Forming a free-trade agreement with the United States provided Canadian producers a danger and an opportunity.The danger was that U.S.producers might be more price competitive than Canadian producers; the opportunity was that longer production runs for Canadian producers,made possible by a free-trade agreement,would result in cost reductions due to economies of scale.

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A free-trade agreement can expose Canadian producers to competition from U.S. producers, but it also allows them to expand production and reduce costs through economies of scale.

Forming a Free-Trade Agreement with the United States Provided Canadian