NAFTA set up free trade over North America. Since Canada already had free trade with the U.S., the NAFTA set up free trade with Mexico. The NAFTA has been controversial both in Canada and in the U.S because people are afraid that Canadian business firms may leave Canada and take advantage of the lower wages and safety regulations in Mexico. Why would Canada join NAFTA then? Because if it didn’t, “Canada wouldn’t be allowed to be a part of future agreements between the U.S and Mexico,” leaving Canada at a competitive disadvantage to Mexico. The NAFTA was also appealing to Canada because there have been talks that other parts of the Western Hemisphere would also become a part of NAFTA. Canada also joined because it would give it “a lever in future trade negotiation with the European Union and Japan.”

Due to the many rules and regulations under the FTA a bi-national panel settles disputes. The panel settles these disputes by determining whether each country’s regulators are adhering to their trade laws. Both Canada and the U.S. can end the FTA by giving six months notice. Since U.S. exports to Canada only account for a small 1.3 per cent of its GDP and Canadian exports to the U.S account for 20 per cent of its GDP, Losing this agreement would affect Canada much more so than the U.S.

When the U.S. stocks are increasing so usually does the Canadian stocks, this is because Canada and the U.S are interconnected. Many of the successful United States chains have moved into Canada such as McDonald’s, Starbucks, and Wal-Mart. These chains have become very successful in Canada as a result they have helped the Canadian economy grow. Wal-Mart had 200 stores in Canada already by 1997. With a huge successful United States corporation moving into Canada, many jobs have been produced for Canadians and Wal-Mart Canada, which is run by Canadians and staffed with Canadians, has become a successful business.

With a recent 16.5% increase in exports to the United States, Canada now depends on the U.S markets for 87% of its exports. This 87% is the largest kind of demand on product in the world.

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