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Canada‐United State Free Trade

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  • K A FRINZEI
  • Douglas J Mccready

Abstract

The Canada US Free Trade AGreement (FTA) which came into force January 1. 1989 caused heated debate within Canada about the impact it would have on social programs, other directly or indirectly It was argued that Canada would have to give up some social programs because they would be deemed to be substdues to the production of goods or services Alternatively, it was feared that firms would argue that the programs would need to be cut in order to ensure that they could compete with US firms in firms in terms of taxes It is shown that public unease about the fate of social programs was based both on a misunderstanding of FTA provisions, and on ‘misperception’of the mag nitude of social program expenditures Social Programs Such as unemployment insurance, even when they subsidize particular groups of people (eg fisher men) are not normally deemed to be unfair competition which would be countervailable In addition, firsm do not expertence any greter benefit costs in Canada than in the US, albeit there is a different public/private split and thus there is no justification for firms to argue for cutting programs in order tobe competitive, other things being equal

Suggested Citation

  • K A FRINZEI & Douglas J Mccready, 1992. "Canada‐United State Free Trade," American Journal of Economics and Sociology, Wiley Blackwell, vol. 51(3), pages 349-359, July.
    • Handle: RePEc:bla:ajecsc:v:51:y:1992:i:3:p:349-359
    DOI: 10.1111/j.1536-7150.1992.tb03486.x
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