The Canada-United States free trade agreement: The adjustment process for Canadian-owned firms

Abstract

Changes in manufacturing performance in Canada will be necessary to take full advantage of improved access to the United States market as problems of productivity are more pronounced in the smaller Canadian-owned firms and plants. The problems of unit costs have been intensified by the recent higher value of the Canadian dollar, which put recent costs at the highest level above comparable United States costs in 30 years.

Promising routes for management to deal with such problems of competitiveness would include increased specialization, faster adoption of new technology, and price reductions made possible by increased productivity. Public policy can facilitate these adjustments at the micro level by appropriate macro and environmental policies.