MOTIVATIONS FOR THE UNITED STATES CANADAFREE 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 econo mies. 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 non member countries.
The North American economies of the US and Canada cer tainly two of the strongest economies on earth, if not the most productive have 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 rea sons of economics and national pride, the country raised the international exchange value of the dollar to a high level in
26 27the very early 1980s, and kept it at high levels through the fall of 1985. The unrealistically high value of the dollar wasa formidable barrier to American exports.
The economic theory of international trade finds itself under serious attack in the 1980s, in those countries where it had been most strongly supported in the past, and where it was(rhetorically at least) strongly supported. The balance of trade deficit in the US caused many politicians, industrial ists, labor leaders, and ordinary citizens to demand import protection, although, in the same breath, they often acknowl edge the validity of the theory of international trade. These American measures were...