Free Trade

In the Canadian context, the term free trade has come to describe both the broader debate and various proposed and realized trade agreements between Canada and the United States, mostly recently NAFTA. Long a contentious political and economic issue, free trade with the US has been about more than trade; intertwined with issues of sovereignty and identity. Both the Liberals and Conservatives have found themselves on opposite sides of the free trade debate over the years.

The first “free trade” agreement was the 1854 Elgin-Marcy Treaty (or Reciprocity Treaty), which eliminated most tariffs between British North America and the US (while also dealing substantially with fish.) Although it was beneficial to both sides and Canadian exports boomed, concerns about a loss of sovereignty – which persist to this day – hurt the Reciprocity Treaty in Canada. Yet it was Britain’s support for the Confederacy during the US Civil War, which led American politicians to cancel the agreement in 1866 to punish the British. It remains the only trade deal the US has ever cancelled.

Following the Reciprocity Treaty’s cancellation many Canadian politicians, including Sir John A. MacDonald, tried in vain sign a new deal with the Americans. This enthusiasm wained, and in 1878 MacDonald introduced the protectionist National Policy. It was embraced by the Liberal government of Sir Wilfrid Laurier, who proclaimed in 1897 that “there will be no more pilgrimages to Washington.”

Yet Laurier eventually changed his mind, and in 1911 negotiated yet another reciprocity agreement (approved by the US Congress and signed by President Taft.) This Reciprocity Treaty was vehemently opposed by the Conservatives, who trumpeted anti-Americanism in that year’s election under the banner of “no truck or trade with the Yankees.” Canadians voted to reject free trade and Laurier, and the issue was pushed to the backburner. Successive governments did lower tariffs and sign sectoral agreements with the Americans over the next decades, most notably the Auto Pact to cover the critial automotive industry. In the 1970s, Canadians debated a “third option” – not the status quo or more dependency on the US, but a renewed national economy and more exports to the wider world.

Free trade reemerged under Brian Mulroney, whose government negotiated the Canada-US Free Trade Agreement. Debate over the proposed deal was the top issue in the 1988 election. In a reversal of their anti-trade script from the 1911 campaign, in this “Free Trade Election” the Conservatives pushed trade. The Liberals ran on a protectionist, somewhat anti-American platform; one of their ads even depicted an American negotiator erasing the Canada-US border. This time, free trade won and the PCs were re-elected. Several years later, Mulroney joined US-Mexican negotiations to create the North American Free Trade Agreement (NAFTA.) Though Jean Chrétien’s Liberals promised to renegotiate or even walk away from NAFTA during the 1993 election, they achieved only symbolic concessions following their victory and Canada formally entered NAFTA on January 1, 1994.

Free trade again became a major issue following the election of US President Donald Trump. On the campaign trail, Trump promised to tear up NAFTA, calling it “perhaps the greatest disaster trade deal in the history of the world.” Trump’s victory launched talks to rewrite the agreement, putting Justin Trudeau and his Deputy PM Chrystia Freeland in the position of fighting to save free trade.

Canada’s extraordinary patience with the new administration eventually yielded the scarcely pronounceable “USMCA”: the United States-Mexico-Canada Agreement. While Trump touted the deal as a colossal American victory, the new agreement left most North American trade rules untouched.

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