- The Washington Times - Sunday, January 4, 2004

TORONTO - The BlackBerry, the popular electronic organizer and e-mailer, is one of the most-visible symbols of how Canada has benefited from the North American Free Trade Agreement (NAFTA).

“I stand up when I give speeches, hold up my BlackBerry, which everybody in the world has, and say, ‘Canadian technology,’” said Pamela Wallin, Canada’s consul general in New York.

BlackBerry manufacturer Research in Motion posted $153.9 million in profits during the quarter that ended Nov. 30, earned partly from the U.S. market opened by NAFTA 10 years ago.

The agreement to lower trade barriers among Canada, the United States and Mexico has shaped the world’s largest trading partnership — Canada-U.S. trade alone is valued at $1.4 billion a day. But despite BlackBerry and other Canadian high-tech achievements, observers say NAFTA has been only mildly positive for the country.

Canada still relies on resource-based industries for 45 percent of all exports, said Andrew Jackson, senior economist at the Canadian Labor Congress.

The country’s investment in research and development as a percentage of gross domestic product is less than half of the U.S. amount. That and Canada’s smaller, underutilized factories mean its production of high-tech goods accounts for 13.5 percent of manufacturing, compared with 34.8 percent in the United States, Mr. Jackson said.

Peter Pauli, associate dean at the Rotman School of Management at the University of Toronto, said although Canada has had gains from NAFTA, they have been limited because productivity goals have not been reached and there has been little cushioning for industries to survive greater competition.

But, Mr. Pauli said, “We needed access to U.S. markets.”

When NAFTA was proposed in the 1980s by the governments of President Reagan and his Canadian counterpart, Brian Mulroney, among its stated aims were to eliminate the gap in productivity between Canada and the United States and to boost wages and living standards.

It never happened in Canada, Mr. Jackson said. From 1992 to 2002, productivity grew by 51.9 percent in the United States compared with 17.9 percent in Canada. Employers, not workers, reaped the benefits of Canada’s higher hourly output, according to the book “Lessons From NAFTA: The High Cost of Free Trade,” published in November by the Canadian Center for Policy Alternatives.

During NAFTA’s first nine years, employment in Canada grew by 19 percent, representing a gain of 2.7 million new jobs. But fewer than half of those new jobs were full time, the book says.

But the Canadian government is upbeat about the treaty and its impact.

“NAFTA has been a great success for Canada and its North American partners, and we are committed to ensuring that it continues to help us to realize the full potential of a more integrated and efficient North American economy,” federal trade spokesman Andre Lemay said.

From 1989 to 2002, Canadian exports to the United States rose by 221 percent, and imports from the United States rose by 162 percent. Canada’s trade with Mexico has doubled over the past 10 years.

Maude Barlow, chairwoman of the Council of Canadians, Canada’s largest public-advocacy organization, acknowledged gains in sectors such as high technology, but she gave NAFTA an overall poor grade.

In addition to low wages, she cited a 2001 study by the Organization of Economic Cooperation and Development, which said social spending in Canada declined by 15 percent of the gross domestic product over the previous decade.

“Opening those doors helped some highly skilled workers and managers in some sectors, but overall, the jury is very clear we created an entrenched poverty class,” Ms. Barlow said.

Clothing manufacturer Peerles employs 3,000 unskilled workers in its Montreal factory. But Peerles President Elliot Lifson champions NAFTA, which wiped out weaker manufacturers and consolidated the clothing industry.

NAFTA accomplished two things, said Mr. Lifson, whose company ships 27,000 suits and 36,000 trousers a week to the United States.

First, “It changed the psyche, the thinking of the Canadian manufacturer that if we ship fine-quality wares at a good price into the U.S., we can survive and succeed,” he said.

Second, it instilled the confidence for Canadian companies to compete worldwide, said Mr. Lifson.

“The biggest advantage Canada has is its proximity to the United States. We are always going to be closer than China,” he said.

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