A Year of the Canadian Trade Agreement

THE Trade Agreement between the United States and Canada which became effective January 1, 1936, reversed a tariff policy that for a number of years had been curtailing commercial intercourse between the two countries. The essential features of this Agreement may be briefly outlined. Pledges were exchanged regarding the tariff principles to be applied in future to all trade between the two countries. Each promised to extend most-favored-nation treatment to the other's trade, that is to say, customs treatment equally favorable to that accorded any other foreign country. As a matter of fact, Canadian goods were entering the United States on these terms before the Agreement. Now, however, this favorable status is formally assured, for the Agreement automatically extends to Canadian goods any tariff reductions which the United States may make in subsequent trade agreements with other countries. Correspondingly, Canada guarantees that American goods will be charged the lowest rates imposed upon goods from any foreign nation. Previously, goods exported by the United States, alone among those coming from any important supplier of the Canadian market, had been subject to the highest general tariff rates.

Further, each country agreed to reduce the rates applicable to an extensive list of products regularly imported from the other. All of the many reductions made by the American Government represented changes in the general American tariff schedules, and the new rates are specifically set forth in the Agreement and "bound" against increase during its life. The Canadian tariff rates on imports from the United States were lowered in two ways. First, the Canadian intermediate tariff schedules were extended to all American products, in accordance with the most-favorednation principle. Secondly, designated reductions of rates were made upon a selected list of products important in the American export trade with Canada. Furthermore, these reduced duties were bound against increase during the Agreement's life. However, neither the promise of most-favored-nation treatment nor the pledge not to increase the Canadian rates applicable to specifically enumerated products is a safeguard against the grant of still lower preferential rates on the same commodities to the countries within the British Empire -- a matter given new significance by the negotiation of a new accord between Canada and the United Kingdom in 1937.

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