Businesses need markets and markets need businesses. If capital and goods are to flow unhindered and help grow the economic circumstances of their citizens, countries need to look beyond their borders to ensure growth can occur. Canada, in many ways, is ahead of the curve in this endeavour. Let’s start with the North American Free Trade Agreement or NAFTA – the world’s largest free trade zone within the world’s largest concentration of economic activity.
NORTH AMERICAN FREE TRADE AGREEMENT
What NAFTA does is allow the free flow of goods, capital and labour across three countries. Every day, US$1.9 billion worth of goods crosses the Canada-U.S. border. As an investor looking to come to Canada, NAFTA offers foreign investors preferential access to this market worth more than US$21 trillion (GDP) with approximately 480 million consumers.
Also, through our NAFTA partnership, Canada provides foreign investors an economic zone that benefits from lower tariffs, predictable rules and reductions in technical barriers to trade. Environmental and labour co-operation agreements have also emerged providing rules such as the North American Agreement on Environmental Co-operation (NAAEC) and the North American Agreement on Labour Co-operation (NAALC).
Canada is also embarking on a trade agreement with Europe known as the Canada-European Union Comprehensive Economic and Trade Agreement or CETA. Once approved, the agreement would eliminate 98 percent of the tariffs between Canada and the E.U. Canada will have guaranteed preferential access to both the E.U. and North American markets (as a result of both CETA and NAFTA), representing about one billion people with a combined GDP of US$62 trillion or more than one-half of the world’s output of goods and services.
Another important trade deal – the Trans Pacific Partnership or TPP – if ratified, could trump NAFTA as the world’s largest free trade zone. Canada and 11 other countries have struck a deal creating this zone, spanning four continents and 800 million people. If ratified, Canada will have free trade agreements with 51 countries in total, which accounts for about 60 percent of the global economy.