Free Trade Essay Example | Topics and Well Written Essays - 1500 words

Free Trade - Essay Example Free trade also underscores the benefit of the foreign direct investment in Canada, particularly by the United States in their bilateral trade. To cite an example, Alex Rugman (1990) points to the greater stock of US foreign direct investment in Canada than Canadian foreign direct investment in the United States. (p. 78) The impact of this fact offsets the reservations of critics regarding the outward flow of Canadian wealth to other countries. It makes sense to think that because of the larger amount of capital invested, the US firms in Canada demand more labour than those needed by the Canadian firms operating in the US, or the jobs â€Å"lost† when Canadian capital is funneled abroad. Free trade also addresses the issue in regard to tariffs and the concept of â€Å"rules of origin.† It is inevitable to have discrimination in favor of supplies from one country, risking the diversion of lower-cost supplies from another. By reducing tariff levels in multilateral system, free trade can reduce discrimination as well as strengthen cost control. (Barton, Goldstein & Josling 2006, p. 176) The value of the Canadian dollar that accompanied the negotiation and implementation of free trade upset all projections of benefits to Canada†¦ In effect, an increase in the exchange rate of 15 percent is equivalent to imposing a tax on all exports of 15 percent and removing a 15 percent tariff on imports. (p. xvii) Finally, it is important to highlight that free trade agreements in general lead to internal reforms and that all countries that are engaged in them may benefit from it. There is the aspect about raising standards to bolster competitiveness, for example. To illustrate: Since Canadian customers now have better access than ever before to products and services made in the United States, they have become more demanding consumers as they assimilate the American consumer expectations. While