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Issue #590 | Perishables | Mediterranean | Middle East | Africa Trade

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2014 Media Kit
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Canada should avoid Free-Trade-Accord bandwagon

By: | at 08:00 PM | International Trade  

Concentrate on US and other big-payoff markets

Canada should focus its limited resources on improving access to the US market and those with potentially large payoffs, rather than trying to complete a host of free trade accords - despite the fact that the United States and many other countries are doing so - says a C.D. Howe Institute report.

In a Commentary, US Bilateral Free Trade Accords: Why Canada Should Be Cautious About Going the Same Route, the Institute’s Senior Policy Analyst Danielle Goldfarb says: “The recent wave of US free trade agreements, including the Central America-Dominican Republic agreement that Congress ratified in July, will have relatively minor direct effects on Canadian interests.”

Goldfarb adds that the US partners have relatively small economies and US duty-free access is already widely shared and not worth much because the tariff rates for non-partners are already low.

Still, the Commentary, part of the Institute’s Border Papers series, says that the US agreements are important for Canadian policymakers because they “set rules and precedents without Canada being at the bargaining table, complicate international trade, and might weaken multilateral and regional liberalization efforts that are in Canada’s interest.”

The author says that the best strategy for Canada is to, “focus in areas likely to produce the largest payoffs for Canadian interests while minimizing risks and costs.

She says that maintaining and improving access to the US market must be Ottawa’s overwhelming priority. “This means removing barriers to flows of goods and people that are inconsistent with the highly integrated Canada-US economic space.” Canada should also maintain its support for current World Trade Organization multilateral negotiations.

“If policymakers are determined to proceed with free trade accords, Canada should try to engage large markets in comprehensive accords that go beyond reducing barriers to goods trade and that reinforce multilateral efforts,” says Goldfarb.

She adds: “Most bilateral free trade agreements with willing partners are unlikely to result in large economic gains for Canada. Such accords will make the international trading system more complicated and expend limited government resources, for the prospect of a marginal and declining benefit of which businesses may not even take advantage.” (Canada NewsWire)