Peter Pundit, an economics reporter, states that the European Union (EU) is increasing its productivity very rapidly in all industries. He claims that this productivity advance is so rapid that output from the EU in these industries will soon exceed that of Canada and, as a result, Canada will no longer benefit from trade with the EU.

a. Do you think Peter Pundit is correct or not? If not, what do you think is the source of his mistake?

b. If the EU and Canada continue to trade, what do you think will characterize the goods that the EU sells to Canada and the goods that Canada sells to the EU?