General Issues and Regional Groups
Edited by Miroslav N. Jovanović
Chapter 15: The North American Free Trade Agreement: Fait Accompli?
351 decade, culminating in the Smoot–Hawley tariff of 1930 with nationalist responses by Mexico and Canada.1 For example, Mexico nationalised oil production and Canada entered preferential trading arrangements with the British Commonwealth in the 1930s in response to the US Smoot–Hawley tariff. In the midst of the Great Depression, the US Congress passed the Reciprocal Trade Agreements Act, which granted the Secretary of State Cordell Hull the right to negotiate unconditional most favoured nation (MFN) treaties. Several such treaties were signed before the Second World War intervened. The US unconditional MFN treaties created the basis for the multilateral General Agreement on Tariffs and Trade (GATT) negotiations after the Second World War.2 Canada engaged bilaterally with the United States in the multilateral GATT negotiations since 1947, but Mexico did not participate in GATT, instead focusing on an import substitution approach to development. Through successive rounds of GATT negotiations, tariffs between Canada and the United States were progressively reduced from very high levels. Also in response to a trade dispute, in the 1960s Canada and the United States negotiated the bilateral Autopact which provided for the integration of automotive assembly and production between the two countries. The Canada–US Free Trade Agreement In the mid-1980s, Canada launched free trade negotiations with the United States to consolidate the integration of the two economies, which led to the US–Canada Free Trade Agreement (CUSFTA). Long advocated by Canadian economists (see, for example, Wonnacott and Wonnacott, 1967), a combination of factors – the implementation...
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