Facts & Figures

NAFTA @10 part one: a look back

November 3, 2006

A recently released research volume produced by Foreign Affairs and International Trade Canada examines the Canada-U.S. Free Trade Agreement (FTA) and the North American Free Trade Agreement.

The first chapter provides an overview from a Canadian perspective, and finds that although implementing the agreements necessitated short-term adjustment costs, they have ultimately delivered both positive and substantial impacts.

Effects have been strongest on trade, with bilateral Canada-U.S. trade from 1985 to 1995 rising 139% in sectors for which trade was liberalized, but only 64.5% in non-liberalized sectors. Studies also suggest productivity has improved as a result of the trade agreements, with one finding that in the absence of the FTA, manufacturing productivity would have been 5% lower in 1996.

Given that higher productivity contributes to higher incomes for Canadians, this is a particularly striking result. The agreements have also increased the variety of goods and services available, and may have positively affected direct investment.

For more information, go to www.international.gc.ca/eet/research/menu-en.asp to read the NAFTA@10 report.

Provided by the Office of the Chief Economist, Foreign Affairs and International Trade Canada (www.international.gc.ca/eet).