Settlement with international trading partners: The Canadian Free Trade Agreement did not aim to undermine the existing international business partners or even the aspirants; therefore, it aimed to align with the international trade agreements such the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
Advancements in trade rules: The Canadian Free Trade Agreement encouraged the modernization of internal trade in order to strengthen the flow of goods and services and ensure mobility of labors and investors. This is done by lowering or eliminating the trade barriers, which helps to attract more investments and increases the productivity. The Bank of Canada also backs the lowering of interprovincial trade barriers, according to which such move would increase Canada’s annual output up to “two-tenth of the percentage point.
Extended coverage: The AIT was restricted to particular economic sectors of Canada, but the Canadian Free Trade Agreement expanded its coverage by including the energy sector along with other service economies. This eventually increased the share in Canada’s GDP because the Canadian Free Trade Agreement majorly covered the energy sector and the service economy, where the share to the GDP of Canada accounts to approximately 90% for the former and 70% of the GDP for the later.
Safeguarding public policies: The Canadian Free Trade Agreement has a special ability to formulate laws for economic practices with an objective of public welfare. They may be related to health services, rights of labor, safety at work, protection of customers from any fraud, etc.
Penalties: The Canadian Free Trade Agreement also levied fines and penalties for instances where governments abandon any of the Agreement’s policy. The penalties were approximately doubled as compared to the penalties charged as per AIT.
Changes brought by the Canadian Free Trade Agreement:
The CFTA opened avenues for companies that used to operate in different sectors but were restricted to bid for government contracts. Such companies, including construction firms now have the access to compete for contracts issued by the government.
The government on its own had the mechanism to check procurements if the market process did not abide by the rules of the Canadian Free Trade Agreement.
Competition was broadened in energy sector as energy-related supplies were open for procurement to all suppliers due to removal of interprovincial barriers.
The Canadian Free Trade Agreement equipped the governments to address and resolve the regulatory barriers for new economic sectors.
CFTA worked to address the regulatory differences, which acted as barriers for an effective internal trade.
Economic Impact of the Canadian Free Trade Agreement:
If one looks at the Canada’s annual GDP, one-fifth of it is contributed by the internal trade, which is approximately $385 billion per year. This statistic alone is enough to prove how the Canadian Free Trade Agreement strengthened the domestic market.
This change was also recognized by the Bank of Canada, according to which, the elimination of trade barriers at the interprovincial level added up to “two-tenth of a percentage point to Canada’s potential output annually.â€
The Canadian Free Trade Agreement also increased the productivity and attracted more investors to invest in domestic markets.
Not only the Canadian authorities have realised the relevance of CFTA in developing Canada’s domestic market but also as per the International Monetary Fund, removal of trade barriers created opportunities for expansion of domestic business along with foreign direct investment.
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