Should Canada Unilaterally Adopt Global Free Trade?
Commissioned Study, Canadian Council of Chief Executives, May 2014
49 Pages Posted: 12 May 2014
Date Written: May 12, 2014
Against the background of evidence of the dominant role of unilateral initiatives in advancing global trade liberalization in recent decades and of the deadweight costs of utilizing preferences under bilateral/regional free trade agreements, this study evaluates the implications of Canada adopting a policy of unilateral free trade. While this option has been applied with great success by city states such as Singapore and Hong Kong (and is being tried out by Shanghai), it is an open question whether a large, territorially diversified economy such as Canada could realistically contemplate it. The present study concludes that unilateral liberalization generates gains equivalent to those under major FTAs that Canada is pursuing and that a policy of unilateral liberalization is something that Canada can contemplate and should evaluate in greater detail, including the political economy aspects. Most important would be the possible impacts on Canada as a destination for foreign direct investment.
Keywords: Canada, Unilateral Liberalization, preference utiilzation, cost of preference utilization, CGE model
JEL Classification: F13, F14
Suggested Citation: Suggested Citation