Trade Liberalization and Inequality in Canada in the 1990s

In this chapter, Daniel Schwanen addresses the impact of the major trade liberalization efforts undertaken by Canada and its trading partners beginning with the Canada-U.S. Free Trade Agreement (FTA) in 1989. The author focuses in particular on the question of whether liberalized trade could have been a factor behind the emergence of greater inequalities in Canada in the 1990s. The author divides Canadian manufacturing industries into five groups according to their sensitivity to trade liberalization in the 1990s and to the direction taken by exports and imports following the opening of trade. Schwanen concludes from this exercise that more open trade may have contributed to inequalities in Canada, by favoring certain groups already doing relatively well, while being unfavourable to many less-skilled and lesser-paid groups.