The early 80s decline in the Canadian dollar should, according to the protectionists, have increased its import weights and decreased its export weights. Not only did the exact opposite occur, but a subsequent rebound from 1987 to 1992 had no reversing effect. Finally, the huge 2003- 2005 rally in the Canadian dollar had no discernible effect on either import or export weights.
The adoption of the North American Free Trade Agreement (NAFTA) in late 1993 preceded a general trend of increasing export and decreasing import weights regardless of currency movements, which suggests the free trade agreement produced economic efficiencies greater than the frictions caused by any currency fluctuation.
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