From Leaps of Faith to Hard Landings:

This paper evaluates the impacts of increased economic integration with the United States in the wake of the Free Trade Agreement (FTA) and the North American Free Trade Agreement (NAFTA) against the backdrop of the " great free trade debate " of the late 1980s. Part One briefly summarizes the key issues raised in the debate, when proponents claimed that the FTA would boost long-term economic growth with minimal impacts on the Canadian social model, while critics expressed concerns about the loss of needed economic policy levers and the dangers of " downward harmonization " to the U.S. social model. Part Two looks at the economic record of the past 15 years, and argues that the promises of a significant boost to productivity growth and positive restructuring of Canadian industry have been largely unrealized. The Canadian economy has changed, but long-standing structural problems such as excessive resource dependency and the underdevelopment of a sophisticated " knowledge-based " economy very much remain with us. Part Three looks at the impacts of closer economic integration on wages, income distribution, and social programs, and argues that fears of " downward harmonization " were amply justified. The paper does not address the impacts on Canada of the addition of Mexico to the original FTA, but concentrates on the much more important impacts of Canada-U.S. integration. For reasons of space, little is said about pressures for policy convergence outside of economic and social policy, though environmental and cultural policies are clearly important. It is worth underscoring at the outset that Canada-U.S. economic integration was already well advanced before the FTA, and has not been the only factor shaping Canadian economic and social performance over the past 15 years. As argued in the successive Alternative Federal Budgets of the CCPA, restrictive fiscal and monetary policies were the major factor behind Canada's dismal record from the late 1980s to the latter part of the 1990s. And, as argued by Clarkson (2002), the " new constitution " of trade deals has interacted in complex ways with other elements of the " neo-conservative agenda " which have a life of their own. While it is true that economic integration has given the right a stronger political hand, the left falls into a trap if it believes that politics has been made irrelevant by trade deals. Our history under " free trade " could have been different, and this paper …