National Policy vs Free Trade

National Policy An economic policy implemented in Canada at Confederation. The policy put high tariffs (taxes) on foreign made goods to protect the Canadian manufacturing industry. It was contrived in response to the thought that the limited population of Canada could not compete with the larger and heavily industrialized nations of the United States and Great Britain.

Free Trade Agreement An economic policy only recently adopted by Canada whereby goods are traded between certain countries without tariffs. It provides a level playing field for national goods and foreign goods. It creates a more international and competitive market. It allows for the free flow of labor and capital between different countries.

National Policy in Canada Soon after Confederation, Canada adopted the National Policy under its first Prime Minister, Sir John A MacDonald, in It was popular with the Canadian people since it was seen as protecting Canadian industry and giving people at home priority for jobs. It was not accepted unanimously, however. Many saw it as stunting potential growth and economic isolation.

Free Trade in Canada For most of its history Canada put high tariffs on foreign made goods as per its National Policy. Free Trade, however, was proposed to North America by Mexican President Carlos Salinas, American President George Bush, and Canadian Prime Minister Brian Mulroney in October of It was formalized on January 1 st, 1994 as the North American Free Trade Agreement (NAFTA). It meant no more tariffs on most foreign goods.

Advocates of Free Trade National Policy was challenged by the Conservatives in 1920 but had little success. Liberal Prime Minister William Lyon Mackenzie King began to soften the protectionist policies of National Policy and adopted more of a Free Trade outlook with the United States. The North American Free Trade Agreement (NAFTA) was finally implemented by Brian Mulroney in the early 90s.

Similarities Both are economic policies that have been used by Canada. Both create economic competition in their respective areas. Both were at first supported by both major Political Parties and both later tried to dismantle it, first under Mackenzie King and finally under Mulroney.

Differences Free trade focuses on an international market while National Policy focuses on a national market. Free trade is popular with corporations while National Policy is popular with the common worker. Free trade encourages the movement of money and labor between countries while National Policy encourages money and labor to stay at home. Free Trade opens up the international market to cheap labor whereas National Policy protects workers’ rights.

Benefits of National Policy Protects our own industries and our own citizens. It protects small businesses. Prevents cheaply made foreign products from getting an upper hand on homemade goods. Provided the solid base for Canada to establish its industries at its inception. Is thought to provide a higher standard of living.

Benefits of Free Trade Allows global trade to flourish. Creates a more dynamic and competitive economy. Encourages big business. Cheaply made products for consumers lowers cost of living. It gives consumers control over their economy by giving them uninhibited choice of products. It reduces international poverty by allowing third world countries to compete and encourages globalization.

Canadian Policy Reflections We should keep our policy of Free Trade. Canada is a country with a massive amount of natural resources and a tiny population. Exports account for nearly a third of our GDP which at the moment is $1.023 trillion. If we tax foreign goods our exports will not be well received. This would negatively impact our economy. Allowing third world countries to compete will lower international poverty. For example, high tariffs on African-made goods in Europe forces many African countries into abject poverty. Most third world countries have little else to offer the international market other than cheap labor, so they don’t really benefit from tariffs at all. Less poverty in the world means less war and strife. Free trade would also allow easier access to resources some countries do not naturally have, also negating many reasons for war.

References book/ book/ u-s-free-trade-agreement u-s-free-trade-agreement ductions/23271.htm ductions/23271.htm

Free Trade is the Only Way!