which is greatly influenced by Canada's physical geography that is rich in natural resources. Its huge size and small population has made extrac ting and transporting goods to markets difficult. The second maior influence is from the United States, which has a much more powerful economy and a larger market. As most Canadians live in the southern areas, trade has naturally developed from north to south. across the can-Am border. rather than from east to west between provinces and regions. This accounts for the third influence imposed by the federal governments intervention in the development of the country's resources and economv rather than allowing market forces to play the major But the days of such government in tervention are drawing to a close, as Canada has begun to embrace the principles of free trade and allowing the market-place to manage the economy rather than the government. The canadian government was once reputed for being rather socia list because of its interventionist practice. With small population, the Canadian market for goods such as cars was small and difficult to access. Manufacturers had difficulty competing with the much larger production capacity of the us, where economies of scale made per unit prices significantly lower. To help stimulate the development of " value-added"industries, Canada engaged in protectionist practices. To protect the Canadian car industry, for example, the government erected heavy tariffs on the import of Us cars. In the 1960, The Canadian and american governments made a deal on car production. Both sides decide they could benefit if they had freer trade in cars, and so an agreement called Auto Pact was drawn up for the benefit of both sides. The success of the assignment of this auto pact was significant, because it paved the way for the free Trade agreement(fta) between Canada and the us in the 1980s. Today free trade seems to be prevailing all over the globe in spite of the voice of cursing. The idea of a free trade agreement made good economic sense. Canadian industries had been hurt by the american use of non-tariff barriers to trade and a refusal to regard Canada as a"special case"and waive such measures. As a result, businesses were increasingly relocating to the us to get around the barriers, and to protect Canadian industry, a deal had to be made For the Americans, the Free trade Agreement(FTA) was a small expression of a big idea it wanted more international support for the General Agreement on Tariffs and Trade(Gatt), which is now replaced by more comprehensive wTO. For Canada entering into the fta meant a new reduced role in the econo my for the government that has been by tradition very interventionist, and this has been difficult to accept. This deal has benefited some regions more than others resource-rich western provinces have done well, selling their products to their southern neighbours, while the heavily-manufacturing based eastern prov inces4 which is greatly influenced by Canada’s physical geography that is rich in natural resources. Its huge size and small population has made extracting and transporting goods to markets difficult. The second major influence is from the United States, which has a much more powerful economy and a larger market. As most Canadians live in the southern areas, trade has naturally developed from north to south, across the Can-Am border, rather than from east to west, between provinces and regions. This accounts for the third influence imposed by the federal government’s intervention in the development of the country’s resources and economy, rather than allowing market forces to play the major role. But the days of such government intervention are drawing to a close, as Canada has begun to embrace the principles of free trade and allowing the market-place to manage the economy rather than the government. The Canadian government was once reputed for being rather socialist because of its interventionist practice. With small population, the Canadian market for goods such as cars was small and difficult to access. Manufacturers had difficulty competing with the much larger production capacity of the US, where economies of scale made per unit prices significantly lower. To help stimulate the development of “value-added” industries, Canada engaged in protectionist practices. To protect the Canadian car industry, for example, the government erected heavy tariffs on the import of US cars. In the 1960, The Canadian and American governments made a deal on car production. Both sides decide they could benefit if they had freer trade in cars, and so an agreement called Auto Pact was drawn up for the benefit of both sides. The success of the assignment of this Auto Pact was significant, because it paved the way for the Free Trade Agreement (FTA) between Canada and the US in the 1980s. Today free trade seems to be prevailing all over the globe in spite of the voice of cursing. The idea of a free trade agreement made good economic sense. Canadian industries had been hurt by the American use of non-tariff barriers to trade and a refusal to regard Canada as a “special case” and waive such measures. As a result, businesses were increasingly relocating to the US to get around the barriers, and to protect Canadian industry, a deal had to be made. For the Americans, the Free trade Agreement (FTA) was a small expression of a big idea: it wanted more international support for the General Agreement on Tariffs and Trade(GATT),which is now replaced by more comprehensive WTO. For Canada, entering into the FTA meant a new reduced role in the economy for the government that has been by tradition very interventionist, and this has been difficult to accept. This deal has benefited some regions more than others: resource-rich western provinces have done well, selling their products to their southern neighbours, while the heavily-manufacturing based eastern provinces