14 January 2008

The Canada-U.S. FTA: 20 Years After

This article, by Steven Poloz, chief economist with Export Development Canada, appeared in the 11 January 2008 edition of “Canadian Transportation & Logistics”.

Twenty years have passed since the signing of the Canada-U.S. Free Trade Agreement, which went into effect 19 years ago. It's a good time to check the report card, to see how we are doing.

The architects of the deal told us that north-south trade would blossom, and they were right. Our exports of goods and services to the U.S. have more than tripled since 1988, from $117 billion per year to $398 billion, an increase of 240%. Our imports of goods and services from the U.S. have not risen by as much – from $108 billion to $322 billion, and increase of just under 200%.

A good part of Canada's relative success is due to higher resource prices. Adjusting exports and imports for inflation shows that export and import volumes have both risen by about 150% since 1988….