Another study shows that Canada's economy has benefited greatly from NAFTA, the free trade agreement with the United States and Mexico.  The Royal Bank of Canada report, to be released later this week, acknowledges that trade adjustments were costly in the short run, but fears of overall job losses and plant closures have proved to be unfounded.

“Canadians have prospered,” conclude economists Craig Wright and Derek Holt.

“Few countries have provided as shining an example of how to adapt and prosper in a post-freer trade world than Canada.”
. . .
Before Canada signed on to the Canada-U.S. free-trade agreement in 1988 and the North American free-trade agreement in 1993, critics charged that Canadian production would move south, exports would evaporate, jobs would dry up, foreign investment in Canada would deteriorate, the tax base would shrink, and the restructuring would force the country into a painful and long-term funk.

The adjustment was not without pain, but the end result, after 18 years of free trade, has made the criticisms look frivolous, the paper argues.
. . .
Exports have soared and foreign direct investment in Canada has risen substantially. Government coffers are full to overflowing, and Canada's fiscal situation is the envy of many a rich country. And while many of Canada's top companies have been bought by foreigners, often American, Canadian companies have been just as busy buying up U.S. firms, the study says.

Growing competition from Asia has dampened Canadian export growth recently.  The authors suggest measures to enhance competitiveness, including business tax cuts and encouraging further liberalisation of global trade.

The Royal Bank report corroborates an economic analysis released by Statistics Canada earlier this year.

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