U.S./Canada Free Trade Agreement

The incentives to erect trade barriers are often as great for developed countries as they are for developing countries. Japan, it must be admitted, is a highly productive economy, and one whose individual firms often follow enlightened (by North American standards) policies towards both customers and employees. Nevertheless, the country's balance of trade has profited significantly from its imposition of technical trade barriers. The EEC is also a highly productive group of economies. Further, the EEC has performed well in the development of the more backward (economically) countries in western Europe. These significant accomplishments, however, have often been at the expense of free trade with nonmember countries.

The North American economies of the US and Canadacer tainly two of the strongest economies on earth, if not the most productivehave resorted to the use of both voluntary and involuntary quotas in the 1980s, as a means of protecting domestic industries. Further, the US erected a formidable barrier to the export of its own products. For combined reasons of economics and national pride, the country raised the international exchange value of the dollar to a high level in

26 27the very early1980s, and kept it at high levels through the fall of 1985. The unrealistically high value of the dollar wasa formidable barrier to American exports.

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=========================== As the data presented in Table 1 indicate, the growth in the value of US assets abroad slowed significantly in the 19831985 time period, and the improved growth rates subsequent to 1985 have not recovered to pre1983 levels. By contrast, 36the growth in the value of foreign assets in the US slowed only slightly in 1983 and 1984, and, with the exception of particularly strong growth in 1986, maintained annual growth between 14.6 percent and 19.0 percent in all other years. The combined effects of these differing rate of growth led to the transformation of the US from a creditor to a debtor country. The character of the American external deficit, as well as its magnitude, must be considered. In the case of developing countries, the bulk of the external debt is comprised of commercial bank loans, loans from international organizations (such as The World Bank), and loans from the governments ofdeveloped countries. Such loans, for the most part, are characterized by high interest rates, specific annual (or more often) repayment requirements, and specific terms (maturity dates). The provisions of such loans are not, again for the most part, directly tied to either a country's annual
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Approximate Word count = 5947
Approximate Pages = 24 (250 words per page)

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