Brian Mulroney divided and reformed Canada through free trade with the United States


Brian Mulroney first brought the Progressive Conservatives to power when I was at the beginning of my career as a journalist. But his political life was never something I covered in great detail. His decision to negotiate a free trade agreement with the United States transformed Canada’s economic history, and yet it consumed much of my working life for several years.

Mulroney died Thursday at age 84 in a Florida hospital after falling at his home there. Alan Cowell has written an extensive obituary for Mr. Mulroney that documents his many important achievements, but also the accusations of financial irregularities and influence peddling that followed his tenure. Those accusations tarnished his reputation, even among his former supporters, and contributed to the eventual demise of the federal Progressive Conservative Party.

(Read: Brian Mulroney, Prime Minister Who Led Canada into NAFTA, Dies at 84)

I reported on free trade negotiations primarily from Washington. Unlike in Canada, where it often seemed like every molecule of political and public debate was consumed by talk, negotiations barely registered there.

Nothing in my professional experience polarized Canadians as much as Mr. Mulroney’s move toward closer economic integration with the United States. Whatever the economic advantages of free trade, Canadian industry at the time largely consisted of branches, often inefficient, producing a limited range of products to escape import tariffs that reached 33 percent on products. manufactured. Workers in those factories, and the communities that depended on them, were rightly concerned that shipments from their parent companies’ larger, more efficient American plants would kill their jobs under free trade.

(The automobile industry was the exception. In 1965, Canada and the United States signed an agreement that allowed American automobiles to enter Canada tariff-free in exchange for continuing production in Canada, most of which was then shipped to the United States. Joined).

Mulroney’s decision to pursue free trade was a reversal of the Conservative Party’s legacy. Early in Canada’s history, tariffs were comparatively low and their main purpose was to raise money for the government. In an era without an income tax, tariffs were effectively a sales tax on imported goods. But John A. Macdonald, Conservative leader and the country’s first prime minister, successfully campaigned in the 1878 election on something he called the National Policy, the key element of which was the imposition of high tariffs to create an invisible wall around Canada to protect their industries. It lasted, more or less, for a century until Mulroney arrived.

One of Mulroney’s selling points for a free trade agreement was the possibility that it could end seemingly perpetual trade disputes such as the one over Canadian softwood lumber exports to the United States.

Although Mulroney and President Ronald Reagan made a big public display of their friendship, the talks did not go smoothly. When I met with a group of journalists on a Sunday morning in October 1987 in an ornate meeting room inside the US Treasury building, I was not at all sure that a deal would be announced. But an agreement had been reached that included a system for resolving trade disputes, the main sticking point, although it was not exactly what Mulroney had promised.

The following year, the federal election was held on free trade and Mulroney prevailed.

The subsequent incorporation of Mexico to create the North American Free Trade Agreement (and the subsequent globalization of trade after the agreement that created the World Trade Organization reduced many tariffs around the world) left the free trade agreement between Canada and the United States in the shadow of history.

But the initial free trade agreement had profound effects, good and bad, on the Canadian economy. Jobs disappeared. A 2001 study by the National Bureau of Economic Research in Cambridge, Massachusetts, found that within Canadian industries that had been hit by the biggest tariff cuts, jobs fell 15 percent between 1989 and 1996. During that same period , US imports of products previously blocked by high tariffs soared by 70 percent.

On the positive side, at least in economic terms, the study found that within those industries that were once protected by tariffs, labor productivity (how much factories earned for each hour of work) increased at a significant compound annual rate of 2 .1 percent. Increasing productivity generally helps lower prices for consumers and, of course, benefits factory owners and investors.

Canada did not become, as Mulroney’s critics feared, the 51st state after free trade. But the pact did not fulfill some of its promises. The dispute over softwood lumber continues to lurch decades later. And not all communities benefited from the rebound in jobs and factories that eventually trickled down to the economy as a whole.

(Read: This city once earned much of what Canada bought. But no more.)

Furthermore, as Alan details in Mr. Mulroney’s obituary, free trade and several other important changes he brought to Canada during his tenure as prime minister were eventually pushed aside in the public’s memory. The cause was a story directly involving Mr. Mulroney that I covered: his acceptance of, as one investigation found, “envelopes full of cash” during three meetings with a German arms and aviation lobbyist.

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Originally from Windsor, Ontario, Ian Austen was educated in Toronto, lives in Ottawa and has reported on Canada for The New York Times for two decades. Follow him on Bluesky:

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