Editorial: Free trade with Canada has become a global aspiration .

India joins long list of nations that have or are seeking a pact with our country

Prime Minister Stephen Harper has one overriding objective on his six-day trip to India beginning Sunday — to stimulate trade.

Not only does he want to triple bilateral trade to $15 billion by 2015, he wants to negotiate a free-trade agreement, a deal that one study suggests could add $6 billion to the Canadian economy and create 40,000 jobs.

Of course, any mention of free trade risks the wrath of the new Luddites who reject the reality of globalization and lobby for increased protectionism despite overwhelming evidence that free trade has brought benefits to the Canadian economy. That evidence is provided by the Canada-U.S. Free Trade Agreement, which marked its 25th anniversary in October, and its successor, the North American Free Trade Agreement, which went into effect Jan. 1, 1994.

In the absence of these trade deals, it is difficult to imagine how poorly the Canadian economy would have fared after the technology market meltdown in 2000, the border thickening after 9/11, the volatility of the Canadian dollar over the last two decades and the Great Recession of 2008.

As Douglas Porter, deputy chief economist of BMO Capital Markets, helpfully pointed out in a recent analysis, “despite all the wild gyrations in the Canadian dollar, global commodity prices and two deep downturns, Canadian exports have increased their standing as a share of the U.S. economy over the past 25 years.”

The trade deals also had a positive impact on foreign direct investment. U.S. direct investment jumped from $76 billion at the end of 1998 to $326 billion by the end of 2011; while Canadian investment in the U.S. climbed from $51 billion to $276 billion.

The agreements likely staved off protectionist measures that would almost certainly have been introduced during economic slumps and Porter even credits them for contributing to the Bank of Canada’s effort to tame inflation.

According to the Department of Foreign Affairs and International Trade, the variety of products available to Canadian consumers increased by 60 per cent following implementation of the agreements. And the changes trade liberalization brought about, particularly specialization and competition, reduced markups to the benefit of consumers. The increase in competition has forced Canadian companies to innovate, improve efficiency and keep prices low. Increased productivity has led to higher wages and raised the standard of living.

Perhaps one of the most important, and overlooked, aspects of the free-trade agreements is the inclusion of a dispute resolution mechanism that, however imperfect, is better than nothing.

Given the litigious nature of U.S. commerce, without the agreements, many more cross-border transactions between Canada and the U.S. would have ended up in court.

The free trade agreements of 1987 and 1994 have paved the way for others, including deals with Israel, Jordan, Chile, Costa Rica, Colombia, Honduras, Panama, Peru and the European Free Trade Association states of Iceland, Liechtenstein, Norway and Switzerland. More free-trade agreements are imminent with Canada’s entry into the trans-Pacific Partnership of nine countries and ongoing negotiations with the European Union and Japan. China has made no secret that it would like to see the Canada-China Foreign Investment Promotion and Protection Agreement signed in September evolve into a full-fledged free-trade deal.

None of this should come as a surprise. Nations would not pursue free-trade agreements if they didn’t believe they’d bring benefits to their citizens. Trade liberalization has been a global goal since the creation of the General Agreement on Tariffs and Trade in 1948. The failure of the Doha Round has proven the futility of trying to get all nations to agree to one treaty, leaving bilateral deals as the obvious alternative.

Canada should take pride in having been among the first to negotiate an all-encompassing deal with its largest trading partner — a deal that has helped Canada boost its gross national product by $1.1 billion since 1989 and create 4.6 million jobs.

If it all goes according to plan, Canada will conclude a free-trade agreement with India before the end of next year. It promises to be a good deal for both countries.

Source : vancouversun.com