Canada Needs to Diversify its Export Strategy

During my last semester as an MBA student, I decided to take a class in International Relations theory. It was certainly a challenging class, especially considering I’d never had a course in political science. There was a steep learning curve in the beginning, but I learn very quickly, so I was able to stay right on track with the material. The last paper I wrote for that course had to do with Canada and NAFTA. I don’t think it’s a good idea to share the whole paper (22+ pages), but I thought I’d include pieces of the conclusion. Any hyperlinks below were added via WordPress’s “recommended links” and weren’t part of the original conclusion. Enjoy!

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At the outset, this paper attempted to shed some light on Canada’s relationship to NAFTA. After the literature review and subsequent analysis, there certainly seems to evidence that Canada made the choice that benefitted the country the most [economically] when it signed onto NAFTA. As the [academic] literature has shown, there will continue to be calls for the three North American countries to further integrate. This certainly may help all of the countries of NAFTA, but it is hard to say that with Mexico still far behind the US and Canada, economically. In time, one would expect that Mexico could become a global economic force, but for now, there is still much work to be done. As it stands now, Canada’s main purpose for being part of NAFTA seems to be because the US is involved. As a result, one would expect that Canada would continue to be part of NAFTA and continue to strengthen its relationship with the US. If NAFTA were just an agreement between Mexico and Canada, there probably would not be a NAFTA.

After analyzing the data, one of the most important takeaways is that Canada needs to continue to diversify its exports strategy. The vast majority of Canadian exports are to the US. In the beginning, this was probably out of convenience. The US market is much larger than Canada’s and it is right there. However, as events like the global financial crisis foreshadow the possibility of similar and bigger events, it is important for countries like Canada to ensure that they are not too invested in the success of one nation. If for instance something were to happen to the US such that it pulls them [the US] down into a recession like Japan saw in the 1990s, Canada would undoubtedly be affected. Although, some may argue that if this were to happen, the whole world would probably be pulled into a recession. However, as Canada demonstrated by its resilience during the financial crisis, it is possible to mitigate the effects of a catastrophic event. This is exactly why Canada needs to continue to seek out free trade agreements with other countries. The more free trade agreements that Canada can enter into, the more insulated it will be against a possible economic collapse in the US.