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U.S. President Ronald Reagan welcomed the Canadian initiative and the U.S. Congress gave the President the power to sign a free trade agreement with Canada, subject to congressional revision until October 5, 1987. In May 1986, Canadian and U.S. negotiators began developing a trade agreement. The Canadian team was led by former Deputy Finance Minister Simon Reisman and Peter O. Murphy, former U.S. Deputy Trade Representative in Geneva. Nafta is technically a free trade area, but with certain attributes of a customs union – in which Member States maintain the same obligations and rules with regard to third countries – and also with certain attributes of a common market that allows the free movement of factors of production (labour and capital) between Member States. For example, these attributes are the pressure on Canada and Mexico to comply with U.S. tariffs; Detailed rules of origin that require high North American content for a wide range of consumer products; liberalisation of trade in services, including financial services and capital flows in general; and to improve the international free flow of services and businessmen and many professionals.

Resource-sharing agreements (particularly between Canada and the United States) also indicate a common market. Beginning in 1855, when Canada was under British control, free trade between the North British And U.S. colonies was established as part of the reciprocity agreement. In 1866, a year before Canadian Confederation, the United States Congress voted to repeal the treaty. Canada`s first prime minister, John A. Macdonald, tried and failed to reintroduce reciprocity, after which the government moved to a more protectionist policy. Many politicians were increasingly concerned that closer economic relations with the United States would lead to political annexation. [4] The phenomenon of “cross-border shopping,” in which Canadians would make day trips to U.S. border towns to use duty-free goods and a high Canadian dollar, caused a mini-boom for these cities. The loss of many Canadian jobs, particularly in Ontario`s manufacturing industry during the recession of the early 1990s, was attributed (fairly or not) to the free trade agreement.

No real progress has been made in setting acceptable subsidies or removing the applicability of anti-dumping and countervailing duties. Canada and the United States agreed to work more on these issues, but this was not the case under the free trade agreement. However, the Uruguay round of global GATT negotiations has developed stricter dumping rules and established authorized and unauthorized subsidies. Over the next two decades, a number of academic economists have studied the effects of a free trade agreement between the two countries. Some of them , Ronald Wonnacott and Paul Wonnacott,[9] and Richard G. Harris and David Cox[10] – concluded that Canada`s real GDP would increase significantly if U.S. and Canadian tariffs and other trade barriers were eliminated and that Canadian industry could produce on a larger and more efficient scale. Other free trade economists were John Whalley of the University of Western Ontario and Richard Lipsey of the C. D. Howe Institute. [11] As noted in the agreement, the main objectives of the Canada-U.S.

free trade agreement were the same: the exact impact of the agreement is difficult to measure. Trade between Canada and the United States, which had already increased, accelerated after the signing of the agreement. [20] While exports accounted for about 25% of Canada`s gross domestic product (GDP) over the entire 20th century, exports have accounted for about 40% of GDP since 1990. After the year 2000, they reached almost 50%. [21] It was also the first Canadian election where a lot of negative publicity was used; An anti-free trade advertisement showed that the negot