Politics, Business & Culture in the Americas

The Mulroney-Reagan Free Trade Legacy

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Newspapers across Canada are recalling the events and the issues related to the U.S.-Canada Free Trade Agreement (FTA) of 1987. Yes, it’s been 25 years, and the general impression in the reports seems more positive than negative. Canada’s premier newspaper, The Globe and Mail, titled it the “deal that freed Canada’’.

The FTA was later transformed into the North American Trade Agreement with Mexico (NAFTA) in 1993. While there remain some detractors on both sides of the border, no one is really questioning its existence, and if anything, both the U.S. and Canada have actually expanded their free trade impetus to other parts of the world.

It is worthwhile to recount that the FTA was not a deal without its obstacles and difficulties in Canada. The unions generally were opposed because of its feared impact on jobs and existing social programs such as Medicare. Some provincial premiers, including David Peterson of Ontario, and the federal leaders of both opposition parties in the national parliament (John Turner of the Liberal Party and Ed Broadbent of the National Democratic Party—NDP) resisted Canadian Prime Minister Brian Mulroney‘s initiative with U.S. President Ronald Reagan, and are still to this day somewhat unenthusiastic about the deal and its promise.

The truth is that while the results may be mixed, the absence of the FTA would have deprived the Canadian economy of greater access to the world’s largest market at a time when both countries were coming out of a recession. In the early years, until 2000, the trade level rose dramatically—exports to the U.S. tripled, and imports from the U.S. increased significantly. With Canada getting its government deficit and debt problems under control in the 1990’s, Canadians entered the new millennium poised for better days. The FTA was in effect delivering on its promises, at least in its early days.

Since 2000, trade growth has admittedly stabilized to the point that some would qualify as stagnation. The events of 9/11 and their effects on “thickening” the border, the strengthening of the Canadian dollar, and increased globalization of markets largely explain this development. However, the fears that the FTA would affect negatively Canadian sovereignty, national identity, our social programs and our economic base have not materialized.

Today, both Canada and the U.S. have continued to embark on greater free trade initiatives around the world. It is becoming hard to distinguish in each country who is really dead-set against free trade agreements. Canada is on the verge of signing a major trade agreement with the European Union, President Obama wants to double exports by 2015, and both have joined the Trans-Pacific Partnerships that could lead to the world’s biggest trading bloc. No political party in each country has campaigned against any of these initiatives.

Both U.S. President Ronald Reagan and Canadian Prime Minister Brian Mulroney deserve high marks for pushing through this historic achievement in the mid 1980’s. Their successors today are building on what they accomplished.

For Canada, the step was higher and today Canadian producers are far more confident and more audacious in capturing new markets. The U.S. remains by far our biggest commercial partner, but no longer does Canada feel limited to North America. The recent dispute surrounding the Keystone Project showed that the Canadian government was ready to look at other alternatives for exporting the oil sands.

The impact on the Canadian economy, however, remains incomplete. The statistics still show less productivity in Canada than in the U.S., and our country has not had the expected growth in research and development. This said, had Mulroney and Reagan not signed the trade deal making it the biggest commercial relationship in the world, the world economy would have been a hotbed of protectionism and greater domestic regulation of economies with possible disastrous consequences both economically and politically.

Closer to my home province of Québec and related to the events of the FTA, it should be recalled that Prime Minister Mulroney benefitted from the crucial support of then Québec Premier Robert Bourassa, who also had his own representative at the talks. This became the model for greater economic cooperation within our federation.

The current Canada-European Union trade talks were also an idea first proposed by outgoing Québec Premier Jean Charest. All this shows that the Reagan-Mulroney legacy on free trade set the stage for the world’s push for greater trade liberalization and possibly in ways beyond their expectations. Not bad for a legacy.

John Parisella is a contributing blogger to AQ Online. He is the former Québec delegate general in New York and currently an invited professor at University of Montréal’s International Relations Center. His Twitter account is@JohnParisella.


John Parisella is the former Québec delegate general in New York and currently a visiting professor at the University of Montréal’s International Relations Center. He is also a Member of the Board of Directors of The Montreal Council on Foreign Relations.

Tags: Canada, Free Trade Agreement, Unites States
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