International Trade and Finance: A North American Perspective

By Khosrow Fatemi | Go to book overview
Save to active project

committed to an extensive social welfare program along the lines of the Great Society model of the United States in the 1960s. While decisionmaking mechanisms are as slow as the Canadian postal system (which is notorious for its inefficiency), sometimes the system is jolted by what happens in the United States, and suddenly things are expedited. For instance, the ink on the 1986 Tax Reform Act had not dried before Canada revised its tax code to reflect changes in the U.S. Tax Act. One motivation was indeed the fact that any delay in the synchronization of the Canadian tax system might have worsened the exchange rate further because the lower corporate tax in the United States could invite a substantial flow of capital from Canada to United States. 8 Additionally, a lack of coordination of the tax system in Canada may exacerbate the Canadian brain drain. Whatever the perceptions, the fact remains that a widening gap in foreign trade with the United States has made Canada richer, and the United States cannot continue indefinitely to be a market for heavily protected Canadian industries.

In the same vein, it may be time to reconsider the Auto Pact signed with Canada in 1965 under President Johnson. The pact has been a centerpiece of economic relations with the United States. It allows the production of auto parts in Canada for Canadian assembly lines of U.S. auto manufacturers and the importation of those parts into the United States almost duty- free. It was written during the 1960s when U.S. labor was becoming too expensive, and Canada provided an opportunity for lower labor costs. This benefited the U.S. auto industry and helped Canadian industrialization, especially in the province of Ontario, and was supposed to be revised in 1968. However, this was not done and it has become a major benefit for Canada, which exported auto parts valued at $3.6 billion to the United States in 1986. Today the pact is so lucrative that it attracts "offshore manufacturers to assemble cars in Canada as a conduit for duty-free importation into the U.S. of finished vehicles originating in Asia." 9 All signs point to the willingness of both sides to create a free trade area, but world economic conditions in general and those of the United States in particular have changed, and there is a need for renewed understanding.


SUMMARY

The essence of leadership is to do one's homework and then inform the public about the virtues of a decision about to be taken. An industrial nation like Canada with enormous resources should be able to weather the industrial storms by testing its ability to compete internationally. The best way to do this would be a framework for movement of products and services with minimum inhibition. Canada stands to gain most by this without losing its identity. Luxembourg, for example, has maintained its identity despite membership in the Common Market. The EC, if it can be used as an analogy, has meant higher standards of living for millions of Europeans and none have lost their identity. To all this must be added a sense of

-257-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
International Trade and Finance: A North American Perspective
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 304

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?