Canada-United States Free Trade Agreement
The Canada-United States Free Trade Agreement (CUSFTA) represents a significant economic initiative aimed at enhancing trade relations between Canada and the United States. Initiated in the mid-1980s, discussions focused on the potential benefits of removing trade barriers, with the belief that stronger bilateral ties would bolster productivity and global competitiveness. Following the U.S. Congress’s approval in 1987, the agreement was officially signed and came into effect on January 1, 1989. Its main objectives included eliminating tariffs on goods and services, fostering fair competition, and liberalizing investment conditions between the two nations.
The agreement led to a marked increase in trade, although its impact was mixed; while some sectors experienced growth, others faced challenges. Additionally, the question of national sovereignty sparked debate, particularly within Canada. In the 1990s, the success of CUSFTA paved the way for the expansion of trade agreements to include Mexico, culminating in the creation of the North American Free Trade Agreement (NAFTA). This evolution reflects a broader trend toward regional economic integration in North America.
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Canada-United States Free Trade Agreement
Identification Agreement between the U.S. and Canadian governments to create open trade markets and fair competition
Date Went into effect on January 1, 1989
The Canada-United States Free Trade Agreement opened up possibilities for more liberalized business and trading between the two nations. In Canada, the agreement was extremely controversial, as some Canadian special interest groups feared that the new agreement would eliminate a certain degree of the country’s newly acquired sovereignty. In the United States, however, the agreement barely attracted any public attention.
At the tail end of the 1980’s, the governments of Canada and the United States began to examine the benefits that could result from removing barriers to trade between the two nations. The policy makers of the time believed that it was important to strengthen both the relationship between the two nations and the ability of each country to compete in global markets. At the time, Canada and the United States were among each other’s largest trading partners, and boosting productivity, employment, and trade as a whole became an important goal for both countries.
Talks began in the mid-1980’s between the Canadian and the U.S. governments. In Canada, a commission on trade recommended expanding relations with the United States, and by 1987, the U.S. Congress gave President Ronald Reagan permission to enter into a trade agreement with the Canadian government. A finalized trade agreement was signed by both nations and officially went into effect on January 1, 1989.
The express purpose of the agreement was to remove any barriers between the two nations to trade in both goods and services, including the eventual removal of all tariffs. Policies were put in place to facilitate fair competition within each nation’s territories and to liberalize conditions for investment. Procedures were also established to help settle any future disputes that might arise between the two nations as impartially as possible. Ultimately, both nations hoped there would be an eventual growth and expansion of the agreement’s policies.
Impact
The Canada-United States Free Trade Agreement greatly increased the amount of trade between the two nations. Opinions about the agreement varied, as some employment sectors suffered losses and others flourished. Overall, the investment of each nation in the other increased. The agreement and the question of sovereignty remained somewhat controversial in Canada, but in the 1990’s, the Canadian government voted to extend many of the terms of the free trade agreement to Mexico. This new agreement involving all three nations was called the North American Free Trade Agreement (NAFTA).
Bibliography
Kreinin, Mordechai E., ed. Building a Partnership: The Canada-United States Free Trade Agreement. East Lansing: Michigan State University Press, 2000.
Siddiqui, Fakhari, ed. The Economic Impact and Implications of the Canada-U.S. Free Trade Agreement. Queenston, Ont.: Edwin Mellon Press, 1991.
Smith, Murray G. Assessing the Canada-U.S. Free Trade Agreement. Halifax, N.S.: Institute for Research on Public Policy, 1987.