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Monday, July 21, 2008
Free trade is working for Alberta, but most Canadians are not happy with NAFTA
An Angus Reid poll released today shows that “only one-in-fourteen Canadians believe their country has been the main beneficiary of the North American Free Trade Agreement (NAFTA), and a majority of respondents are calling for the renegotiation of the commerce pact.”
Here are the key findings:
• 46% think the U.S. has benefited more from NAFTA than the other North American countries; Mexico at 30%, Canada at 7%
• 52% want to renegotiate NAFTA, 18% are happy with status quo, 11% want Canada to leave NAFTA
• 50% think NAFTA has not benefited Canadian workers at all
• More than half see at least moderate benefits for Canadian employers, Canadian manufacturers and the Canadian economy in general
The results broke down somewhat predictably according to party lines: “Conservative Party voters are more likely to want to stay in NAFTA without making any amendments to the accord (40%) than Liberal Party voters (22%), New Democratic Party voters (12%), Bloc Québécois voters (19%), and Green Party voters (26%).” (It is interesting that Green Party voters are more pro-NAFTA than the Liberals.)
Respondents from Alberta are the most likely (12%) to believe that Canada has benefited the most from NAFTA, and they have good reason to feel this way.
A report called Alberta’s Export Experience Under Free Trade Agreements: 1988-2007 released on July 18th shows that “more than one-third of Alberta’s Gross Domestic Product is derived directly from international exports.” The report measures Alberta’s export performance since 1988, the year before the first free trade agreement came into force, and things look good.
According to the report, “Alberta’s exports to partnering countries, including the U.S., Mexico, Chile, Israel and Costa Rica have increased in total by 683 per cent since 1989 when Canada’s first free trade agreement became effective. Alberta’s exports to non-partnering countries grew by 166 per cent during the same period.”
Here are some additional highlights:
• Alberta’s total merchandise export value has increased by 525 per cent since 1988, the year before the inception of the Canada-U.S. Free Trade Agreement (FTA).
• Alberta’s share of total Canadian exports has nearly doubled from 9.6 per cent in 1988 to 18.4 per cent in 2007.
• Energy continues to be Alberta’s principal export, accounting for 68 per cent of Alberta’s total exports in 2007 compared to 64 per cent in 1993.
• Machinery has become the second most important export for Alberta. Since 1993, growth in Alberta’s machinery exports has increased by 636 per cent.
• Since the inception of the NAFTA, there has been tremendous growth in Alberta’s value-added exports. Examples include organic chemicals, plastics, machinery and precision instruments.
Free trade is normally an issue that unites libertarians and conservatives. Free trade agreements, however, are a different matter. Critics say free trade agreements do nothing to remove barriers to trade and instead limit national sovereignty with new international rules governing labour and the environment, for examples.
At the recent Freedom Fair in Edmonton, Prof. Paul Geddes asked the question: “Have libertarians abandoned free trade?”
I think it is a question worth asking again.
Posted by Matthew Johnston on July 21, 2008 in Trade | Permalink
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Comments
Free trade is a little too well engineered to actually be "free" trade. We don't need a manual for free trade...we don't need any paperwork, let alone an agreement as convoluted as the tax code, for real free trade. None.
Posted by: JC | 2008-07-21 9:59:30 PM
The economic illiteracy of Canadians never ceases to amaze. The origins of the wealth of nations were explained by Adam Smith more than 200 years ago, and more specifically, David Ricardo explained the theory of comparative advantage in 1817. Wake up! This is not esoteric knowledge, folks!
But Amgus Reid is partly to blame, too, for the silly framing of the question. What difference does it make if Canada benefited "more" from NAFTA? If Mexico benefits more than Canada, should we cancel it out of spite?
Canada: One Nation Under Envy.
Posted by: Grant Brown | 2008-07-21 11:35:15 PM
As usual, these polls don't tell the whole story.
If I think my income (or Canada's income as a whole) has doubled because of free trade and the USA's income has tripled. Then I would think that the USA has done better out of the deal than me. But does that mean I am against free trade? Not at all, it just means that we both are getting richer with the USA at a faster rate than Canada.
Posted by: Tom | 2008-07-22 6:58:35 AM
Do we have a trade agreement with China? No
Do we trade with China? Yes
We don't need NAFTA either.
Posted by: JC | 2008-07-22 7:01:18 AM
Grant covered it. I am fairly competent with finances and I do pay a lot of attention to what's going on around me in the world. I simply don't have enough information, nor I have read any comparative studies to determine what might have been without free trade.
Canadians vote with their feelings. They don't know shit about most things international and less about economy. In fact, I would guess that only about 20% of Canadians are even smart enough to pay attention to anything that isn't entertainment.
Those polls are meaningless.
Posted by: John V | 2008-07-22 9:15:03 AM
Grant, well said. I am an ecomonics lay person, and it has taken me 2 or 3 years of self educating to obtain what I consider an elementary level education. Yet I am still amazed at the common beliefs people have that are so contrary to sound economic principles. I am also amazed at how difficult it is to explain these priciples to someone who has never heard of them before. Certainly there is little incentive for our public school system to teach them.
Posted by: TM | 2008-07-22 3:59:28 PM
Since Alberta is now driving the Canadian economy following Ontario's demise, I fail to see how the imperfections in NAFTA are a problem. If it weren't for NAFTA, then Canada would be in dire straits, like during the Trudeauist era. Thank God - yes, God, you athiest self-worshipping Ontarians - for NAFTA. Your failures are your fault.
Posted by: Zebulon Pike | 2008-07-22 4:35:15 PM
ZP, We are better off since NAFTA, so from that perspective it is not a problem. But as a business owner I need to always look for ways to improve performance, reduce costs, etc. If we look at NAFTA from that perspective, it is full of holes. Or maybe it is better to say not full of enough holes.
Why not try to be better?
Posted by: TM | 2008-07-22 5:05:54 PM
TM wrote: "I am an economics lay person..."
Well then we need more lay people as your comments are always insightful and clarifying.
Posted by: Matthew Johnston | 2008-07-22 10:37:15 PM
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