Why did the United States, Canada, and Mexico sign the North American Free Trade Agreement (NAFTA)?
1 Answer
Free Trade with the United States has been an issue for Canadian Governments since before Confederation (1867). Whether to protect Canadian products or find markets for them.
Explanation:
The British had a reciprocity agreement with the United States in 1855. It has been an ongoing election issue in Canada. The original Canadian-United States Free Trade Agreement (1987) was an initiative of the then Canadian Progressive Conservative Government of Brian Mulroney. They had been against such an agreement in the previous election (1984) but began to favor it after the Election.
NAFTA (1994)superseded the previous agreement by including Mexico.
Canada's trade with the United States increased from about 25% of GDP to 40% of GDP under the Free Trade Agreement. The depressed value of the Canadian dollar made a significant difference although it was not always lower.
The Canadian dollar is often 20% lower in value than the American dollar so Canadian Goods are cheaper for Americans to purchase.
Also in the Entertainment Industry the American dollar goes 20% farther for Movies shot in Canada.
The Northern States of the US have a lot of trade with Canada. Canadian Resources, Technology and Training are valuable in the US. Common language, demographics and culture made trade comfortable between the US and Canada.
