilateral) (see graph) Opponents feared a loss of national sovereignty and the loss of a country’s ability to protect its culture, environment, labour standards and social programs

Tariffs n n n Many neo-liberal governments before the 1990 s believed their role Tariffs n n n Many neo-liberal governments before the 1990 s believed their role was to manage the economy and ensure full employment They thought high tariffs could protect local economies Therefore attempts for free trade in the early 20 th century was limited

Western Europe n n n First major area to move towards free trade 1958 Western Europe n n n First major area to move towards free trade 1958 – signing the Treaty of Rome 1971 – fuller agreement Original members of European Community (EC) were Belgium, France, Germany, Italy, Luxembourg and the Netherlands Since then EC now EU has expanded

Western Europe Cont… n n n Denmark, Ireland, UK joined 1973 1981 – Greece Western Europe Cont… n n n Denmark, Ireland, UK joined 1973 1981 – Greece 1986 - Portugal, Spain 1995 – Austria, Finland Sweden Their role is to not only for FTA’s but also introduced Euro, and have rapid-response military for peacekeeping They also help countries from bilateral trade even if they don’t want to be part of the EU

The Next Stage… n n n Wider free trade zones Possible Pacific Rim Agreement The Next Stage… n n n Wider free trade zones Possible Pacific Rim Agreement and a Free Trade Area for the Americas (FTAA) Long term intention of the World Trade Organization (WTO) is to unite the entire world through free trade and are also responsible for managing and liberalizing trade in the world

Free Trade and Canada Free Trade and Canada

Early History between Canada and the US n n n From 1854 to 1866 Early History between Canada and the US n n n From 1854 to 1866 limited free trade 1 st prime minister Sir J. A. Macdonald won 1878 election based on National policy, free trade abandoned to protect Cdn manufacturers from American (and other) competition 1911 – PM Laurier was not reelected because of his support for FTA’s During 30’s even more done to ensure no FTA’s were in place Since the 30 s PC governments in favour; liberals more recently

Auto Pact n n 1965 – Canada moved towards free trade Example of sectoral Auto Pact n n 1965 – Canada moved towards free trade Example of sectoral free trade, since it involves only 1 part of the economy Eliminated the border for products of the ‘Big Three’ car manufacturers (GM, Ford, Chrysler) Now specific models that were once made only for Cdn markets were also made for U. S

Auto Pact’s Special Clause n n n Cdn government feared in a completely uncontrolled Auto Pact’s Special Clause n n n Cdn government feared in a completely uncontrolled market, assembly might end up in U. S One rule – at least one vehicle to be assembled in Canada for each car that was sold in Canada Described as managed free trade

Auto Industrial Boom n n n The big 3 found assembly cheaper in Canada- Auto Industrial Boom n n n The big 3 found assembly cheaper in Canada- labour costs low, high quality S. Ont became largest auto production regime By late 1990 s, Canada exported one million more motor vehicles than t was importing (see graph)

Free Trade Agreement n n n 1988 – B. Mulroney supported FTA and came Free Trade Agreement n n n 1988 – B. Mulroney supported FTA and came into effect Jan. 1, 1989 with all bilateral tariffs and other trade restrictions removed by 1999 WTO objected and the Auto Pact ended in 2000 They felt he big 3 had an unfair advantage in selling cars in N. America

The North American Free Trade Agreement (NAFTA) The North American Free Trade Agreement (NAFTA)

The Third Step n n n The extension of the FTA was to include The Third Step n n n The extension of the FTA was to include Mexico in 1994 At first glance, not significant to Canada – Mexico trade never very big Proves risky to Canada – wages lower, lower env. standards therefore more attraction to U. S. and some Cdn businesses

The Future of Free Trade The Future of Free Trade

Bilateral Free Trade n n n Canada has signed with Chile and Israel to Bilateral Free Trade n n n Canada has signed with Chile and Israel to stimulate trade and expand Cdn markets Can also be seen as broad step towards FTAA Meetings in 1994 with leaders from the nations of the Americas (except Cuba) want to develop huge free trade zone for 2005 – protests for concern of globalization

Pacific Rim n n 21 countries along pacific Rim (also members of the Asia-Pacific Pacific Rim n n 21 countries along pacific Rim (also members of the Asia-Pacific Economic Cooperation (APEC) Plan to have all members by 2010, with full free trade between all members by 2020 Would be largest in the world Like FTAA – big protests in Vancouver in 1997

A Global Market – should there boundaries? n n An increase in economic globalization A Global Market – should there boundaries? n n An increase in economic globalization Transnationals have been struggling with campaigns/protests –sweatshops, child labour Critics fear Free trade has more costs than benefits For Canada – our culture, health care, and gap between rich and poor widen

Opinion Piece n n Write an opinion paragraph about what you think would be Opinion Piece n n Write an opinion paragraph about what you think would be best for Canada. Make sure to state at least 2 -3 benefits and costs. Use some examples from the presentation. Be careful of your grammar and back up your thoughts with facts. Your reading from yesterday will help (p. 240 -246)