Canada-U.S. Relations after Free Trade: Lessons Learned and Unmet Challenges

Article excerpt

Fifteen years ago, Canada and the United States entered into a historic commitment: to facilitate and manage the growing integration of their two markets on a bilateral, rather than a multilateral, basis. The result was the Canada-United States Free Trade Agreement (FTA), which entered into force on January 1, 1989. Five years later, they agreed to add Mexico to the mix and convert the FTA into the trilateral North American Free Trade Agreement (NAFTA). By 2004, Canadians could look back on fifteen years of experience under the new arrangement. What have we learned from that experience? Let me share six lessons that fifteen or more years of involvement in the free trade project have taught me, and draw out some guidance for the future.

Three of the lessons are largely political, while the other three are more academic or intellectual in their scope. They can be summarized, briefly, in the following way:

1. Projects of this nature require an unique partnership of political leader and policy entrepreneur. Without political leaders of courage, conviction, and vision, it would not have proved possible to confront the deeply entrenched but false fears that are so critical to the continued appeal of protectionism and nationalism, and without policy entrepreneurs prepared to challenge the purveyors of conventional wisdom in government and academia, freer trade in North America would have remained captive of incrementalism and multilateralism.

2. Success on this project relied on the support of business in all three countries which dared to dream big; it was important to listen to their diagnosis of the problems that needed to be addressed and equally important to ignore their prognosis of what to do about them.

3. So-called civil society groups added spice to this project and reminded us all that there is more to North America than trade and economics, but the project would not have succeeded if political leaders and negotiators alike had not learned to keep the views of the most trenchant civil society groups in perspective; theirs was usually a different agenda.

4. Economists were generally right about the benefits of free trade, but have not always proved helpful in finding the best way of achieving them.

5. Political scientists were generally wrong about the threats posed by freer trade, but they can make an important contribution to designing the institutional underpinnings required to gain the full benefits of freer trade.

6. Finally, it is important to involve the lawyers, but only if you keep them in their place.

A Partnership of Vision and Knowledge

For many people, the most admired politician of the twentieth century was Winston Churchill. It is not difficult to understand why. Churchill exemplified the best qualities of leadership: vision, courage, and bulldog determination. He demonstrated that if a project is worth doing it must be done, regardless of the politics. He also understood that leadership requires the ability to draw out the best in others and an understanding that most major projects can only be accomplished through the cooperative efforts of many individuals.

North American free trade was such a project. It required the vision of an exceptional generation of political leaders prepared to swim against the tide of the postwar Keynesian consensus, but it also took the dogged determination of policy entrepreneurs in all three capitals ready to reject the conventional wisdom of entrenched bureaucracies. Remarkably, the 1980s produced both groups of people in Ottawa, Washington, and Mexico City: political leaders like Brian Mulroney, Ronald Reagan, George Herbert Bush, and Carlos Salinas de Gortari, who were prepared to reject the easy path of ever-growing statism; and advisors and policy entrepreneurs capable of translating their priorities and values into workable policies and programs. The result was a fundamental re-ordering of the relationship between government and society. …