Archived — Perspectives on North American Free Trade Series Number 06—The Long and Short of the Canada-U.S. Free Trade Agreement, December 1999
Strategic Policy Sector
Economic Research and Policy Analysis Branch
This monograph assesses the impact of tariff reductions under the Canada-U.S. Free Trade Agreement (FTA) on trade flows, productivity, output and employment in Canadian manufacturing over the 1989–1996 period. It finds that the FTA has caused a significant increase in exports and imports throughout the 1990s as trade growth outstripped growth in manufacturing output. This has been accompanied by other benefits such as increased product specialization which, in turn, lead to productivity improvements, reduced costs, and lower prices to consumers. As expected, not all sectors have been affected by the FTA in the same way. A handful of industries experienced certain adjustment costs early on during the FTA implementation period. These adjustments were associated with reallocating resources out of protected and inefficient lines of manufacturing. However, according to the study, improvements in manufacturing employment and output since 1996 suggest that some and perhaps most of the reallocation has been to high-end manufacturing, further strengthening the economic outlook of Canada's manufacturing sector under free trade.
Catalogue number: C21-28/6-1999
Available online only.
- Date modified: