US-Canada free trade initiatives

Canada and the United States are both trading nations. We began as colonies of trading empires, then developed our own trading partners. We both depend economically on those outside our borders. Canada relies on American markets and suppliers, the US on offshore bankers and financiers.

The Thirteen Colonies’ desire to trade on world markets rather than through Britain was a spur to US independence. US cancellation of the 1855 Reciprocity Treaty—a limited free trade—with Britain’s remaining North American colonies was a factor in drawing them together into Canadian Confederation a decade later.

With the end of Reciprocity, Canadians became ambivalent about free trade. As a fact of life, we depended on it. Our transcontinental railways—built to hold the line against US incursion in the West—were built with American technology by Americans such as Van Horne and Rogers. Yet talk about formalizing the flow across the border made us uneasy.

A crusade against the “veiled treason” of free trade with the US won Canada’s first Prime Minister, Sir John A. Macdonald, his last election. Another reciprocity proposal ended the 15 year régime of Sir Wilfrid Laurier in the 1911 election.

Despite the high US (Hawley-Smoot) and Canadian tariffs of the 1930’s, the two counties drew together economically in the lead up to the Second World War. Canada served as a bridge for President Roosevelt’s Lend Lease aid for Britain until the US entered the War.

In the 1950’s and 60’s American investment led to control of many Canadian companies going Stateside. In 1965 the Canada-US Auto Pact gave Canadians a share in American car manufacturing. Until the recent downturn, the Pact has been mutually beneficial.

Yet the disparity in size of the two economies—“an elephant in bed with a mouse” as Canada’s former Prime Minister Pierre Trudeau put it—led to Canadian concern over loss of autonomy, especially in areas of culture and natural resources such as fresh water.

Prime ministers Diefenbaker and Trudeau (one Conservative, the other Liberal) tried to diversify Canadian trade with limited success. An about-face was taken by PM Brian Mulroney who signed a Free Trade Agreement with President Ronald Reagan in 1988.

Four years later he signed a North American Free Trade Agreement with George Bush Sr., which took effect under President Bill Clinton. The 1988 agreement was closely contested in the 1988 Canadian election the Mulroney’s Conservatives almost lost. The 1992 treaty required stick handling by President Clinton to overcome opposition in Conress.