Canada’s Free Trade Agreements: The Run-Down |'s Blog on Customs Brokerage and News Updates

Canada’s Free Trade Agreements: The Run-Down

canada free trade agreement

What is Canada’s stance on free trade?

As Canada’s total trade is worth approximately two-thirds of its GDP, the nation is typically described as a “trading nation” or “export-oriented economy”. 75% of that total trade is done within countries that are a part of active Free Trade Agreements with Canada.

Today, Canada has 13 free trade agreements in force with various countries. By far, Canada’s most beneficial agreement is NAFTA. In fact, the Canadian economy has grown a total of 2.5% more annually than it would have without the agreement being in place.

What is a free trade agreement?

Free Trade Agreements are when two or more nations form an agreement on the terms of trade between the participating parties. These agreements are set in order to determine the tariffs and/or duties that countries impose (or forgo imposing) on imports and exports.

By their very nature, these agreements have a significant effect on international trade.

Unilateral, bilateral, multilateral trade agreements

Unilateral: This kind of agreement happens when a country decides to impose trade restrictions, without the reciprocation of any other country. This is pretty rare, as this puts the country at a competitive disadvantage.

At times, developed nations use unilateral trade as a method of providing foreign aid. It helps smaller, emerging markets grow, and creates new markets for exporters.

Bilateral: As you may have guessed, this agreement occurs between two countries. This is when the two participating parties agree to loosen restrictions on trade in order to expand business between them.

Tariffs are lowered, and the parties are granted preferential trade status with each other.

Multilateral: The more the merrier is absolutely true in this case. Multilateral agreements are very powerful, covering a large area, and boosting the parties’ competitive advantage on the market.

The drawback? These agreements are incredibly difficult to negotiate, as different countries’ interests may clash. (Think: NAFTA — that is currently under negotiations spurred by shifting US values).

The following is a list of Canada’s active free-trade agreements:

Canada-US Free Trade Agreement (CUSFTA)

North American Free Trade Agreement (NAFTA) – Read our post about it here

Canada-Israel Free Trade Agreement (CIFTA)

Canada-Chile Free Trade Agreement (CCFTA)

Canada-Costa Rica Free Trade Agreement (CCRFTA)

Canada-European Free Trade Association Free Trade Agreement

Canada-Peru Free Trade Agreement (CPFTA)

Canada-Colombia Free Trade Agreement

Canada-Jordan Free Trade Agreement

Canada-Panama Free Trade Agreement

Canada-Honduras Free Trade Agreement

Canada-South Korea Free Trade Agreement (CKFTA)

Canada-Ukraine Free Trade Agreement (CUFTA) – Read our post about it here

Comprehensive Economic Trade Agreement (CETA) – Read our post about it here & here

Without a doubt, free trade agreements are integral to the Canadian economy. Today, the Trudeau government faces the challenge of deepening public support for trade agreements as the political climate is shifting toward protectionism.