Background of NAFTA with Respect to Canada - Literature review Example

NAFTA has not been beneficial for Canada Rachna Jalan NAFTA has not been beneficial for Canada Background of NAFTA with respect to Canada NAFTA, the North American Free Trade Agreement was introduced to the world on January 1994 jointly by Canada, the United States and Mexico as the biggest free trade area around the globe (Weber, 2006). The agreement was signed by Canadian Prime Minister Brian Mulroney, Mexican President Carlos Salinas and U.S. President George H.W. Bush (“NAFTA: A Foundation”, 2008). As per the Canadians’ memory goes this mutual agreement between the three countries of the continent did not have a smooth beginning (Kipling, 2007). During the late 1980s, the existence of Brian Mulroney’s Conservative government in power on one hand while the oath taken by the Liberal opposition led by Jean Chretien to strongly discourage this sort of an assembled trade with the Yankees and their Mexican peons on the other, made way for a lot of resistance to entry of NAFTA in Canada (Kipling, 2007). Many of the Canadians found the interpretation of the rationale for the proposal of such an agreement difficult (Kipling, 2007). Amidst all pessimistic views, there existed latent optimistic outlooks too. After all, trade and economics worth millions or billions had the potentials for making the difference between job security and the dole (Kipling, 2007). The split attitude of Canada has been explained by Gary Hufbauer, member of the Peterson Institute of International Economics, according to whom Canada was aiming to achieve exclusive economic integration with U.S. along with a political distance (Kipling, 2007). However, other experts of the field were in support of the popular belief that the failure of Canada’s endeavors in achieving complete access to the U.S. market in the early free trade agreements between the two economies, was chiefly responsible for the country to appear as the father of NAFTA, which being a much broader agreement was undoubtedly expected to compensate for the losses (Kipling, 2007). The fact that Canada did not bear any true intention to enter into any direct contract with U.S. reflects Canada’s ironic relationship with NAFTA (Kipling, 2007). In spite of Canada’s strong inclination towards multinational links, the silent conflict between the Harper government and Washington clearly indicated failure of multilateralism as represented in NAFTA (Kipling, 2007). Hence, is has been commented, “maybe NAFTA is dead or, at best, in desperate need of artificial respiration” (Kipling, 2007). How NAFTA has not been beneficial for Canada “Critics said it would never work” (Carrera, n.d.). In the light of the complications encouraged by NAFTA such as environmental damage, the rising of the gap between rich and poor, the multiplication of trade disputes, combined other equally serious problems do not show NAFTA as beneficial for Canada (Carrera, n.d.). Today, even after 14 years of the signing of the agreement, the Canadian economy reveals no significant changes. The enormous dissatisfactions expressed by the Canadians, makes the assessment of the contributions made by NAFTA much easier. “Those opposed to Nafta-from U.S. congressmen and left-of-center Mexican political leaders to union workers in all three countries, and a variety of non-governmental organizations (NGOs)—have been especially vociferous in getting their point across” (Carrera, n.d.). A report titled, “The Failed Experiment: Nafta at Three Years”, brought out in 1997 by an intelligent association of the United States, The Economic Policy Institute clearly denounced the agreement (Carrera, n.d.). Another blow was struck in December 1998 by the Public Citizen Global Trade Watch, an NGO which simply brought out its own report card for judging the deed and gave “fail” marks (Carrera, n.d.). The team openly addressed the multiple failures of NAFTA in umpteenth number of spectrums, chiefly agriculture, public health, wage levels, highway safety, drug enforcement, the environment, to name a few (Carrera, n.d.). Majority of the opinions consider the endeavors taken by the agreement to be futile. NAFTA’s deficiencies particularly towards the environment have been severely considered (Carrera, n.d.). A comment made by Edward Hoyt, director general of EIC Consultores de Mexico, an energy and environmental consulting and project development firm, clearly portrays the environmental picture by stating the very fact that substantial problems that remained before the implementation of NAFTA still exist acutely (Carrera, n.d.). The indifferent attitudes of the agreement towards the management of hazardous waste and the treatment of industrial waste have been a matter of serious concern (Carrera, n.d.). The existence of legislation proves to be futile unless it is actually implemented (Carrera, n.d.). Another area of failure of NAFTA is the fact that irrespective of the promised amount to be used for cleanup tasks, higher ozone levels and a happening of Hepatitis, merely 1% could be produced (Carrera, n.d.). NAFTA has been criticized for its inefficiency in tackling labor problems too (Carrera, n.d.). The main areas of shortfalls have been keeping safety standards and working conditions up to the mark (Carrera, n.d.). The country is proud to be considered as world’s ones of the rarest economies with successful stories providing employment to 560,000 fresh jobs and its growth of 3.4% in the year 2002, has made the country to rank among the fastest growing top seven industrial economies (Ghosh, 2004). However, these figures do not take into account the account of job losses and therefore fail to produce the net effect (Ghosh, 2004). Almost 300,000 employees have gone south to Mexico and low-wage areas in the United States (Ghosh, 2004). Majority of people concede, “NAFTA has significantly reduced the bargaining power of workers vis-à-vis capital and has contributed to the erosion of social security systems that were among the best in the world” (Ghosh, 2004). One can easily deduce that the offerings made by NAFTA for the betterment of Canada has been almost negligible. Canada, in spite of being looked upon as the father to NAFTA, its civilians has clearly showed discontent towards the agreement in terms of its usefulness for the benefit of the economy as a whole. According to Murray Dobbin, a Canadian analyst, NAFTA is responsible for cutting down the real wages of the Canadian workers by 20% within ten years of its implementation and has even appropriated growth of yields as per capital only (Ghosh, 2004). Dobbin has expressed that not only unemployment insurance, but other social security provisions have been curtailed (Ghosh, 2004). The analyst has even shown deep concern in areas of health care provision and other public utilities like water and electricity which have been removed or privatized (Ghosh, 2004). NAFTA has been the greatest contributor for the dropping of Canada from its 1st to 9th place in the UNDP’s human development ranking in a few years only (Ghosh, 2004). The Canadians strongly feel that it is the United States, their biggest trading partner who has actually benefited the most from the NAFTA, while their own country as remained a loser in the agreement (Weber, 2006). This overview of the Canadians is even supported by the Mexican public, who is considered to be the winner by the United States (Weber, 2006). The belief of the public of Canada that they were the looser in NAFTA has been increasing in strength with the passage of time (Weber, 2006). According to a survey conducted by Ipsos Reid in 2002, 47% of Canadians expressed that NAFTA has not been beneficial for Canada while 38% could observe the success of Canada under the agreement (Weber, 2006). Within the next 3 years the Canadians’ belief of NAFTA as a failure for their country increased at an alarming rate (Weber, 2006). The same survey when conducted in 2005, revealed result showing majority of the Canadians, almost 60% considered the agreement to be futile for the economic upliftment of their country while only a small portion of the population, merely 30% of the civilians of Canada were satisfied with the results of NAFTA in their country (Weber, 2006). Some counter arguments of NAFTA with respect to Canada A survey conducted by Ipsos Reid in June 2003, clearly revealed almost 70% of Canadians’ fondness for NAFTA while only a small portion of the population, 26% expressed discontent for the agreement (Weber, 2006). In spite of strong criticism faced by NAFTA for not being beneficial in the areas of trade, environment, social securities, labor and employment, those supporting the agreement say, “By strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has proved to be a solid foundation for building Canada’s future prosperity (“NAFTA: A Foundation”, 2008). Statistics clearly show that Canada’s merchandise trade with the U.S. and Mexico under NAFTA has climbed up to $598.4 billion in 2007 (“NAFTA: A Foundation”, 2008). The service sector too reflected a boom in 2007 when the country’s trade in services with both its partners under NAFTA has doubled from $42.9 billion in 1993 to $86.5 billion in 2005 (“NAFTA: A Foundation”, 2008). Moreover, the boost in economic activity and production in Canada have encouraged the generation of new employments for the citizens (“NAFTA: A Foundation”, 2008). NAFTA can be held responsible for generating almost 4.1 million jobs in Canada (“NAFTA: A Foundation”, 2008). The Canadians aspire to achieve trade and investment liberalization along with strong endeavors for the protection of the environment and working conditions (“NAFTA: A Foundation”, 2008). This very dream may come true with NAFTA which commits to aid for “the successful approach of parallel environmental and labour cooperation agreements” “NAFTA: A Foundation”, 2008). Conclusion Canada, one of the world’s fastest growing economies entered into NAFTA in 1994 along with its co-participants the United States and Mexico with the objective of overcoming its various deficiencies thereby ensuring the economy’s overall augmentation. However, today even after more than 14 years of the signing of the agreement, the economy does not really reveal any extraordinary scenario. Umpteenth number of discouraging endeavors from NAFTA has been persistently recognized by the Canadians. Apathy distinctly divulged by the agreement encompass environmental damage, rising of the gap between rich and poor, increasing trade disputes, negligence towards healthcare provisions and other public utilities like water and electricity, shortfalls in unemployment insurance and labor problems, and many more. True, that NAFTA has contributed, to some extent, in the advancement of a number of sectors of the Canadian economy, the agreement has nevertheless, failed to show any extraordinary progress for the benefit of the country. We can therefore conclude that the signing of NAFTA has not really helped the country in coming out with flying colors. References Carrera, Olaf. (n.d.). NAFTA AT FIVE: Five years later, why is so little known about the free-trade accord’s benefits?. Mexico Connect. Retrieved Jul 21, 2008, from http://www.mexconnect.com/mex_/travel/bzm/bzmnafta5.html. Ghosh, Jayanti. (2004). Ten years of NAFTA. IDEAS. Retrieved Jul 21, 2008, from http://www.networkideas.org/news/jan2004/news13_NAFTA.htm. Kipling, Bogdan. (2007). Bogdan Kipling: Canada and NAFTA. projo.com: The Providence Journal. Retrieved Jul 21, 2008, from http://www.projo.com/opinion/contributors/content/CT_nafta27_11-27-07_TI7T5HE_v16.2a7bda1.html. NAFTA: A Foundation for Canada’s Future Prosperity. (2008). Foreign Affairs and International Trade Canada. Retrieved Jul 21, 2008, from http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/over.aspx?lang=en&menu_id=33&menu=R. Weber, Stephen J. (2006). In Mexico, U.S. and Canada, Public Support for NAFTA Surprisingly Strong, Given each Country Sees Grass as Greener on the Other Side. World Public Opinion.Org: Giving Voice to Public Opinion Around the World. Retrieved Jul 21, 2008, from http://www.worldpublicopinion.org/pipa/articles/brlatinamericara/161.php?nid=&id=&pnt=161&lb=brla. Read More